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THE  LIBRARY 
OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


yl 


LV 


06  SOUTH 
iWOADWAY 


A    TREATISE 


ON  THE  LAW  OF 


Personal     Property 


BY 
JAMES  SCHOULER,  LL.D. 

Ex-Professor  in  the  Boston  University  Law  School,  and  Author 

of  Treatises  on  "  Wills,  Executors  and  Administrators,"  "The 

Domestic  Relations,"    "Bailments,  including  Carriers" 


FIFTH   EDITION 


ALBANY,  N.  Y. 

MATTHEW  BENDER  &  COMPANY 

INCORPORATED 

1918 


CopraiGHT,  1873,  1884.  1896  and  1901 
By  JAMES  SCHOULER 


COPTKIGHT,    1918 

By  MATTHEW  BENDER  &  COMPANY, 
Incorporated 


T 


COMMnv  t 


PREFACE  TO  THE  FIFTH  EDITION 


Foe  the  present  edition  this  volume  has  been  re-enlarged,  to 
conform  with  the  original  work,  and  the  development  of  the  whole 
subject,  with  the  latest  cases,  English  and  American,  has  been 
brought  down  to  the  present  date. 

Arthur  W.  Elakemore,  Esq.,  of  the  Boston  Bar,  has  aided  in 
the  annotation  and  collection  of  cases  for  this  volume;  and  other 
competent  assistance  has  been  given  in  preparing  the  citations, 
index  and  tables.  But  the  author  has  personally  edited  and 
revised  the  entire  volume  with  care,  and  he  submits  it  as  his  own 
responsible  work. 

Jx\MES  SCHOl'LER. 

January  10,  1918. 


(iii) 


643/ 


PREFACE  TO  THE  FIRST  EDITION 


"  OuE  law-books,"  observes  one  of  America's  ripest  professional 
scholars,  —  Mr.  Bishop,  —  "  do  not,  to  any  great  extent,  treat  of 
personal  property  under  a  separate  head,  the  same  as  they  do  of 
real  estate.  A  treatise  which  shall  do  this  well  is  really  a  desider- 
atum in  legal  literature." 

Chancing  to  read  this  passage  some  years  ago,  I  was  much  im- 
pressed by  its  force  and  originality.  Subsequent  study  sensed  to 
convince  me  more  fully  that  Mr.  Bishop's  remark  was  a  just  one; 
and  the  favor  with  which  my  former  treatise  on  the  Domestic 
Relations  was  received  by  the  professional  public  induced  me  to 
seek  to  supply  this  desideratum  by  my  own  efforts.  Such  is  my 
explanation  for  venturing  to  appear  as  a  text-writer  once  more  — 
and  probably  for  the  last  time  —  with  a  work  which  I  hope  will  be 
found  to  cover  new  ground,  and  to  rank  among  the  original  as  well 
as  useful  law-books  of  the  day.  There  are  treatises,  and  good  ones 
too,  which  deal  with  special  branches  of  Personal  Property  law; 
but  other  topics  have  almost  utterly  escaped  critical  attention;  nor 
am  I  aware  of  any  modern  writer  who  has  before  sought  to  map 
out  the  law  of  this  vast  subject  so  as  to  present  an^-thing  like  an 
orderly  and  comprehensive  sketch  of  principles.  Mr.  Williams's 
compact  little  volume  on  Personal  Property  enjoys,  it  is  time,  a 
well-deserved  popularity  ;  but  in  scope  and  subject-matter  that  work 
differs  essentially  from  the  present ;  and  notwithstanding  the  care- 
ful annotations  of  American  editors,  it  is  likely  to  reuuiin,  what 
the  author  designed  it  should  be,  a  manual  for  English  students  in 
conveyancing,  rather  than  a  text-book  suited  to  the  more  general 
wants  of  law-students  and  practising  lawyers,  and  especially  those 
of  our  o^vn  land.  Chancellor  Kent  devotes  but  little  space  in  his 
Commentaries  to  the  general  characteristics  of  chattel  law;  and 
indeed  some  of  its  most  interesting  doctrines  had  hardly  begun  to 

(v) 


VI  PRKi-ACE    TO    I'IKST    Kl>lTIOX. 


nnfold  when  his  busy  pen  was  laid  aside.  I  need  hardly  add  that 
niackstone,  living  in  a  day  when  real  predominated  largely  over 
personal  wealth,  furnishes  little  for  our  instruction.  Property 
jurisprudence  now  reveals  itself  in  two  grand  and  independent 
divisions,  American  courts  often  shaping  the  rules  and  leading  the 
way ;  and  there  is  room  in  the  lawyer's  library  for  a  work  on  Per- 
sonal Property,  elementary  in  its  character,  to  serve  as  the  com- 
panion of  our  many  valuable  treatises  on  Real  Estate  law. 

In  one  particular  I  desire  to  anticipate  criticism.  A  work  like 
this,  which  is  made  up  in  great  part  from  the  copious  materials 
of  some  twenty  volumes  of  the  same  size,  deals  necessarily  with 
principles  and  not  details;  and  it  would  be  found  impossible  to 
cite  or  comment  upon  decided  cases  with  anything  like  freedom  or 
fulness,  when  discussing  some  of  the  larger  topics.  Leading  cases, 
properly  so  called,  have  generally  been  referred  to ;  specimen  cases 
are  chosen  where  the  field  was  too  vast  for  minute  selection ;  and  I 
have  taken  pains  to  refer  accurately,  at  all  times,  to  such  works  on 
special  topics  of  Personal  Property  as  would  best  supply  all  the 
precedents  which  I  had  omitted.  But,  besides,  I  have  freely  used 
materials  of  my  owoi  gathering  throughout  this  book,  especially  as 
concerns  the  latest  decisions ;  while  in  chapters  on  the  less  familiar 
topics,  such  as  Joint  and  Common  Owners,  Interest  and  Usury, 
Money,  and  Chattel  Mortgages,  the  compilation  of  cases  is  entirely 
my  own.* 

Seeking  to  dev elope  an  extensive  subject  in  a  natural  order  of 
progression,  I  have  found  myself  unable  to  treat  of  the  "  Title  to 
Personal  Property  "  within  the  present  limits.  A  second  volume, 
devoted  to  that  subject,  and  covering  especially  the  important 
topics  of  Gift  and  Sale,  would  be  required  to  complete  the  present 
work  according  to  the  original  plan.  But  whether  that  volume 
shall  over  be  Avritten,  is  doubtful ;  nor  am  I  unmindful  that  the 
legal  profession  is  already  supplied  with  good  works  on  those  topics, 
which  may  suiSce  for  their  wants.  At  all  events  this  volume 
gathers  the  matter  most  needed,  and  will  be  found  complete  in 


*NoTE    (1017).     The  same  may  be  said  as  to  such   topics  treated  here  as 
Animals,    Assignment,    Emblements,   and  Liens. 


PEEFACE    TO    I'lEST    EDITION.  vii 

itself;  and  such  as  it  is,  I  submit  the  work  to  an  indulgent  pro- 
fessional public,  in  the  hope  that  it  may  prove  useful,  and  hence 
successful. 

JAMES  SCHOULER. 

Washington,  D.  C, 

February  21,  1873. 


TABLE  OF  CONTENTS 


PART  I. 

INTRODUCTORY, 


PAGE 

§  1.     General  Division  of  the  Subject 1 


PART  II. 

NATURE   AND  GENERAL   INCIDENTS   OF  PERSONAL   PROPERTY. 

CHAPTER    I. 
PilRSONAL    PROPERTi'    IX    GENERAL. 

§  2.     Personal  Property  at  the  Common  Law  defined 2 

§  3.     Mobilit}^  the  Leading  Essential  Quality  of  Personal  Property.  ...         3 
§  4.     Division  of  Things  into  Movables  and  Immovables ;  Changes  from 
the  One  Kind  to  the  Other  by  Severance  or  Incorporation  with 

Soil ' 3 

§  5.     Things  Movable  are  Animate  or  Inanimate 5 

§  6.     Duration  of  Enjoyment  considered:  Peculiar  Distinction  at  Com- 
mon Law  between  Freehold  and  Chattel 5 

§  7.     Personal  Property  or  Chattels  in  our  Law  the  Residuum  of  the 

Freehold 7 

§  8.     Wliat  is  a  Chattel  at  the  Common  Law 7 

§  9.     Chattels  Real  and  Chattels  Personal 8 

§  10.     Fixtures,  Heirlooms,  and  Emblements 9 

§  11.     Choses  in  Possession  and  Choses  in  Action 9 

§  12.     The  Same  Subject ;  Better  Classification  would  be  into  Corporeal 

and    Incorporeal    Chattels 12 

§  13.     The  vSame  Subject;  Rights  of  Dominion  affected  by  Title 14 

§  14.     The  Same   Subject;    how   Things  Incorporeal   become   Corporeal. 

etc 14 

§  15.     The  Same  Subject;  General  Conclusion  as  to  Corporeal  and  Incor- 
poreal  Personal   Property In 

§  16.     Meaning  of  the  Terms  '*  Goods,"  "  Effects,"  "  Things,"  etc 17 

(ix) 


X  TAliJ.i;    OF    OOiN'TKNTS, 

PAGE 

§   17.     Application    of   "Estate"   to  Things   Real,   and    "Property"    to 

Tilings  Personal   19 

§  18.  Classification  into  Ileal  and  Personal  affected  by  Modern  Legisla- 
tion    21 

§  19.  Chattels  Real,  Chattels  Personal,  and  Chattels  of  a  Mixed  De- 
scription, to  be  considered  in  Order 21 

CHAPTER    II. 

CHATTELS   REAL 

§  20.     Chattels  Real  defined 23 

§  21.     Term  of  Years  the  only  Important  Chattel  Real;  Attendant  Terms 

and  Leases  distinguished 23 

§  22.     Leases  in  General;  their  History,  etc 24 

§  23.     When  a  Lease  begins 26 

§  24.     Term  of  a  Lease 27 

§  25.     Term  of  Lease  as  affected  by  Statute  of  Frauds;   Written  Lease 

required,   etc 28 

§  26.     The  Same  Subject;   whether  a  Seal  is  Essential;   Efl'ect  of  Term 

not  within  Statute 31 

§  27.     Form  of  Lease   32 

§  27a.  Lease  and  Agreement  for  Lease  distinguished 33 

§  28.     Rent  or  Recompense  under  a  Lease 34 

§  29.     Covenants  of  a  Lease 35 

§  30.     Covenants  usual  on  the  Les.sor's  Part 36 

§§  31-33.     Covenants  usual  on  the  Lessee's  Part 40,  41,  44 

§  34.     Assignment  of  Lease ;  Act  of  Parties 44 

§  35.     Assignment  of  Lease  ;  Operation  of  Law 46 

§  36.     Underletting  distinguished  from  Assignment 48 

§  37.     Modes  of  terminating  a  Tenancy 49 

§  38.     The  Same  Subject;  Lapse  of  Time;  Merger;  Surrender 49 

§  39.     The  Same  Subject :   Forfeiture 51 

§  40.     The  Same  Subject ;  Notice  to  Quit:   Modes 52 

§  41.     Contingent  Modes  of  terminating  a  Tenancy 55" 

§  42.     Mutual  Rights  of  Lessor  and  Lessee;  Distress,  Ejectment,  etc.  .  .  .  5.1 

§  42a.  Lea.ses  follow  General  Rules  of  Contract 56 

§  426.  Leases  of  Offices'  or  Apartments 57 

§  43.  Terms  of  Years  in  English  Sense  of  Trust  Arrangements;  Mort- 
gage of  Terms    58 

§  44.     Whether  Mortgages  are  Chattels  Real 60 

CHAPTER  III. 

CHATTELS   PERSONAL. 

§  45.     What  are  Chattels  Personal 62 

§  46.     Significance  of  the  Word  "  Personal  "  in  this  Connection 63 


TABLE  OF  co^■T::^•Ts.  xi 

PAGE 
§  47.     Corporeal    Chattels    first    to    be    considered;    next    Chattels    In- 
corporeal     63 

§§  48-50.     Corporeal  Chattels;  Animals,  Tame  and  Wild 64,  66,  69 

§  51.     Offspring  of  Domestic  Animals;   how  owned 72 

§  52.     Property  in  a  Person  or  Corpse 73 

§  53.     Vegetables,  Minerals,  etc.;  Severance  or  Annexation 74 

§  54.     Money  a  Corporeal  Chattel  Personal 76 

§  55.     Ships  and  Vessels  are  Corporeal  Chattels  Personal 78 

§  56.     Miscellaneous  Corporeal   Chattels  Personal 78 

§  57.     Civil-Law  Distinctions  among  Movable  Things 79 

§  58.     Incorporeal   Chattels   Personal,   or   Rights   in   Action,   to   be   con- 
sidered    79 

§  59.     Debts,  Claims,  Demands,  etc 79 

§  60.     Debts  upon  Security 80 

§  61.     Bank  Deposits  considered;  General  or  Special  Deposit 80 

§  62,     Various  Instances  of  Incorporeal  Chattels  Personal 81 

§  63.     Legacies  and  Distributive  Shares 82 

§  64.     Patent  Rights  and  Copyrights 83 

§  65.     Insurance   Policies    84 

§  66.     Annuities,   Pensions,    Salaries,   etc 84 

§  67.     Incorporeal    Personal    Chattel;    Right    to   ha    distinguished    from 

Evidence  of  Right    85 

§  68.     Stocks  and  Shares   85 

§  69.     Bills  and  Notes,  Checks,  etc 88 

§  70.     Bonds  and  Other  Instruments  for  the  Payment  of  Money 89 

CILAPTER  IV. 

PERSONAL   CHATTELS    CORPOEEAL    AND    INCORPOREAL   CONTRASTED. 

§  71.     Leading  Distinctions  between  Corporeal  and  Incorporeal  Chattels 

Perirenal 91 

As  to  Assignment  and  Transfer;  Early  Doctrine 91 

Assignment;  the  Subject  continued;  Old  Rule  of  Law 92 

Assignment;  the  Subject  continued  ;  Rule  of  Equity 93 

Assignment;    the   Subject   continued;    Modern    Fusion    of   Equity 

and  Common-Law  Doctrines   96 

The  Same  Subject;  what  may  now  be  assigned 99 

The  Subject  continued ;  what  Constitutes  an  Assignment 104 

The  Subject  continued;  Notice  of  Assignment  to  Debtor,  etc 107 

The  Subject  continued  ;  what  an  Assignment  confers 109 

The  Subject  continued;   Disputing  Consideration,  etc.,  of  Assign- 
ment    ^1^ 

T1ie  Subject  continued;  Assisnee's  Rights  and  Remedies 112 

Subject  of  Assignment  as  regulated  by  Statute 117 

Negotiable  Instruments  excepted  from   the   Old   Rule   of  Assign- 
ment    118 


§ 

72. 

§ 

73. 

§ 

74. 

§ 

75. 

§ 

76. 

§ 

77. 

§ 

78. 

§ 

79. 

§ 

80. 

s 

81. 

§ 

82. 

§ 

83, 

•Xll  TABLE    OF    CONTENTS. 

PAGE 

§  84.     Indorsement  as  distinguished  from  Assignment 122 

§  85.     Various  Classes  of  Negotiable  Instruments  considered 123 

§  86.     General  Conclusion  as  to  Assignment,  etc.;   Civil-Law  Rule 124 

§  87.     As  to  Delivery;  Chattels  Corporeal  and  Incorporeal 125 

§  88.     Eule  as  to  Transfer  of  a  Ship  or  Vessel 126 

§  89.     As  to  Seizure  and  Attachment;  Chattels  Corporeal  and  Incorporeal  127 

§  90.     As  to  Larceny;  Chattels  Corporeal  and  Incorporeal 128 

§  91.     As    to    Husband's   Marital    Rights;    Chattels    Corporeal    and    In- 
corporeal     128 

§  92.     As  to  Survival  of  Remedies 129 

§  93.     As  to  Effect  of  Time  upon  Title;  Statutes  of  Limitation 130 

CHAPTER  V. 

HEIELOOilS    AND  EMBLEMENTS. 

§     94.     Border    Line   between    Real    and    Personal;    Heirlooms,    Emble- 
ments, and  Fixtures   132 

§§  9-5,  96.     Heirlooms,  their  Nature  and  Incidents 132,  134 

§     97.     Heirlooms;  Doctrine  as  to  Wild  Animals 135 

§     98.     Heirlooms;   Doctrine  as  to  Ttitle-Deeds,  Keys,  etc 136 

§     99.     Heirlooms;  Final  Observations 137 

§   100.     Emblements ;  Rule  as  to  Chattels  Vegetable 139 

§   101.     Diverse   Ownership    of   (Soil    and   Products;    Statute    of    Frauds 

applied  to  Chattels  Vegetable 141 

§   102.     Emblements;     Title     in     Chattels     Vegetable     transmissible     by 

Death 142 

§   103.     Emblements ;   A.nnual  Crops  fit  for  Harvest 143 

§   104.     Doctrine  of  Emblements  strictly  so  called 143 

§   105.     Doctrine  of  Emblements;  Labor  upon  Crop  required 145 

§  106.     Doctrine   of   Emblements;    Unexpected   Termination   of   Tenancy 

without  Fault  146 

§   107.     Doctrine  of  Emblements;  Right  of  taking,  how  exercised,  etc...  150 

§  108.     "  Away-going  Crops  "  of  Tenants  for  Years 150 

§  109.     Emblements,  etc..  as  concerns  Mortgagees  and  Lien  Claimants .  .  .  152 

§  110.     Emblements  in  the  Civil  Law 153 

CHAPTER  VI. 

FIXTURES. 

§  111.     Fixtures  the  most  Important  of  Exceptional  Classes 154 

§   112.     Origin   of  Fixtures ;    Definitions 154 

§  113.     Character  of  tlie  Annexation  to  Land 156 

§  114.     Modern  Tests  with  Reference  to  Fixtures 161 

§  115.     Slight  or  Constructive  Annexation 162 

§  115a.  Purposes  of  Improvement:  Pecuniary  Considerations,  etc 163 

§  116.     Assent  to  the  Annexation ;  Act  of  Severance 163 


TABLE    OF    CONTENTS.  Xlll 

PAGE 

§  117.     General  Conclusion  as  to  determining  the  Eight  to  take  away.  .  .  165 

§   118.     Situation  of  Contending  Parties;  Various  Classes 166 

§  119.     Right  to  remove  fixtures  as  between  Heir  and  Executor 166 

§  120.     Right  to  remove  Fixtures  as  between  Life-Tenant  and  Remainder- 
Man,  etc 169 

§§   121,  122.     Right    to    remove    Fixtures    as    between     Landlord    and 

Tenant 169,  173 

Right  to  remove  Fixtures  as  between  Vendor  and  Vendee 177 

Right  to  remove  Fixtures  as  between  Mortgagor  and  Mortgagee..  178 

Secret  Arrangement*. ;  Subsequent  Parties  without  Notice 180 

Right    of    Fixtures    as    between    Personal    Representative    and 

Devisee 181 

Eight  of  Fixtures  in  Miscellaneous  Instances 182 

Latest  Test  of  Fixtures;  General  Conclusion 183 

Time  within  which  Fixtures  should  be  removed 185 

Liability  to  repair  Damages  caused  by  removing  Fixtures 187 

Rights  of  Action,  etc.,  in  General 188 

Transfer  of  Fixtures  ;   Various  Incidents 188 

Various   Examples   as   to   Things   which   might   appear   Real   or 

Personal ;  Turpentine,  Sap,  Peat,  etc 189 

Various  Examples  continued  ;  Buildings  on  Another's  Lands 190 

Various  Examples  continued;  Pews,  Organs,  Church  Furniture, 

etc 191 

§   133.     Character  of  Property  as  Real  or  Personal;  Doctrine  of  Equita- 
ble Conversion    192 

CHAPTER  VII. 

PERSONAL  PBOPEETY  IN  EXPECTANCY. 

§   134.     Time  of  Enjoyment  of  Personal  Property  to  be  considered 194 

§   135.     General  Doctrine  of  Interests;  Immediate  or  Expectant 194 

§   136.     How  far  this  Doctrine  applies  to  Personal  Property 195 

§   137.     As  to  Personal  Property;  Interests,  Immediate  or  Expectant.  .  .  .  196 

§   138.     Expectant  Interests  in  Per.-onaltj'  under  a  Will 197 

§  139.     Expectant  Interests  created  in  Personalty  by  Deed  of  Trust,  etc..  199 

§   140.     Exception  as  to  Perishable  Chattels 200 

§   141.     Use  by  the  Party  in  Immediate  Interest 202 

§   142.     Rule  applied  to  Animals 203 

§§   143,   143o.     Rule   applied   to   Stock   and   Bonds;    Dividends,    Interest 

Coupons,  etc 203,  205 

§   144.     Income  and  Capital ;  Life-Tenant  and  Remainder-Man 207 

§   145.     Rule  of  Apportionment  applied 208 

§  146.     Rule  against  Perpetuities   209 

§  147.     Limits  to  Accumulations  of  Income  ;  Thelluason  Act 212 

§   148.     Real  and  Personal  compared ;  as  to  Estates  Tail 215 

§  149.     Real  and  Personal  compared;  as  to  Contingent  Remainders 217 


§ 

123. 

§ 

124. 

§ 

124a, 

§ 

125. 

§ 

126. 

§ 

126a. 

§ 

127. 

§ 

128. 

§ 

128a. 

§ 

129. 

§ 

130. 

§ 

131. 

§ 

132. 

XIV  TAlil.K    OF    CONTKNTS. 

PAGE 

§   150.     Roal  and  Personal  comparted;  as  to  Reversionary  Interests 218 

§  151.     Real  and  Personal  compared;  as  to  Conditional  Devise  or  Beque.st  21!) 
§  152.     Equity  aids  Parties   in   Expectancy;    Security   from  Life   Bene- 
ficiary, etc 220 

§   153.     Deatli  of  Life  Beneficiary;  Presumptions 221 

CHAPTER  VIII. 

JOINT    AND    COMMON    OWNEUIS. 

§  154.     Number  and  Connection  of  Owner.s  of  Personal  Property 222 

§  155.     Owners  in  Severalty  ;  Joint  and  Common  Owners 222 

§   156.     Joint  Ownership  of  Personal  Property;  its  Nature  and  Creation.  223 

§   157.     Joint  Ownership  under  a  Will 227 

§   158.     Joint  Executors,  Trustees,  etc 228 

§  159.     Joint  Ownership ;  how  construed,  etc 229 

§  160.     Severance  of  Joint  Ownership 229 

§   161.     Owner-ship  in  Common ;  its  Nature  and  Creation 230 

§  162.     The  Same  Subject;  Special  Exceptions 233 

§   163.     Incidents  of  Joint  and  Common  Ownership;  as  to  Third  Persons.  233 

§   164.     Remedies  of  Joint  and  Common  Owners  against  Third  Persons.  .  23(> 

§   165.     Rights  and  Remedies  of  Co-owners  among  themselves 23S 

§   166.     The  Same  Subject;  Contribution,  Partition,  etc 242 

§   166o.  The  Same  Subject ;  Partition  in  Equity 245 

§  167.     Disadvantages  of  Joint  or  Common  Ownership 246 

§   167o.  Joint  Adventures  and  Adventurers 247 

CHAPTER   IX. 

PARTNERS. 

§  168.     The     Partnership     Relation,    for     the     Ownership     of    Personal 

Property 248 

§  169.     Division  of  Subjects  in  the  Present  Chapter 249 

§  170.     Nature,  Creation,  and  Purposes  of  Partnership 249 

§  171.     The  Same  Subject;  Competency  of  Parties  to  become  Partners.  .  .  252 

§   172.     The  Same  Subject;  Purposes  and  Scope  of  Partnership 254 

§  173.     The  Same  Subject;  Essentials  of  a  Partnership  as  to  the  Parties; 

Community  of  Profits,  etc 256 

§  173a.  Community  in  Profits  and  Losses;  latest  ca.ses 258 

§  174.     Conclusion  as  to  Nature  and  Creation  of  Partnership 259 

§  175.     Creation  of  Partnership  as  to  the  Public;  Partnership  Liability, 

how  incurred 260 

§   176.     Partnership    as    to    the    Public;     Ostensible,    Nominal,    Silent, 

Secret,  etc..  Partners 261 

§§  177,  178.     Secret   Partnership;    Liability  of   Actual    Partner    to   the 

Public 262,  26.-. 

§§  179,  180.     Ostensible  Partnership;  Nominal  Partner's  Liability.  .267,  270 


TABLE    OF    CONTENTS.  XV 

PAGE 

§  181.  Modem  Legislation  affecting  Partnership  Liability  to  the  Public.  27(t 
§  182.     Liability   of   Partners   to  Third   Parties   affected    by   Notice   of 

Stipulations,  etc 271 

§  183.     Articles  of  Copartnership   272 

§   184.     Time  when  a  Partnership  begins 273 

§  185.     Rights  and  Duties  of  Partners;  Rights  in  Partnersliip  Property.  273 

§  186.     The  Same  Subject;  Rights  in  Real  Estate 27t» 

§  187.     Right  of  Partner  to  bind  the  Firm  as  to  the  Public 277 

§§   188,  189.     The  Same  Subject;  Instances  considered 27!t,  283 

§  190.     Liability  of  Firm  for  Fraud,  etc.,  of  Partner 2S.'» 

§  191.     Riglits  and  Duties  of  Partners  as  between  themselves 2S.') 

§   192.     Dissolution  and  Change  of  a  Partner.ship ;  how  elfected 288 

§   193.     Consecjuenccs  of  Dis.-.olution  as  to  the  Parties  and  the  Public.  .  .  .  289 

§   193tt.  Disfribution  of  Firm  and  Individual  Assets  in  Bankruptcy 293 

§  194.     Di-ssolution  by  Death  :  Surviving  Partner,  etc 294 

§   195.     General  Conclusions  as  to  tlie  Ownership  of  Personal   Property 

as  Partners   29(1 

CILAPTEU  X. 

MEMBERS    OF   UMJTED    I'.VRTNERSlllPS,    AM)   OF    JOTNTSTOCK    COMPANIES, 
AND    SIUP-OWiNERS. 

§§  196,  197.     Limited  Partnerships;  their  Origin  and  Nature 298,  299 

§   198.     Limited  Partnership;  Prelimijiaries;  Certilicates.  etc 301 

§   199.     Limited  Partnership  :  Business,  how  conducted 303 

§  200.     Limited  Partncrshij) :  Dissolution  and  its  Consequences 304 

§§  201,  202.     Joint-Stock     Companies;     Nature     and     Origin;     English 

Statutes 305,  30<i 

§  203.     Joint-Stock    Company    and    Partnership    compared    as    to    Dis- 
solution    308 

§  204.     Joint-Stock    Company    compared    witli    Corporation:    American 

Decision 308 

§  205.     Part-Ownership  in  Ships  or  Vessels;  its  Nature 309 

§  206.     Part-Owners,  with  Relation  to  One  Another;   General   Principle 

of  Ownership 31 1» 

§  207.     The  Subject  continued  :  Right  to  dispose  of  Vessel 312 

§  208.     The  Same  Subject;  Employment  of  the  Ship  or  Vessel 313 

§  209.     Adjustment  of  Controversies;  Lien  on  Each  Other's  Shares,  etc..  315 

§  210.     Miscellaneous  Points  as  to  Rights  of  Part-Owners  inter  sc 317 

§  211.     Ship-Owners  with  Relation  to  Third  Persons;   Form  of  Actions. 

etc 31S 

§  212.     Part-Owners  with  Relation  to  Third  Persons;  Liability  for  Sup- 
plies, etc 319 

§  213.     Liability  of  Part-Owners  to  Others  for  One  Another's  Torts .321 

§  214.     Managing  Owner,  or  Ship's  Husband 322 


XVI  TABLE    OF    COISTTEIN'TS. 

CHAPTER  XI. 

MEMBERS   OP   COEPOEATIONS. 

PAGE 

§  215.     Corporate  Organization;  its  Advantages  and  Disadvantages 324 

§  216.     Public  and  Private  Corporations;  Leading  Classe.s 326 

§§  217,  218.     History  and  Modern  Growth  of  Corporations 327,  329 

§  219.     How  Private  Corporations  are  created;  Charter,  Legislative  Act, 

etc 331 

§  220.     The  Same  Subject ;  Acceptance  of  a  Charter  by  the  Incorporators ; 

Conditions  Precedent,  etc 333 

§  220a.  De  Facto  Corporations 334 

§  221.     Language  of  Legislative  Acts  of  Incorporation 335 

§  222.     Constituent  Elements  of  a  Private  Corporation 335 

§  223.     Internal  Organization  and  Management;   Directors,  Membership, 

etc 337 

§§  224^227.     The  Same  Subject;  Powers  of  Directors,  Corporate  Officers, 

etc 338,  341,  342,  343 

§  228.     By-Laws  of  a  Private  Corporation 345 

§  229.     The  Corporate  Seal 347 

§  230.     Power  of  Private  Corporations  to  hold  and  dispose  of  Personal 

Property 348 

§§  231,  232.     The  Same  Subject;  Right  to  purchase  and  hold  Personal 

Property 349,  351 

§  233.     Power  to  hold  Eeal  Estate;  iStatutes  of  Mortmain 352 

§  234.     Power  to  take  by  Bequest 354 

§  235.     Power  to  hold  Property  upon  Trusts 355 

§§  236,  237.     Right  to  transfer  and  dispose  of  Corporate  Property.  .356,  357 

§  238.     Right  to  issue  Negotiable  Obligations 359 

§  239.     Right  to  borrow  or  raise  Money 360 

§  240.     Rule  of  Eminent  Domain  applied 361 

§  241.     Visitation  of  Corporations;  Mandamus  and  Quo  Warranto 362 

§  241a.  Legislative  Regulation ;  Foreign  Corporations 364 

§§  242,  243.     Dissolution  of  Private  Corporations;  how  effected 364.  368 

§  244.     Effect  of  Dissolution  upon  Corporate  Property 370 

§  245.     Consolidation  or  Amalgamation  of  Private  Corporations;  Seces- 

.sion 372 

§  245a.  Holding  Companies 374 

§  246.     Revival  of  Private  Corporations 375 

§  247.     Summary  as  to  the  Kinds  of  Ownership  in  Personal  Property 376 

CHAPTER  XII. 

INCOME,   IXTEEEST,   ASD  trSUEY. 

§  248.     Usufruct  or  Income  of  Personal  Property ;  General  Remarks 378 

§§  249,  250.     Origin  of  the  Practice  of  taking  Recompense  on  Loans; 

Primitive  Ideas  as  to  Interest  and  Usury 379,  380 

S  251.     Modern  Legislation  distinguishing  Interest  and  Usury 381 


PAGE 

§  252.     Interest  ami  Usury  to  be  considered  in  Order 38-i 

§§  253,  254.     As  to  Interest;  when  payable  on  Contracts 384,  387 

§  255.     Rule  as  affected  by  Statutes  permitting  a  Higher  Rate  of  In- 
terest    388 

§  256.     Interest  on  Negotiable  Instruments,  etc 390 

■  §  257.     Interest  imposed  by  Way  of  Punishment 394 

§  268.     Interest  where  Suit  is  brought 396 

§  259.     Interest  in  Transactions  relating  to  Real  Estate;  on  Rents,  Mort- 
gage Debts,  etc 397 

§  260.     Interest  as  to  those  holding  Trust  Funds,  etc 398 

§  261.     Interest  upon  Legacies  or  Annuities 400 

§  262.     Immunity  and  Privilege  of  Government  as  to  Interest 400 

§  263.     Compound  Interest   400 

§  264.     Rule  of  Interest  in  Partial  Payments 402 

§  265.     As  to  Usury  ;  Characteristics  of  Usury  Laws 402 

§  266.     What  Contracts  are  Usurious;  Questions  of  Intent 403 

§  267.     Change  or  Renewal  of  Usurious  Contract 405 

§  268.     Taking  Usury  where  a  Contract  was  not  originally  Usurious,  etc.  408 
§  269.     Compounding    Interest,    Discounting,    Selling    Notes,    etc.,    not 

Usurious 400 

§  270.     W^hether  Charging  for  Exchange  is  Usurious 411 

§  271.     W'hether  taking  Gift,  Bonus,  Fee,  etc.,  is  Usurious 411 

§  272.     Rule  of  Usury  applied  to  Banlcs 414 

§  273.     Rule  of  Usuiy  as  to  the  Loan  of  Productive  Chattels 416 

§  274.     Various  LTsurious  Devices 417 

§  275.     Distinctions  as  to  the  Purchase  and  Sale  of  Commodities 418 

§  270.     Usury  with  Reference  to  a  Former  and  Latter  Loan 420 

§  277.     Usury  consists  in  Actual  Taking 421 

§§  278-280.     Usury,  who  may  plead,  etc 421,  423.  425 

§  281.     Usury,  how  to  be  pleaded  and  proved 426 

§  282.     Usury  as  a  Defence  in  Chancery 427 

§  283.     Legal  Consequences  of  Usury 428 

§  284.     The  Same  Subject ;  Effect  of  Voluntary  PajTuent 429 

§  285.     Rule  of  Equity  as  to  the  Consequences  of  Usury 430 

§  286.     Effect  of  Usury  as  between  Principal  Debt  and  Security 431 

§  287.     Usury  as  a  Criminal  or  Penal  Offence 432 

§  288.     Conilict  of  Laws  relating  to  Interest  and  Usury 433 

§  289.     Constitutional  Questions;  Law  in  Force  at  Date  of  Transaction.  433 
§  290.     Summary    of    Chapter;     Usufruct,    Income,    etc.,    of    Personal 

Property 434 

CHAPTER  Xin. 

CONFLICT  OF  LA.WS  EELATINO  TO  PERSONAL   PROPEBTT. 

§  291.     Fundamental  Rule  as  to  Sovereignty 436 

§§  292,  293.     Growth  of  International  Jurisprudence;    Works  of  Publi- 
cists, etc.,  on  this  Subject 436,  438 


XVIU  TABLE    OF    CONTKNTS. 

PAGC 

§  294.     Conflict  of  Laws  as  affecting  Property;  Laws  as  to  Person  and 

Property  distingui-ihed    439 

International  Distinctions  between  Things  Real  and  Personal.  .  .  .  440 

FIuctuation.s  of  tlie  Rule  as  concerns  Personal  Property 441 

Distinction  between  Real  and  Personal  regards  Property  in   its 

Legal  Character   443 

Modern  Dissatisfaction  with  the  Test  of  Owner's  Domicile 444 

The  Subject  concluded;  uliether  Lex  Situs  shall  prev:iil 445 

Contracts  concerning  Personal  Property 447 


§ 

2i)5. 

§ 

296. 

§ 

297. 

§ 

298. 

§ 

299. 

§ 

299a, 

PART  iil. 

LEADING    CLASSES    OF    PKKSONAL    PKOPEKTV. 
CHAPTER  I. 

SUn»S    AND  VESSELS. 

§  300.     Chattels  Corporeal  first  to  be  considered;  Ships  or  Vessel.^  and 

Money 449 

§  301.     Ships  or  Vessels ;  History  of  the  Law  of  Shipping 449 

§  302.     Tlie  Ship  a  Peculiar  Chattel 450 

§  303.     Division  of  the  Present  Chapter 451 

§  304.     Title  to  a  Ship,  and  Modes  of  Transfer 451 

§  305.     The  Same  .Subject;  Registration,  Bill  of  Sale,  etc 452 

§  306.     The  Same  Subject;  Policy  of  Registration,  License,  and  Enrol- 
ment    455 

§  307.     The  Same  Subject;  Sale  and  Transfer  of  Title 456 

§  308.     The  Same  Subject;  what  Appurtenances  pass  under  Instruments 

of  Transfer 458 

§  309.     The  Same  Subject;  taking  Possession  under  a  Transfer;  Rule  of 

Caveat  Emptor,  etc 459. 

§  310.     Concerning  the  Persons  employed  in  and  about  a  Ship 460 

§  311.     The  Same  Subject;  Master's  Rights  and  Duties 460 

§§  312,  313.     The  Same  Subject;  Master's  Powers  in  an  Emergency.  .463,  464 

§  314.     The  iSame  Subject :  Master,  when  specially  employed 466 

§  315.     Rights  and  Duties  of  Seamen 466 

§  316.     Rights  and  Duties  of  Pilots 469 

§  317.     Rights,  etc..  of  "  Material-Men  " 470 

§  318.     Methods  of  employing  a  Ship;  General  Ship  and  Charter-Party .  .  470 

§§  319,  320.     The  Same  Subject;  General  Ship;  Contract  of  Freight. 470.  472 

S  321.     General  Ship;  the  Subject  continued ;  Bills  of  Lading 474 

§  322.     Transportation  of  Passengers  by  Water 477 

5§  323.  324.     Letting  of  Vessel  on  Chartor-Party 478.  480 

§  325.     TJit>  Same  Subject:  Time  as  an  Essential;  Demurrage 482 


■iAULK    OF    COXTENTS.  XIX 

PAGE 

§  326.     Charter-Parties,  liow  modified ;   how  construed 484 

§  327.     Marine  Torts  and  I'erils 485 

§  328.     The  Same  Subject ;  Colli.-^iori 485 

§  328a.  Limitation  of  Liability 487 

§§  329,  330.     The  Same  Subject:  Salvage 489,  492 

§§  331,  332.     Average  in  Maritime  Losses 494,  496 

§  333.     Captures,  Privateering,  Piracy,  etc 498 

§  334.     Jurisdiction  of  Courts  of  Admiralty 500 

CPL\PTER  TI. 

MONKY. 

Money  defined  :   its  Nature  and  Uses 502 

The  Same  Subject ;  Coinage  of  Money 503 

Copper,  etc..  Coins,  and  their  Uses 504 

Advantages  of  (lold  and  Silver  for  Purpose.s  of  Money 504 

Moncj-  as  a  Standard  of  Value;  its  Circulation  limited 505 

Money  with  Reference  to  Sale,  Barter,  etc 506 

"  Lawful  Money,"  as  contrasted  with  Bullion,  etc.;  Legal  Tender.  506 
Distinction  between  Corporeal  and  Incorporeal  Personalty  with 

Respect  to  Sloney 507 

Coinage  by  Covernment ;  l^nglish  Monej' 508 

The  Same  Subject ;  American  Money 509 

"  Legal  Tender  "  Notes,  whetlicr  American  Money 511 

Effect  of  "  Confederate  "  Currency 515 

Specie  and  Currency  distinguished 516 

Counterfeiting,  Forgery,  and  Kindred  Crimes 517 

Bills  of  Credit ;  Prohibition  upon  States 518 

National  Banks  and  their  Currency 519 

Bank  Notes,  etc. ;  How  far  a  Legal  Tender 523 

'■  Money,"  *'  Cash,"  etc.,   in  Testamentary  Trusts,  and  Colloi]uial 

Use 524 

CH.XPTKU  iir. 

DEIiTS    IN    GKNER.VI,. 

§  353.     Cliattels  to  be  hereafter  coii.-idered  ar(>  Incorporeal 526 

i?  354.     Simple  Chattel  Incorporeal ;   Debt  defined,  etc 526 

^  355.     "Obligation"  distinguislied  from  Debt:  a  Word  of  Larger  Scope.  527 

§  356.     Classification  of  Debts  :  Priority 528 

§§  357,  358.     Debts  of  Record,  etc .IJ!).  532 

§  359.     Same  Subject ;  Priority  of  Debts  of  Record 532 

§§  360,  361.     Specialty  Dehts;   Covenants,  Bonds,  etc 53:J.  534 

§  362.     Simple-Contract  Debts   537 

§  363.     Priority  of  Debts  depends  sometimes  upon  the  Parties  concerned  537 

§  364.     Rule  as  to  Preferences  among  Creditors 538 


§ 

335. 

§ 

336, 

s 

337. 

s 

.338. 

§ 

339. 

§ 

340. 

§ 

341. 

§ 

342. 

s 

343. 

§ 

344. 

§ 

345. 

§ 

346. 

§ 

347. 

§ 

348. 

§ 

349. 

§ 

350. 

§ 

351. 

^ 

352. 

XX  TABLE    OF    CONTENTS. 

PAGE 

§  365.     How  a  Debt  is  discharged 53!) 

§  366.     Tlie  Same  Subject ;  Effect  of  Paying  Smaller  Sum,  etc .541 

§  367.     Effect  of  Debtor's  Note  or  Cheek  by  Way  of  Discharge  of  Debt.  .  .  .544 

§  368.     The  Same  Subject ;  Effect  of  giving  a  Higher  Security,  etc 540 

§  369.     General  Rule  as  to  accepting  Note  or  Obligation  of  Third  Per- 

son,  etc.,  in  Payment 547 

§  370.     Effect  of  designating  a  Place  of  Payment 540 

§  370a.  Accord  and  Satisfaction ;  Account  Stated,  etc .540 

§  371.     Application  of  a  Partial  Payment 550 

§  371a.  Conditional  Payment  in  a  Dispute 553 

§  372.     Composition  or  Extension  Agreement 553 

§  373.     Demands  and  Claims 555 

§  374.     Rules  of  Set-Off;  Recoupment,  etc.,  in  Modern  Practice 555 

CHAPTER  IV. 

DEBTS    SECURED  BY   LIEN. 

§  375.     Various  Securities  for  Debt  enumerated .556 

§  376.     What  is  a  Lien 556 

§  377.     Various  Kinds  of  Liens  stated 557 

§  378.     Common-Law  Lien;  Particular  and  General  Lien 558 

§§  379,  380.     Who  may  be  entitled  to  a  Particular  Lien 558,  561 

§  381.     Whether  a  Particular  Lien  may  exist,  irrespective  of  Contract.  .  .  563 

§  382.     General  Lien ;  who  may  acquire 565 

§  383.     General  Lien  of  Attorneys  and  Factors 566 

§  384.     General  Lien  by  Express  Agreement 569 

§  385.     Lien,  how  made  and  kept  sure;  Possession  necessary 571 

§  386.     Waiver,  Extinguishment,  or  Exclusion  of  Lien 573 

§  387.     Method  of  enforcing  a  Lien 575 

§  388.     Right  of  Owner  of  Goods  to  discharge  Lien,  etc 578 

§  389.     Equitable  Liens  considered  578 

§  390.     Statutory  Liens ;  Mechanic's  Lien  Laws,  etc 580 

§§  391,  391o,  392.     Maritime  Liens  considered   581,  582.  584 

§  393.     Broad  Significance  of  "  Lien  "  in  Judicial  Language 585 

§  393a.  Lien  Statutes  Constitutional 586 

CHAPTER  V. 

DEBTS   SECURED   BY   PLEDGE;    COLLATERAL   SECURITY. 

§  394.     What  is  a  Pledge  or  Pawn ;  Collateral  Security 587 

§§  395,  396.     What  Things  may  be  the  Subject  of  Pledge 589,  591 

§  397.     The  Debt  or  Engagement  to  be  secured 592 

§  398.     Who  may  pledge  or  receive  in  Pledge 593 

§  398«.  Trading  in  Stocks  on  Margin 595 

§§  399,  400.     Delivery  in  Pledge;  Retention  of  Possession 596.  598 

§  401.     Duty  of  Pledgee  as  to  taking  Care  of  the  Pledge,  etc 601 


TABX£    OF    CONTENTS.  X51 

PAGE 

§  402.     Whether  Pledgee  may  use  the  Pledge 604 

§§  403,  404.     Right  of  Pledgee  to  sue  Third  Parties,  Assign,  Transfer, 

etc 605,  607 

§  405.     Pledgor'.?  Right  to  transfer  his  Own  Interest,  etc 608 

§  406.     True  Owner's  Rights  where  the  Pledge  was  wrongful 608 

§  407.     Remedies  of  Pledgee  on  Default  of  Pledgor 609 

§  408.     Effect  of  Legislation  and  Special  Contract 612 

§  409.     How  Notes  and  Various  Other  Securities  should  be  realized ;  Col- 
lection, etc 613 

§  410.     Miscellaneous  Points  as  to  realizing  the  Security 615 

§  411.     Pledgee  may  sue  the  Pledgor  instead  of  enforcing  the  Security. . .  617 

§  411a.  Pledgor's  General  Right  to  redeem 618 

§  412.     How  the  Contract  of  Pledge  becomes  extinguished;   Extension, 

etc 618 

§  413.     Business  of  Pawnbrokers,  etc 619 

CHAPTEPw  VI. 

DEBTS    SECURED    BY    MORTGAGE;    CHATTEL    MORTGAGES. 

§  414.     Debt  on  Mortgage  Security  to  be  considered;  Mortgages  in  Gen- 
eral    620 

As  to  what  constitutes  a  Chattel  Mortgage 621 

The  Same  Subject ;  Mortgage  distinguished  from  Lien  or  Pledge .  622 
The  Same  Subject;  Mortgage  distinguished  from  Sale,  etc.;  Essen- 
tial Test 623 

Form  of  Chattel  Mortgage ;  Parol  Mortgage,  etc 626 

Matters  of  Description  in  a  Mortgage 627 

What  does  a  Chattel  Mortgage  give  in  iSecurity 629 

Tlu>  Same  Subject ;  Rule  as  to  Future-Acquired  Property 629 

Wliat  does  a  Chattel  Mortgage  secure 632 

Mortgages  made  under  a  Qualified  Title,  etc 634 

Mortgage  should  conform  to  Legislative  Policy,  etc 635 

Rules  of  Delivery,  Registry,  etc. ;  Local  Statutes  require  Registry.  636 

The  Same  Subject;  Effect  of  Unrecorded  Mortgage 639 

Delivery  and  Possession,  etc.,  without  Registry,  etc 642 

Want  of  Delivery  as  a  Badge  of  Fraud 644 

Priority  among  Chattel  Mortgages 64(! 

Rights,  etc.,  of  Mortgagor  and  Mortgagee;  Right  of  Possession.  .  646 

Sale,  Transfer,  etc.,  by   Mortgagor;   Mortgagor's  Interest 649 

Mortgagee's  Rights  and  Liabilities 651 

Mortgagee's  Assignment  of  the  Mortgage 652 

Foreclosure  and   Redemption   of  Chattel   Mortgages;    Mortgagee's 

Common-Law  Rights  on  Default 653 

Modern   Rule  favors  ^lortgagor  more  liberally;   Equitable  Doc- 
trine as  to  Default 6.V) 

Mortgagee  may  foreclose  in  Equity 656 


§ 

415. 

§ 

416. 

§ 

417. 

§ 

418. 

§ 

419. 

§ 

420. 

§ 

421. 

§ 

422. 

§ 

423. 

§ 

424. 

§ 

425. 

§ 

426. 

§ 

427. 

§ 

428. 

§ 

429. 

§ 

430. 

§ 

431. 

§ 

432. 

§ 

433. 

§ 

434. 

§ 

435. 

§ 

436. 

XXU  TABLE    OF    COXTKiNTS. 

PAGE 

g  4;57.     Modern  Statutes  reflating  Forecloaure  and  lltdemption:  Special 

Agreements  of  Parties,  etc 6rjt) 

§  438.     Mortgagee  may  pursue  Personal  Remedies  against  Mortgagor  on 

Default 658 

§  439.     Mortgagor's   Equity  of  Redemption 659 

§  440.     Payment,  Satisfaction,  etc.,  of  Mortgage  Debt 660 

§  441.     Mortgage  of  a  Ship  or  Vessel 661 

g  442.     Hypothecation  of  a  Ship;  Bottomry  and  Respondentia  Bonds.  .  .  .  661 

CHAPTER  VII. 

BILLS    AND    XOTKS. 

§  443.     History  of  Bills  and  Notes 663 

§  443o.  The  Negotiable  Instruments  Law 664 

§  444.     Bills  of  Exchange  and  Promissory  Notes  defined 665 

§§  445,  446.     Leading  Essentials  of  Bilk  and  Notes 666.  668 

§  447.     Principal  Parties,  etc.,  compared  in  Bills  and  Notes 671 

§§  448,  449.     Acceptance  of  a  Bill  of  Exchange 671,  673 

§  450.     Riglits   and   Duties   of   the   Holder   of  Negotiable   Paper    on    its 

Maturity 675 

§  451.     Presentment  and  Demand;  how  and  where  made 675 

§  452.     Presentment  and  Demand,  when  made;  Days  of  Grace,  etc 679 

§§  453,  454.     Proceeding.?   on   Dishonor  of  the  Bill   or  Note:   Notice   to 

Secondary  Parties,  etc 681,  683 

§  455.     Strict  Presentment  and  Notice,  when  excused 685 

§§  456,  457.     Negotiability;  Transfer  by  Indorsement 688,  691 

§  458.     Effect  of  Transfer  by  Mere  Delivery;  Title  of  Bona  Fide  Holder 

for  Value   692 

§  459.     Rules  applicable  to  Accommodation  Paper 695 

§  460.     Discharge  of  Drawer  or  Indorser  from  Liability 697 

§  461.     Failure  of  Consideration  as  between  Original  Parties 698 

§  462.     Questions  relative  to  Forged  or  Altered  Paper 699 

CHAPTER  VIII. 

MISCELLANEOrS    NEGOTIABLE    AND    QUASI-NEGOTIABLE    INSTKUMENTS. 

§  463.     Miscellaneous  Instruments  More  or  Less  Negotiable 702 

§  464.     Checks  and  their  Characteristics 702 

§§  465,  466.     Checks    distinguished    from    Bill.^    of    Exchange.    Drafts, 

etc 703.  705 

§  467.     Eflfect  of  certifying  a  Check 708 

§  468.     Payment  of  Checks ;  Duties  of  Banker,  etc 711 

§  469.     Points   of   Resemblance   between   Check   and   Bill    of    Exchange: 

Effect  of  Indorsement,  etc 712 

§  470.     Effect  of  paying  a  Forged  or  Altered  Check 713 

§  470o.  Memorandum  Cheeks   714 


TAB1.K    t)l'    CONTENTS.  XXlll 

PAGE 

§  471.     Bills  of  Lading;  liow  fur  Negotiable 7iri 

§  472.      Warehouse  Receipts  ;   wlu-ther  Negotiable 719 

§  473.  Letter.s  of  Credit.  Circular  Notes,  Certificates  of  Deposit,  etc.  .  .  .  719 
§§  474,  475.     Coupon    Bonds    and    their    Negotiable   Qualities;    fCuglish 

Rule 721,  72;i 

§§  476,  477.     Coupon   Bonds  and   their  Negotiable  Qualities:   American 

Rule 724.  72r» 

?!  477a.  Negotiable  Bonds  in  general 727 

§  478.     Government  Loan.s;  Notes,  Bonds,  etc 730 

§  479.     Registered  Bonds  distinguislied  from  Coupon  Bonds 732 

CHAPTER  IX. 

SHARES   OF   STOCK. 

§  480.  Shares  in  Joint-Stock  or  Business  Corporations;  Division  of 
Present  Chapter;  Capital  is  largely  invested  in  Business  Cor- 
porations    734 

S   481.     Nature  of  Stock  considered;  Capital  Stock 735 

§  482.     The  Same  Subject:  .Sliares  are  Incorporeal  Personal  Property.  ..  '736 

S  4S;J.     Dividends  ujion  Stock  ;   their  Nature 738 

ii  484.     Stock,  as  distinguislied  from  the  Corporate  Property 739 

<»  485.     Over-issue  of  Stock;  Partially  paid-in  Capital,  etc 740 

<>  486.     Right  of  a  Corporation  to  deal  in  its  Own  Stock 741 

§  487.     Risks  of  Investment  in  Stock ;  whether  Trust  Funds  may  be  thus 

invested 742 

§  488.     Metliods  by  wliich  One  becomes  a  Stockholder;  Subscription  and 

Tran.sfer 744 

§§  489-491.     Subscription  for  Shares 745.  746,  748 

§  492.     Promoters :   Preliminary  Subscribers,  etc 749 

§  493.     Subscribers  to  New  Stock;  New  Shareholders,  etc 750 

§  494.     The  Contract  of  Membership,  and  Subscription  in  General 751 

§S  495,  496.     Transfer  of  Stock;  General  Mode  considered 751.  753 

§§  497,  498.     Informal  Transfer  of  Stock;  Equitable  Rights  of  Buyer.753,  754 

§  499.     Whether  a  Stock  Certificate  may  be  deemed  Negotiable 757 

>^  500.     Transfer  of  Stock  in  Special  Instances 758 

§  501.     Lien  of  Corporation  on  Stock  for  Unpaid  Dues 760 

§  502.     Transfers  made  under  a  ForgiKl  Power:   Careless  Transfers 761 

S^  503.  504.     Contracts  for  Stock;  Stock  Si)eculations 762,  763 

§  505.     The  Same  Subject ;  Sale.s  through  Brokers 764 

§  506.     False  Representations  by  Directors  inducing  Sale  of  Stock 766 

!^  507.     Transfer  of  Stock  on  Execution  Sale,  etc 766 

5  508.     Preference  Shares  or  Preferred  Stock;  Scrip.  "'  Rights."  etc 767 

§  509.     Riglits  of  a  Stockliolder :   Membership.  Voting,  etc 768 

§  509rt.  Voting  Trusts   770 

§  510.     Stockholder's  Right   to  Dividends 771 

S  511.     Lial>?Tities  of  a  Stoekiioldi-r ;  how  far  liable  for  Corporate  Debts.  774 


XXIV  TABLE    OF    CONTJEiS'TS. 

PAGE 

§  512.     The  Same  Subject;  Rule  of  Equity 776 

§§  513,  514.     The  Same  Subject;  Modern  Legislative  Policy 777,  779 

§  515.     Liability  of  Stockholders  for  Torts  of  a  Corporation 780 

§§  516,  517.     Liability  of  Stockholders  for  Calls,  Assessments,  etc.. 780,  782 

§  517a..  Rights  of  Stockholders  on  Dissolution 783 

CHAPTER  X. 

PATENTS    AND   COPYBIGHTS. 

§  518.     General  Policy  of  Patent  and  Copyright  Laws 784 

§  519.     Patents  first  to  be  considered;  Subjects  patentable 785 

§  520.     Novelty  and  Utility  essential  to  the  Invention  or  Discovery 786 

§  521.     No  Public  Use  for  Two  Years  prior  to  the  Claim 790 

§  522.     Patent  of  a  Foreign  Invention 791 

§  523.     Abandonment  or  Public  Dedication  of  One's  Invention 791 

§  524.     Priority  among  Conflicting  Claimants  of  a  Patent 793 

§  525.     Proceedings  for  procuring  a  Patent 793 

§  526.     The  Same  Subject ;   Specifications 794 

§  527.     Patents;   how  issued ;  their  Tenor 797 

§528.     Legal  Title  to  Letters-Patent ;  Heirs,  Assignees,  and  Licensees.  .  .  797 

§  529.     Caveat,  Surrender,  Reissue,  and  Disclaimer 800 

§  530.     Rule  as  to  Extension  of  Patents 802 

§  531.     Appellate  Proceedings  for  obtaining  a  Patent 803 

§§  532,  533.     Infringement  of  Patents;  Remedies,  etc 804,  806 

§  534.     Miscellaneous  Points  as  to  Patent  Suits 807 

§  534a.  The  Effect   of  the  Anti-Trust  Laws  on   Commerce   in   Patented 

Articles 808 

§  5346.  Controlling  Price  of  Patented  Articles 809 

§  535.     Copyright :  Statute  Protection,  etc 809 

§  536.     The  Same  Subject ;   Legal  Principles 810 

§  537.     Length  of  Copyright  Term 813 

§  538.     How  Copyright  is  procured 814 

§  539.     Assignment  of  Copyright 814 

§  540.     Infringement  of  Copyright ;  Remedies,  etc 815 

§  541.     English  and  Foreign  Patent  and  Copyright  Laws 816 

§  541,  note.     International  Copyright 816 

CHAPTER  XL 

ANNUITIES,   PEKSIONS.  AND   INSUKANCE   POLICIES. 

§§  542,  543.     Annuities;  their  Nature  and  Incidents 818,  819 

§  543a.  Pensions.  Salaries.  Wages,  etc 820 

§  544.     Life  Insurance ;  Modern  Development  as  a  Business 822 

§  545.     Contract  of  Life  Insurance;  Various  Forms  of  Policy 823 

§  546.     Insurable  Interest  in  a  Life 824 

§  547.     Assignment  of  Life  Insurance  Policies 826 


TABLE    OF    CO:XTENTS.  XXV 

PAGE 
§§  548,  549.     Contract  of  Life  Insurance;  Preliminary  Questions;  Medi- 
cal Examination   829,  831 

§  550.     Conditions  Subsequent  vitiating  the  Policy 833 

§  551.     The  Same  Subject ;  Manner  of  Death 835 

§  552.     When  the  Insurance  Risk  commences 837 

§  553.     Forfeiture  through  Non-Payment  of  Premiums 838 

§  554.     Re-Insurance,  Double  Insurance,  etc 840 

§  555.     Time  and  Mode  of  obtaining  Payment 841 

§  556.     Insurance  against  Accidents 843 

§§  557,  558.     Insurance  on  Property- ;  Fire  and  Marine  Insurance .  .  .  846,  847 
§  559.     Miscellaneous   Kinds   of   Insurance ;    Guarantee,   etc. ;    Final   Ob- 
servations    849 

S  559a.  Insurance  Regulation  under  Local  Statutes 850 

§  5596.  Liability  Insurance 851 

CHAPTER  XII. 

LEGACIES   AND   DISTRIBUTIVE   SHAKES. 

§  560.     Legacies  and  Distributive  Shares  in  General 853 

§  561 .     Legacy  defined   853 

§  562.     General  and  Specific  Legacies;  Demonstrative  Legacies 854 

§  563.     Residuary  Bequest  or  Legacy 855 

§  564.     Distributive  Shares  considered    856 

§  565.     The  Same  Subject;  Method  of  Distribution 857 


Table  op  Cases  cited xxvii 

Index 859 


TABLE  OF  CASES 


(refekexces  are  to  sections) 


A. 

SECTION 

SECTION 

Abbctt  r.  Frederick 

401 

Aetna  Nat.  Bank   v.  Fourtli 

Nat. 

Abb«»v  Re 

264 

Bank 

466 

AbboUford,  The 

328 

Agawam  Co.  r.  Jordan    523, 

,  530. 

534 

Abbott  r.  jNIerriam 

226 

Agnew  V.  John-son 

165 

V.  Wilmot 

253 

V.  McElhare 

287 

Abby  r.  Billups 

233 

A<jcra,  &c.  Bank,  In  re 

448 

Abeel  r.  Penn.  In^>.  Co. 

553 

Agricultural  Bank  v.  Burr 

488. 

497 

Abeiidroth  r.  Van  Dolsen 

197 

Ahrend  v.  Odiorne 

361 

Able  V.  Shields 

77 

Akerblom  v.  Price 

329 

Abraham  r.  Carter 

165 

Albert  r.  Savin<?5  Bank 

500 

Acker  r.  Bender 

417 

Albion  Life  Assur.  Co.  Re 

173 

Ackermaii  r.  Hmisicker 

422 

Albi.^ton  Re 

13S 

T).  X'^reeland 

138 

Alchin  v.  Hopkins 

372 

Ackland  r.  Lutley 

38 

Aicock  r.  Smith 

299 

Ackroyd  i\  Smitiison 

133 

Ald-en  /•.  Mayfield 

122 

Acme  Food  Co.  r.  Kersch 

2990 

Aldin  V.  Camden  Co. 

369 

Adair  i;.  Winchester 

81 

Aldine  Mfg.  Co.  r.  Barnard 

114 

Adams  r.  Bristol 

165 

Aldrich  r.  Aetna  Co. 

305 

V.  Beadle 

100 

r.  Jackson 

458 

V.  Burke 

528 

r.  Reynolds 

266 

V.  Clark 

379. 

384 

v.  Wrin;lit 

50 

V.  Claxton 

410 

Alexander  r.  Barker 

188 

r.  Fort  Plain   Bank 

253 

r.  Burohfield 

466 

V.  Iceland 

4.-)l. 

455 

r.  Dowie 

206 

V.  M.irstella 

194 

r.  Hazelrigg 

283 

r.  O'Connor 

403, 

471 

Alexandria  Billiard  Co.   v. 

Milo- 

t\  Pittsbur^^h  Ins.  Co. 

214, 

311 

slowskj' 

27« 

V.  Robin.=on 

77 

r.  Patten 

371 

V.  Kyan 

419 

Alexandria  R.  r.  Burke 

409 

V.  Thurmond 

458 

Alger  K.  Farley 

439 

Adams  Kc 

35 

r.  Scott 

77 

Adamsou'  r.  Horton 

419 

Allaire  r.  Hartshorne 

459 

AAA\(^  r.  TuM 

27a 

AUemania   Ins.   Co.    v.   Firemen's 

Adeline,  The 

330 

Ins.  Co. 

554 

Adey  r.  Arnold 

361 

Allen  Re 

198, 

199 

Adkins  r.  Columbia  Life   In 

P.   Co. 

Allen  r.  Brown 

46(1 

551 

/'.  Clark 

456 

Adler  v.  Fenton 

354 

r.  Cro.sland 

261 

Adolph  SfM'ar  r.  Fmpire  Lace  Co. 

27n 

'•.  Davids 

177 

Aetna  Ins.  Co.  r.  Aldrich 

425. 

441 

r.  Davi-s 

172 

V.  Tyler 

77 

1".  Harper 

165 

t'.  Ward 

549 

r.  Harrah 

164 

Aetna  Life  Tn^.  Co.  r.  Davev 

549 

r.  Hill 

509 

(xxvii) 


XXVI 11 


TABLE    OF    CASES. 


SECTION 

Allen  r.  McCalla  426 

r.  Miller  81 

V.  Pancoast  76,  77 

V.  Pegram                              68,  482 

V.  Smith  385 

V.  Suydami  449 

V.  Williams  471 

Allen  Grocer}'  Co.  i\  Bank  470 

Allhusen  v.  Whittell  144 

Alliance  Bank  V.  Kearsley  188 

Allison  Re  173 

Allison  V.  Juniata  County  256 

AUwood  V.  Heyiw'ood  98 

Almy  V.  Wilbur  440 

Alpena  Cement  Co.  v.  Jenkins      241a 

Alsop  V.  Mather  194 

Alton  V.  Mulledy  371 

Ambler  v.  Bradley  178 

Amelie,  Tire  307 

American    Academy    v.    Harvard 

College  235 

American  Car  Co.  v.  Atlanta  E.  462 

American  Co.  v.  Adams  222 
American  Emigrant  Co.  v.  Clark 

445,  470a 
American  Express  Co.  v.  Parca- 

rello  49 
American  Foundry  Co.  v.  Headley 

Co.  523 
American  Foundries  V.  Lazear  508 
American  Horse  Ins.  Co.  v.  Pat- 
terson 552 
American  Ins.  Co.  V.  Henley  553 
17.  Klink  553 
V.  Stoy  553 
American  Iron  Co.  t.  Air  Line  It.  254 
American  Life  Ins.  Co.  r.  Bruce  477 
American    Life,    &c.    Ins.    Co.    v. 

Eobertshaw  546 
American  Lithographic  Co.  v.  Big- 

elow  82 
American  Maoh.  Co.  v.  Conklin  173a 
American!  Mortgage  Co.  f.  Wood- 
ward 259 
American  Nat.  Bank  r.  Petry  82 
American    Railway    Frog    Co.    v. 

Haven                  "  509 

American  Sav.  Bank  v.  Helgesen  387 
American    S.    S.    Co.    r.    IJnited 

States  307 
American   Stationery  Co.   v.   De- 

laney  64 

American  Tract  Soc.  t\  Jones  27a 

American  Trust  Co.  r.  Mafridge  26 

American  Woolen  Co.  V.  Maaget  371 

Ames  V.  Downing  200 

V.  Merriam  469 


SECTION 

Ames  V.  N.  Y.  Union  Ins.  Co.  555 

V.  Palmer  381 

Amey  v.  Allegheny  City  477 

Ammondson  v.  Ryan  271 

Amsler  v.  McClure  371a 

Ancona  v.  Rogers  427 

Anders  v.  Gardner  82 

Anderson  v.  Bank  460 

V.  Branstrom  82 

V.  Brenneman  427 

V.  Fitzgerald  549 

V.  Harlem  R.  82 

t\  S.  S.  Co.                          306,  316 

V.  Todesca  4 

V.  Tompkins  187 

V.  Van  Alen  78,  80 

Anderson's  Estate  Be  100 

Andrew  v.  Andrew  140 

V.  Blaehly  465 

Andrews  v.  Brace  204 

V.  Durant  307 

V.  Hart  281 

V.  Rue  81 

Andrews's  Will  148 

Androscoggin.  E.  V.  Auburn  Bank 

401,  402 

Ange  V.  Variol  405 

Angerstein  v.  Martin  144 

Angus  r.  McLachlan  385 

Anketel  r.  Converse  264 

Annie  Lindsley,  The  328 

Annon  r.  Bro^^^l  166 

Anthonv  V.  Brown  446 

V.  Butler  188 

v.  Lawson  285 

Anthracite-Lumber  Co.  v.  Lucas  254 

Appei-son  v.  Moore  100 

Appleton  Bank  r.  Fiske  272 

Apsey  V.  Loan  Co.  217 

Aquila,  The  330 

Arbour  v.  Pittsburg  Ass'n  241 

Archdeacon  r.  Cincinnati  Co.  39 

i^eher  v.  Hart  361 

Archer  r.  Imperial  Co.  520 

Arctic  Ice  Mach.  Co.  v.  Trust  Co.  126a 

Arden  v.  Sharpe  188 

Arendale  r.  Morgan                  400,  411 

Arents  r.  Commonwealth  477 

Argues  v.  Wasson  100 

Ariadne,  The  328 

Armenia  Ins.  Co.  V.  Paul  549 

Armour  r.  Michigan  Cent.  R.  471 
Armstrong  r.  Am.  Exch.  Bank 

443,  473 

V.  Armstrong                      156,  160 

V.  Middaugh  279 

V.  Wheeler  34 


TABLK    OF    CASES. 


XXIX 


SECTION 

Armstrong   Co.    v.    Refrigerating 

Co. 

126o 

Arnold  i\  Arnold 

194 

V.  Brown 

189 

V.  Congreve 

146 

V.  Crowder 

113 

,  124 

t\  Dresser 

451 

V.  Maxwell 

173a 

V.  Rock  River  R. 

446 

V.  Ruggles           91, 

482. 

485, 

,  500 

V.  Sprague 

446 

Artisans'  Bank  v.  Backus 

453 

i\  Treadwell 

199 

Ash  V.  Guie 

172 

Ashburner  r.  Balchen 

324 

Ashe  V.  Harris  County 

256 

Ashford  /•.  Mace 

41 

Ashley  v.  Ashley 

77 

V.  Dowling 

204 

Ashtabula  R.  v.  Smith 

494 

Ashton  r.  Corrigan 

437 

V.  Margolies 

42& 

V.  Robinson 

186 

Ashton's  Appeal 

403 

Aspinwall  r.  William.'? 

184 

Atchison  r.  De  Kay 

477 

V.  Golden  Gate  Co. 

255 

Atchison  R.  r.  Morgan   115a, 

126, 

131 

Athenaeum  Life  Ass.  Co.  V.  Pooley 

499 

Atkinson  r.  Atkinson 

497 

V.  Maling 

399 

V.  Pocock 

490 

V.  Runnells 

81 

Atlanta  Nat.  Bank  V.  Grocer  Co. 

2.58 

Atlas,  The 

442 

Attorney-General  v.  Alford 

263 

V.  Bouwens 

475 

V.  Continental  Life  Ins. 

Co. 

446, 

466 

V.  Clark 

156, 

160 

i\  Gaslight  Co. 

217 

V.  Johnstone 

563 

V.  Jones 

70 

V.  Leicester 

226 

V.  Tudor  Ice  Co. 

241 

Atwell  V.  Gowell 

275 

Atwill  i:  Ferrett 

536 

Auburn  Bank  r.  Lewis 

272 

Auld  f.  Caunt 

494 

Aultman  v.  Fuller 

172, 

185 

Aurora,  The 

.320 

Aurora  City  v.  West 

256, 

458, 

476 

Aurora  Soc.  r.  Paddock 

236 

Austin  r.  Harrington 

271 

p.  Haydon 

499 

Austiu  Frear's  Co.  v.  Sp 

illers 

331 

SECTIOX 

Avery  v.  Cheslyn 

128 

r.  Fisher 

171 

r.  Myers 

194 

Aydlett  i\  Brown 

371a 

Ayer  r.  N.  E.  Mut.  Life  Ins. 

Co. 

550 

i\  Tilden 

288 

Ayers  v.  Banking  Co. 

395 

V.  Metcalf 

253 

Aylesford  v.  Morris 

251 

Ayres  i-.  Gallup 

193 

r.  Wattson 

430 

,  438 

r.  Western  R.  R.  Co. 

62 

Axton  V.  Bottlers  Co. 

191 

B. 

Babcock  r.  Farwell 

82 

V.  Hun  toon 

370a 

V.  Lawson 

400 

V.  McFarland 

427 

Back  V.  Lanman 

279 

Backhouse  r.  Patton 

371 

Backus  V.  Shipherd 

455 

Bacon  r.  Bates 

81 

V.  Hooker 

69 

V.  Kimmel 

434 

V.  Lee 

279 

V.  Robertson 

244 

v.  Thorp 

361 

Baeder  i\  Carnie 

391 

Baeder's  Estate 

82 

Bagg  V.  Jerome 

424 

Baglehole  v.  Walters 

309 

Bailey  v.  Buchanan 

256 

V.  Day 

366 

V.  Hollister 

509 

V.  Powell 

164 

V.  Railroad  Co. 

510 

Bain  i\  Lescher 

158 

Bainbridee  l\  Hoes 

446 

V.  Richmond 

422 

Bainway  v.  Cobb 

113, 

121 

Baird  r.  Bank  of  Washington 

233 

Baird's  Case 

203 

Baker  Re 

286 

Baker  r.  Baker                  264. 

368, 

482 

i\  Chase 

163 

r.  Davie 

482 

V.  Drake 

409 

V.  Farmer 

543 

f.  Jewell 

211 

V.  Mayo 

191 

V.  Seavey 

189 

r.  Selden 

536 

Bakor  Co.  r.  Brown 

299 

Baloh  r.  Jones 

165 

Baldinger   Co.    v.   Manufacturers 

Trust  Co. 

467 

XXX 


TABLE    OF    CASES. 


SECTIOX 

Baldwin  v.  Ely  80 

V.  Flask  371 

V.  Johnson  244 

v..  Patrick  173a 

V.  Williams  16,  503 

Baldwin's  Bank  v.  Smith  455 

Balimger  V.  Bourland  271 

Ball  V.  Larkin  77 

Ballantine  v.  Young  510 

Ballinger  v.  Edwards  268,  285 

Ballow  V.  Cunningham  437 

Balsbaugh  v.  Frazer  383 

Baltimore,  The  328 

Baltimore  Barge  Co.  v.  Coal  Co.     320 

Baltimore  Mar.  Ins.   Co.  v,  Dal- 

rymple  407 

Baltimore  R.  V.  Hudgins  320 

V.  Musselman  245 

V.  Wilkens  471 

Bancroft  v.  Dumas  371 

Bandell  v.  Isaac  289 

Banes,  The  326 

Bangor  v.  Coding  390 

Bangor  R.  R.  Co.  v.  Smith  220 

Bangor  Slab  Co.,,  In  re  508 

Bank  v.  Amoss  491 

V.  Armstrong  446 

V.  Black  462 

V.  Breillat  239 

V.  Carrollton  Railroad  193 

V.  Dandridge  223.  224 

V.  Drew  279 

V.  Gilford  499 

V.  Lanier 

350,  382,  396,  398,  499,  501 

V.  Loekwood  243 

V.  Manchester  Co.  502 

V.  Mann  275 

V,  North  122 

w.  Rambo  286 

V.  Whitman  467 

V.  Williams  477a 
Bank  of  Alexandria  r.  Swann  453,  454 
Bank  of  Attica  v.  Manufacturers' 

Bank  497 

Bank  of  Auburn  v.  Lewis  283 

Bank  of  Boothby  r.  Blake  446,  457 

Bank  of  Cadiz  r.  Slemmons  280 

Bank  of  Chenango  r.  Brown  219 
Bank  of  Columbia  v.  Lawrence       453 

V.  Marshall  417 

V.  Patterson  368 
Bank   of   Commerce   v.   Equitable 

Co,  510 

V.  Ruffin  82 

V.  United  States  468 

Bank  Com'rs  v.  Bank  225 


SECTIOIf 

Bank  of  Cooporstown  v.  Woods      453 
Bank  of  Harlem  v.  Bayonne  78 

Bank  of  Henderson  v.  Johnson        460 
Bank  of  Hinton  v.  Swan  434 

Bank  of  Ireland  v.  Archer  448 

V.  Evans  229 

Bank  of  Jersey  City  v.  Leach  467 

Bank  of  Leavenworth  v.  Hunt  428 

Bank  of  Midland  v.  Harris  517 

Bank  of  Metropolis  V.  New  Eng- 
land Bank  382 
Bank  of  Mississippi  v.  Wrenn  243 
Bank  of  Omaha  t'.  Day  395 
Bank  of  Republic  v.  Millard  466 
Bank  of  Rochester  v.  Jones  416,  425 
Bank  of  Salina  r.  Alvord  266 
Bank  of  Seattle  r.  Gidden  448 
Bank  of  Syracuse  v.  Hollister  451 
Bank  of  Tennessee  r.  State  68 
Bank  of  the  State  r.  Burton  345 
Bank  of  United  States  v.  Bank  of 

Georgia  462 

V.  Carneal  451 

V.  Devaux  222 

V.  Smith  451 

Bank  of  Utica  v.  Bender  453 

V.  Smith  451,452 

Bank  of  Valley  r.,  Gettinger  78 

Bank   of   Van   Diemen's   Land   v. 

Bank  of  Victoria  448 

Bank  of  Washington  v.  Arthur       274 

v.  Nock  378,384 

V.  Triplett  452 

Bankers'  Trust  Co.  r.  Dietz  Co.       508 

V.  McCloy  499,502 

Banks  v.  Manchester  536,  537 

V.  Mayor  478 

V.  MeClellan  263 

v.  McKinley  191 

Banneret  v.  Bannerot  126a 

Baptist  Church  v.  Bigelow  132 

Barbed  Wire  Patent  525 

Barber  7\  Barber  157,  158 

V.  Fox  360 

V.  Meyerstein  321,399 

V.  Morgan  217 

Barber  Re  139 

Barbour  r.  Bayon  452 

V.  White  433,434 

Barclay  i\  Barrie  191 

r.  Wainwright  143 

Bardwell  r.  Roberts  418 

Barfield  r.  Cole  417 

Bargate  v.  Shortridge        224,  226,  498 

Barger  v.  Barringer  4 

Baring  v.  Dix  192 

Barker,  In  re  509 


TABLE    OF    CASES. 


XXXI 


SECTION 

Barker  v.  Baltimore,  &c.  R.      315,  332 

V.  High  ley  214 

V.  Jones  1G6« 

Barnard  v.  Adams  331,  332 

V.  Eaton  421 

V.  Graves  367 

V.  Moore  422 

Barnard  Realty  Co.  v.  Bonwit  38 

Barnes  v.  Bartlett  207 

r.  Hoi  comb  417 

t\  Lloyd  366 

V.  Piedmont  Ins.,  Co.  .')53 

Barnett  v.  Brandos  382 

t'.  Denison  477 

V.  Ellis  81 

Barney  v.  Leeds  166 

V.  Saunders  260 

Barque  Gentleman,  The  325 

Barradaile  ?\  Hunter  551 

Barrett  v.  Bennett  419 

v.  Garden  361 

V.  Lewis  371 

Barrett  Co.  V.  Van  Rouk  414 

Barron  v.  Cady  460 

V.  Porter  78 

Barrow  v.,  Paxton  428 

Barrows  v.  Downs  199 

V.  Turner  425 

Barrus  v.  Kyle  383 

Barry  v.  Boninger  383 

V.  Coville  166 

V.  Hoogeworff  383 

V.  Merchants'  Exchange  Co.     231 

V.  Woodbury  100,  126a 

Bartelt  v.  Smith  173a 

Bartle  v.  Coleman  170 

Bartlett  r.  N.  Y.,  N.  H.  &  H.  R.      509 

r.  Pearson  72,  81 

Barton,  v.  Baker  455 

V.  Burton  165 

V.  Hanson  182 

Bassiek  Mine  Co.  r.  Beard.^ley        257 

Batchelder  v.  Batchelder  62 

V.  Jenncss  81 

Bate  V.  Burr  253 

'  Bateman  r.  Mid-Wales  R.  238 

Bates  V.  Androscoggin  R.  .508,  510 

V.  Barry  543 

V.  Coe  523,534 

V.  Mackinley  143 

Bates  r.  Marsh  164 

Batley  r.  Dewalt  36 

Batterman  v.  Albright  100 

Batthyany  t'.  Bouch  305 

Battin  f.'Taggert  529 

Bauer  r.  O'Donnell  534?) 

Bauffh  r.  Fist  370a 


SECTION 

Baurven.si  V.  Goethals  82 

Baxter,  The  214,313 

Baxter  v.  Beckwith  288 

V.  Little  458 
Bayard  v.  Farmers',  &c.,  Bank 

495, 500 
Bayley  v.  Greenleaf  389 
V.  Merrill  386 
V.  Taber  458 
Bayliss  r.  Cackroft  275 
Beach  v.  Derby  433 
V.  Pub.  Co.  199 
Beadle  v.  Munson  271 
Beale  r.  Caddick  189 
V.  Parish  454 
Beales  r.  Cri.-^ford  352 
Beall  V.  Hudson  Co.  387 
V.  Lowndes  179 
V.  White  421,431 
Beals  r.  Benjamin  272 
Bean  v.  Barney  437 
V.  Chapman  253 
V.  Simpson  78 
V.  Smallwood  520 
Beardslee  r.  Richardson  401 
Beardsley  r.  Hill  446 
Bearly  v.  Cox  113 
Beasley  v.  Byrum  49 
Bcaston  V.  Farmers'  Bank  of  Del- 
aware 363 
B  catty  V.  Hanna  328 
Beattys  v.\  Solon  256 
Beaty  v.  Knowler  222 
Beaumont  r.  ileredith  172,  192 
Beauregard  r.  Case  184 
Beaver  r.  Armstrong  256.  477 
Becar  v.  Flues  25 
Beck  V.  Rebow  119 
Beckett  Oil  Co.  v.  Barker        •     53,  82 
Beckford  r.  Hill  183 
Beck  lev  r.  Munson  432 
Bedford  r.  Hunt  520 
r.  McElherron  38 
Bedford's  Appeal  152 
Bedford  R.  R.  Co.  r.  Bowser  490 
Bee,  The  334 
Beeeher  /'.  Bu.«h  173.  176 
Beedle  r.  Bennett  523 
Beeker  r.  Beeker  63 
Beeman  v.  Duck  449 
Boers  v.  Bridgeport  Spring  Co.        510 
V.  St.  John  121.127 
Beete  r.  Bidgood  275 
Boezlev  V.  Crossen  161 
Beldeii  r.  Chase  328 
r.  Lamb  260,  275 
r.  Meeker  80 


XXXll 


TABLE    OF    CASES. 


SECTION 

Belden  v.  Perkins 

403, 404,  408 

Belding  V.  Read 

421 

Beldon  v.  Campbell 

212,  312 

Belford  v.  Scribner 

538 

Belfour  v.  Weston 

31 

Beliot  f>.  Morgan 

477 

Belknap  V.  Wendell 

418,  424 

Bell  v.  Banks 

368 

V.  Day 

271 

V.  Morrison 

189. 193 

V.  Nesmith 

146 

V.  Pitman 

370a 

V,  Sav.  Union 

259 

Belden  Co.  v.  Corn  Planter  Co.      520 

Belford  V.  Scribner  540 

Belknap  V.  National  Bank  462 

Bellamy  V.  Marjoribanks  466 

Bellevue  Mills  v.  Baltimore  Trust 

Co.  254 
Bellows  V.  Hallowell  Bank  246 
t\  Wells  395 
Bellows    Falls    Co.    v.    Common- 
wealth 482 
Bellnme  V.  Wallace  431 
Belmont  Branch  Bank  v^  Hoge        272 
Benedict  v.  Dakin  299a 
V.  Howard  165 
t\  Thompson  188 
Benedum  v.  Bank  473 
Benefactor,  The  328 
Bengough  v.  Eldridge  146 
Benjamin  v.  Stremple  165,  403 
Bennecke  v.  Conn.  Life  Ins.  Co.      550 
Benner  Line  v.  Pendleton  326 
Bennet  v.  Bullock  166 
V.  Fowler  527 
Bennett  Vi  Atherton  30 
V.  Bennett  138 
V.  Davis  139 
V.  Federal  Coal  Co.  254 
V.  Treniont  Co.  452, 457 
Bennett's  Case  193 
Benoir  v.  Paquin  409 
Benson  V.  Benson  361 
i\  Thompson  212 
Bentley  v.  Brossard  173« 
V.  Whittemore  299 
Benton  V.  Chamberlin  193 
Benz  Re  35 
Beran  v.  Tradesmen's  Bank  78 
Berkshire  Bank  rj  Jones  455 
Berkshire  Woollen  Co.  V.  Proctor   379 
Berliner  v.  Waterloo  477 
Berni  v.  Bover  41 
Bernitt  v.  Powers  Co.  167a 
Berry  v.  Chase  82 
V.  Colburn  167a 


SECTION 

Berry  v.  Gibbons  397 

Berthold  v.  Goldsmith  178 

Bertrand  v.  Taylor  165 

Bethulia,  The  313 

Bettis  V.  Tampa  A&s'n  285 

Betty  i\  Moore  139 

Beularig,  The  329 

Bevans  i\  Bolton  425 

r.  Briscoe  106 

Bevin  r.  Conn.  Mut.  Life  Ins.  Co.    550 

Bewick  v.  Fletcher  123 

V.  W^hitfield  53 

Bickford  r.  First  Nat.  Bank  467 

Bier  V.  McGehee  478 

Big  Bend  Land  Co.  r.  Hutchings      82 

Bigelow  r.  Berkshire  Life  Ins.  Co.   551 

V.  Cong.  Society  512 

V.  Elliot  178 

V.  Heaton  385,386 

V.  State  Assurance  Ass'n         553 

Bigler  V.  Waller  345 

Bill  r.  Cureton  139 

Billing  V.  Devaux  465 

Billingsley  v.  Dean  271 

Bine  V.  Kennedy  173a 

Bing  V.  Schmit't  170 

Bingham  v.  Rushing  507 

Birckhead  v.  Brown  473 

Bird  V.  Bird  161 

v.  Cromwell  313 

V.  Davis  435 

Bird  of  Paradise,  The  385 

Birmingham  R.  R.  Co.  V.  White      489 

Birnel  v.  Boyd  Co.  165 

Birtwhistle  'v.  Vardill  295,  296 

BischofF  V.  W^ethered  534 

Bishop  V.  Bishop  116,204 

V.  Brainerd  245 

V.  Elliott  122 

r.,  Halconib  78 

V.  Welsh  367 

Bissel  V.  Price  379 

Bissell  V.  Heyward  346 

V.  Foss  204 

V.  Pearce  431 

Bither  v.  Bnswell  425 

Bittinger  r.  Baker  109 

Bivens  V.  Hull  481 

Bjornson  v.  Rostad  100 

Black  V.  Bogert  400 

r.  Delaware  Canal  Co.               240 

Vi  Ward  445 

V.  Zacharie  77,298,497,498 

Matter  of  82 

Blackburn  r.  Ormsby  366 

Blaekman  v.  Pierce  385 


TABLE    OF    CASES. 


XXXI 11 


SECTION 

Blackstone  v.  Allemania  F.  Ins.  Co.  554 

V.  Miller  69 

Blackston  Bank  r.  Hill  371,410 

Blaekwell,  The  329 

Blackwell  v.  Harrelson  82 

Blackwood  v.  Brown  397 

Blades  v.  Higgs  48,49 

Blaine  v.  The  Carter  442 

Blair  v.   Forehand  50 

Blake  r.  Corbett  417 

V.  Nicholson  380,  385 

r.  Third  Nat.  Bank  191 

V.  Williamsi  296 

Blakely  Ice  Co.  v.  Clarke  82 

Blakemore  v.  Blakemore  166a 

i\  Taber  436 

Blanchard  v.  Putnam  534 

r.  Spraguo  519,  526 
Blanchard's  Factory  v.  Warner      231 

Blancke  r.  Rogers  124 

Bledsoe  v.  Nixon  263 

Blethen  r.  Towle  113,  116 

Blight  r.  Blight  542 

Blin  r.  Pierce  72,  77,  81 
Bliss  V.  American  Bible  Society     235 

V.  Ropes  "      312 

V.  Schwarts  366 

Block  v.  State  287 

Blodgett  V.  Gardiner  258 

Blohm  V.  Hannan  267 

Bloomer  v.  McQuewan  528,  530 

V.  Mill.inger  528,530 

Blossom  r.  Dodd  471 

Blue  V.  Gunn  115 

Blue  Jacket,  The  328 

Blue  Jacket  v.  Tacoma  Mill  Co.      328 

Blundcll  V.  Winsor  202 

Blunt  r.  Walker  232,  233 

Blymire  r.  Boistlo  75 

Boardman  v.  Lake  Shore  R.           510 

V.  Lorentzen  502 

Board  of  Education  v.  State  Board   82 

Boatmen's  Bank  v.  Fritzlen  425 

Bobe  r.  Stickney  371 

Bodenhammer  v.  Newsom  400 

Bodley  V.  Goodrich  237 

Boeseh  v.  Graff  77 

Boffinger  v.  Tuyea  366 

Boggs  I'.  Martin  386 

Bogle  V.  Gassert  477 

Bohl  V.  Linn  435 

Bohr  V.  Anderson  366 
Boldt  Co.  V.  Nivision  Weiskoff  Co.  520 

Bolton  i\  Senis  367 

Bornbolaski   r.  Bank  446 

Bond  V.  Pittard  173 

V.  Taylor  167a 


SECTION 

Bond  V.  Worley  281 

Bondurant  r.  Commercial  Bank     266 

Bondy  v.  Hardina  371 

Bonewell  v.  No.  Am.  Ine.  Co.  548 

Boobier  v.  Boobier  163 

Books  i\  Williams  186 

Boon  r.  Moss  62 

Booraem  v.  Wood  124a 

Boot  t\  Franklin  451 

Booth  V.  Campbell  369 

V.  Kennard  420 

V.  Oliver  122 

Boqua  v.  Marshall  167a 

Borden  v.  Boardman  77 

Born  V.  Bank  of  Chicago  467 

V.  First  Nat.  Bank  467 

Boston  Ice  Co.  v.  B.  &  M.  R.  559a 

P.  Potter  76 

Boston  Safe  Deposit  Co.  v.  Adams  143 

Boston  Steel  Co.  v.  Steyer  458 

Boston  Trust  Co.  v.  Adams  508 

Boswell  V.  Savings  Bank  465 

Botsford  V.  Van  Riper  167a 

Bouch  i\  Sproule  143 

Boughton  r.  James  146 

Boulton,  Ex    parte  399,498 

V.  Bull  519 

Bourne  v.  Freeth  180 

V.  Goodyear  530 

Bouton  V.  Am.  M.  L.  Ins.  Co.        553 

Bovill  V.  Hammond  174 

BoAV  V.  Ry.  Ins.  Co.  556 

BoAvden  i\  Johnson  514 

Bowdoin  v.  Hammond  272 

Bowen  i\  Argall  198 

V.  Peters  208,212,214 

V.  Preston  163 

r.  Stoddard  211 

V.  Warren  206 

Bower  r.  Mar r is  371 

Bowker  V.  Burdekin  188 

V.  Childs  366 

V.  Harris  369 

i\  Smith  186 

Bowles  r.  Eddy  288 

Bowl  in  r.  Furman  16 

Bowling  V.  Harrison  453 

Bowman  v.  Blanton  Co.  173a 

r.  Miller  2SS 

V.  Neely  256,269 

V.  Wood  407 

Bow^'er  v.  Anderson  172 

Boyce  r.  Brady  173 

r.  Edwards  448 

Boyd  V.  Emmerson  468 

i\  Lockport  77 

V.  Moses  326 


XXX IV 


TABU-;    OF    CASES. 


Boyd  V.  N.  Y.  &  H.  Tl. 

V.  Shorrock 
Boyer  v.  Nesbitt 
Boyle  r.  Levings 
Boyleiii  V.  Leonard 
Boylstoii  Ins.  Co.  v.  Davis 
Boynton  v.  Payrow 
Braekett  v.  Bullard 
Bradbury  V.  Smith 
Bradford  v.  Bennett 
Bradford  Banking  Co.  r.  Cure 
Bradley  v.  Bailey 

1'.  Chamberlin 

V.  Duniface 

V.  Holdswortli 

V.  McDonald 

r.  Mut.  Ben.  Life  Ins.  Co. 

V.  Redmond 
Bradley  Re 
Bradt  v.  Benedict 
Brady  v.  Ins.  Co. 

V.  State  78 

Bragg  V.  Geddes  192 

Brainerd  i\  Champlain  Trans.  Co.     253 
Braithwaite  v.  Gardiner  457 

V.  Skinner  63 

Branch  v.  Jesuip  232 

V.  Morrison  130 

Brandao  v.  Barnett  382,  478 

Brander  r.  Brander  143 

V.  Phillips  383 

Brandon  Iron  Co.  v.  Gleason  242 

Brandt  v.  Bowlby  321 

Brannon  v.  Vaughan  123 

Branson  v.  Heckler  406 

Branton  v.  Griffits  103,  106 

Bratton  r.  Clawson  113 

Bray  r.  Bates  368 

Braynard  v.  Hoppock  274 

Breard  v.  New  York  Ins.  Co.  547 

Breasted    v.     Farmers^    Loan     & 

Trust  Co.  551 

Brenham    r.    German    American 

Bank  477 

Brent  v.  Bank  of  Washington  363 

Brent  v.  Bank  of  Washington         501 

V.  Kimball  50 

Brestle  v.  Mehaffie  277 

Brewer  v.  Brown  82 

V.  Knapp  371 

Brewing  Co.  v.  Gehl  02 

Brewster  r.  Hartley  416.417,509 

V.  McCardel      '  458 

Brewster  r.  Wakefield  255 

Brick  r.  Freehold  Co.  397 

Bridge  r.  Kedon  82 


SECTIOiV 

SECTIOKT 

482, 486 

Bridgeport   Bank   v. 

New 

York 

122 

&c.  R.  R.  Co. 

496 

500a 

Bridgeport  Co.  ?;.  Osborne 

486 

165 

Bridges  v.  First  National  Bank 

509a 

79 

Brig  Nestor,  The 

391 

161,163 

Briggs  V.  Boston,  &c. 

R.  R. 

Co. 

379 

409 

V.    Boston    R. 

381 

430 

V.  Boynton 

167a 

198 

V.  Chase 

27 

0,38 

156 

V.  Dorr 

77 

194 

1).  McCullough 

545 

10'5,  106 

V.  Oliver 

436 

183 

i\  Sholes 

267 

321 

V.  Steel 

271 

482 

Brigham  v.  LaUy 

369 

254 

V.  Mead 

499 

0.       551 

V.  Myers 

271 

434 

V.  Potter 

424 

42a 

V.  Weaver 

425 

242 

Bright  i\  Jam<es 

254 

371 

Brightly  r.  Norton 

437 

Brighton  Packing  Co.  r.  Butch- 
ers' Ass'n  27a 
Brightwell  r.  Mallory  4(15,  510 
Brill  r.  Hoile  '  446 
Brindse  v.  Atlantic  City  82 
Bringholff  v.  Mungurmaier 

124, lf4a,  432 

Brink  r.  Feoff  430 

Brinkman  v.  Hunter  448 
Briscoe   r.   Bank   of  Kentucky        349 

Bristol  V.  Equitable  Society  64 

Brittan  r.  Barmaby  320,  321 

Britton  v.  Bishop  458 

V.  Chamberlain  259 

Broaddus  Institute  r.   Siers  82 

Broadway  Bank  v.  McElrath  498 

Brock  V.'  Poor  231 

Brodie  V  .  Howard  208,  212 

Brolasky  v.  Miller  279 

Bromley  r.  Holland  77 

Bronson  r.  Rhodes  345 

Brook  V.  Hook  462 

Brooke  v.  Turner  352 
Brooklyn    Citv    R.    v.    Republic 

Bank             '  458 

Brooklyn  R..  Matter  of  243 

Brooks  V.  Allen  462 

V.  Blanev  453 

)'.  Bvam  528 

r.  Kerr  258 

V.  White  366 

v.  Martin  170 

V.  Minturn  3ii5 

r.  Ruff  418 

V.  White  366 


TABLK    OF    CASES. 


XXXV 


SECTION 

Brosemer  r.  Brosemer 

460 

Brower  r.  Haight 

272 

Brown,  In  re 

465 

,468 

V.  Baldwin 

126 

V.  Bokee 

500 

r>.  Butchers'  Bank 

456 

r.  Cambridge 

.366 

r.  Coombs 

383 

V.  Duchesne 

530 

i\  Dunckel 

368 

V.  First  Nat.  Bank 

254 

V.  Graham 

163 

V.  Iron  Co. 

242 

V.  Jones 

275 

V.  Kiefer 

422 

V.  Leckie 

467 

V.  Mcintosh 

280 

V.  Linn  Co. 

33 

V.  London 

474 

V.  Lull 

315 

V.  McCrau 

387 

V.  McHugh 

445 

V.  Nevitt                       266, 

274 

,286 

V.  Phelps 

505 

V.  Phillips 

434 

V.  Railway  Passenger  Ass. 

Co. 

556 

V.  Simimons 

259 

V.  Smith 

311 

V.  Southern  Ry.   Co. 

82 

V.  SpoflFord 

372 

V.  Swann 

282 

V.  Tanner 

79 

V.  Tarkington 

458 

V.  Vandyke 

266 

,269 

V.  Wall  is 

121 

V.  Ward 

409 

V.  Warren 

399 

V.  Webb 

426 

,428 

V.  Wellington 

161 

Browne  r.  Savage 

150 

I'.  Sharkey   Co. 

254 

Brownell  r.  Hawkins 

403 

Browning  r.  Grady 

365 

t\  Parker 

82 

Bruce  r.  Osgood 

166 

Brufett   r.  Great  Western   R 

242 

Bruff  r.  Mali 

485 

Bruley  r.  Rose 

400 

BrunsAvick  Co.  v.  LTnivcrsity  Co. 

289 

Bryan  v.  Aiken 

143 

,481 

V.  Child 

357 

V.  Collins 

147 

V.  Fox 

366 

V.  Robert 

436 

V.  Spruill 

560 

V.  Thompson 

167a 

V.  Twigg 

161 

Bryant  v.  Auchmiuty 
'  V.  Clifford 

r.  Craig 

V.  Pal  lard 
Bryce  r.  Brooks 
Brydges  r.  Branfill 
Brync  r.  Dorey 
Buchanan  i\  Currey 

V.  Taylor 
Buck   v.  Buck 

V.  Ingersoll 

f<.  Pike 
Buck  Co.  r.  Tietge 
Buckingiiam  v.  McLrfsan 
Buckland  r.  Butterfield 
Buckley  r.  Buckley 
Buckman   i'.   Davi.s 
Buck  master  v.  Ciruiidy 

t'.  Needham 
Buckout  r.  Swift 
Budd  V.  Heiler 
Budge  r.  Mott 
Buffalo  R.  r.  Dudley 
Building  and  Engineering  Co 

Bank 
Bulkeley  v.  Welch 
Bulkley  r.  Barber 

V.  Devine 

r.  Marks 
Bull  V.  Kasson  Nat.  Bank 

i\  Rice 
Bullard  v.  Raynor 
Bullenk  r.  Sharp 
Bullock  r.  Narrott 
Bulwer  r.  Bulwer 
Burck  r.  Taylor 
Burdict  r.  Murray 
Burditt  r.   Hunt 
Bureau  of  Literature  v 
Bureau  r.   Sells 
Burgete  V.  Taliaferro 
Burk  V.  Baxter 

r.  Ilollis 
Burke,  Matter  of 

t\  Lechmore 

r.  McKay 

V.  Smith 

V.  Trabue 
Burkhalter  r.  Second  Bank 
Burlington    Loan    Association 

Ilcider 
Burlington  R.  R.  Co. 
Burmester  v.  Norris 
Burnett  r.   Snydor 
Burnham  r.  Best 
Burns  V.  Anderson 

r.  Bryan 


SECTION 

42fe 
163 
260 
440 
383 
190 
82 
188 
78 
422 

411,438 

32 

254 

270 

121, 122 
114 
258 
257 
163 
109 
106 
313 
494 


Sells 


r. 
459 
407 
206 
27 
198 
464 
273 
278 

173,178 
428 
106 

6,75,82 
380 
419 
536 
540 
166 
113 
127 
259 
492 
453 
225 
250 
466 


279 
r.  Boi>stler  490 
225 
173 
259 
255 
156, 159 


113 


XXXVl 


TABLE    OF    CASES. 


SECTION 

Burns  v.  Meyer  531 

V.  Permeil  506 

Burnes  v.  Fertilizer  Co.  461 

Burnside  V.  Turchell  124 

v.  Weightman  106 

Burr  V.  Becker  446 

i\  Commonwealth  254 

V.  Duryee  519,  529 

Burrill  v.  Boardman  234 

r.  Nahant  Bank  224 

Burriss  V.   Starr  446 

Burrough  V.  Moss  458 

Burt  i\  Evory  520 

v.  Haslett  122 

Burtis  V.  Dodge  261 

Burton  v.  Willin  78 

Burton's  Appeal  236,406 

Burwell  v.  Mandeville  194 

Busby  V.   Chenault  194 

V.  Finn  266.268,282 

Busch-Everett  Co.  v.   Oil   Co.  24 

Busch  V.  Nester  165 

V.  Tel.  Mfg.  Co.  82 

Busfield  V.  Wheeler  385,  386 

Bush  V.  Lathrop  81 

V.  Schooner  Alonzo  315 

Bush  Co,  V.  Becker  Bros.  526 

Business  Men's  League  v.  Tragow  446 

Buster  V.  Holland  371 

V.  Newkirk  49 

Butchart  v.  Dresser  193 

Butler  V.  Cornwall  Iron  Co.  225 

V.  Dubois  477 

V.  Miller  368 

V.  Murray  307 

t\  Eoberson  559a 

V.  Tot  Co.  171 

t\  Wildman  332 

William  S.,  Re  227 

Butlers  V.  Olds  288 

Butterworth  v.  McKinly  307 

Button  V.  Hoffman  484 

Butts  V.  Wood  225 

Bvng  V.  Bvng  95 

Byram  v.  Gordon  422,426 

Byrne  v.  Grayson  271 

V.  Schiller  319 


Cable  V.  McCune 
Cabot  Bank  i\  Warner 
Cadell  V.  Palmer 
Cadwallader  v.  Kroesen 
Cadwell  r.  Pray 
Cahill,  E.  F.,  The 
Cahoon  v.  Morgan 
Cain  V.  Gimon 


354 
453 
146 
187 
431 
213 
78 
278 


SECTION 

Cain  I'.  Robertson  140 

Cairo  R.  i\  Fackney  387 

Cairo  v.  Jane  477 

Caldwell  v.   Bridal  50 

V.  Lieber  172 

V.  Perry  76 

V.  Pierce  254 

V.  Van  Vlissingen  519,  532 

Calkins  v.  Lockwood  74 

Call  V.  Gray  421,425,426 

Callaghan  v.  Myers  536,  538 

Callahan   V.   Goldman  426 

Callahan  Co.  v.  Michael  38 

CallaAvay  Co.  v.  Clark  231 

Calye's  Case  90 

Camanche,  The  320,330 

Cambridge  Water  Works  V.  Som- 

erville  Dyeing,  &c.   Co.  513 

Camden  r.  Allen  354 

Cameron  v.  Blackman  188,  189 

V.  111.   Steel  Co.  82 

Cameron  Co.  r.  Knoxville  530 

Campau  r.  Campau  161 

Campbell   r.    Birch  433 

V.  Campbell  157 

V.  Int.  Life  Ass.  Co.  553 

V.  Iron  Co.  417 

v.  Kenosha  477 

V.  McHarg  267 

V.  N.  E.  Mut.  Life  Ins.  Co. 

546,  549 

V.  Prescott  16 

V.  Raven  491 
Campbell's  Gas  Co.  v.  Hammer     167a 

Campbell   Re  173a,  191 

Canal  Boat  Dan  Brown  391 

Canal  Co.  v.  Fulton  Bank  245 

r.  Railroad  Co.  240 

Canale  r.  Pauly  Co.  299a 

Candee  v.  Webster  258 

Candor's  Appeal  361 

Canfield  V.  Mangor  77 

Canfield  Re  281 

Canning   i\   Owen  113 

Cantey  v.  Blair  278 
Cape   Sable  Company's  Case 

235, 236. 482 

Capehart  v.  Foster  114,122 

Caphart  V.  Dodd.  238 

Capp  V.  Lacey  199 

Caravia  r.  Levy  371o 

Card  V.  Hope  210 

Cardinell  i:  O'Dowd  371 

Carew  r.  Duckworth  468,  469 

Carev  r.  Dennis  77 

Cargo  ex  Capella  329 

Carleton  v.  Leighton  420 


TABLE    OF    CASES. 


XXXVH 


SECTION 
Carlin  r.  Ritler  122 
Carlisle  i\  Bindley  286 
V.  Norris  498,499 
V.  Quattlebaum  379 
Carlton   v.   Bokee  526,529 
Carmichael  f.  Arms  384 
Carnegie    V.    ilorrison  473 
Carney  r.  Mosher  106 
Carpenter    v.   Black   HaAvk   Min- 
ing Co.  237 
V.  Carpenter  100 
V.  Cumniings  433 
V.  Marshall  208 
V.  Northfield  Bank  345 
V.  Snelling  417,427 
V.  Walker  124 
V.  Welch  263 
Carr  v.  Carr  61 
V.  Le  Fevre  489 
t\  National  Security  Bank       448 
Carrington  v.  Roots  101 
v.  Ward  400 
Carroll,  The  328 
Carsey  r.  Swan  457 
Carson  v.  Alexander  253 
V.  Russell  448 
Carter  v.  Burr  is  417 
V.  Dennison  278 
I'.  Greenhow  346 
v.  John    Hancock    Life    Ins. 

Co.  553 

V.  Whalley  193 

r.  White  445,  448 

V.  Wilmerding  398 

Cartwright  r.  Wilmerding  399 

Carty  v.  Fenstemaker  439 

Cary  V.  White  369 

Carviel  V.  Mirror  Films  77 

Case  V.  Bank  382 

V.  Brown  519 

V.  Henderson  466 

V.  Jewett  425 

V.  Woleben  423 

Case  Co.  r.  Barney  434 

V.  Tonilin  288 

Case  Mfg.  Co.  r.  Garven  124o 

Casey  v.  Carver  253 

V.  Caveroe  400 

V.  March  383 

Cashman  r.  Harrison  77 

Casler  v.  Conn.  Mat.  Life  Ins.  Co.  550 

Casner  V.  Hoskins  286 

Casper  V.  Mfg.  Co.  220a 

Castle  V.  Bui  lard  190 

Castling  v.  Aubert  382 

Casualty  Co.  v.  Beattie  254 

Caswell  V.  Keith  417 


SECTION 

Catawissa  R.  R.  Co.  r.  Titus  164 

Cate  V.  Merrill  255,434 

Cattlemen's  Co.  r.  Turner  482 

Catoir   v.   American   Life   Ins.    & 

Trust  Co.  553 

Cator  V.  Burke  81 

Caunt  r.  Thompson  453,  455 

Causey  v.  Yeate-s  398 

CauSler  v.  Wharton  186 

Cave  L\  Cave  119 

Cayuga  County  Bank  r.  Hunt  452 
Caze  V.  Baltimore  Ins.  Co.  319,  320 
Cazenove  v.  British  Ins.  Co.  549 

Ceas  r.  Bramley   "  418 

Cecil  Bank  V.  Watsontown  501 

Cedar  Falls  v.  Wallace  455 

Celesti  State  Bank  r.  Puekett  387 
Celt,  The  328 

Central  Am.  Co.  V.  Pacific  Mail 

Co.  326 

Central   Bank   r.  Hume  546 

r.  St.  John  272 

Central  Branch  R.  V.  Fritz  113,  124 
Central  Business  Co.  V.  Ruther- 
ford 42a 
Central  Co.  v.  Stuber  82 
Central  PI.  R.  Co.  r.  Clemens  490 
Central  R.  r.  Brunswick  R.  75 
Central    Trans.    Co.    r.    Pullman 

Co.  237.245 

Central  Trust  Co.   v.  Lueders       393a 

Central   Trust  Co.   Re  390 

Ce.scinsky  r.  Routledge  533 

ChadSev  r.  Lewis  77 

Chadwi'ck  v.  Covell  64 

Chaffee  r.  Atlas  Co.  422,437 

V.  Boston   Belting  Co.  528 

Chaffee  County  r.  Potter  477 

Chaflin  V.  Cummings  279 

Ciiaffraix  v.  Harper  383 

Challoner  r.  Davies  38 

Chalmers  r.  Turnipseed  368 

Chamberlain  r.  Des  Moines  254 

V.  Masterson  379 

V.  Merritt  177 

Chambers  v.  Goldwsni  81 

r.  Howell  '  194 

r.  Keene  81 

Chambersburg  Ins.  Co.  r.  Smith 

394, 498 

Chamblis.s  v.  Robertson  256 

Champion  r.  Bostwick  178,  185 

r.  Gordon  466 

Chandler  v.  Hart  23,27a 

i\  Spragne  321 

V.  Tluirston  106 

Chandless  t'.  Price  148 


XXXV  HI 


TABLE    OF    CASES. 


SECTION 

Ohannon  r.  Lusk  165 

Chapin  v.  Blue  School  371a 

I'.  Cram  425 

V.  Fell  owes  547 

Chapman  r.  Black  462 

V.  Brooks  79 

V.  Brown  146 

V.  Chapman  547 

V.  Clough  438 

i\  Durant  212 

V.  Haley  81 

V.  Hunt  431,434 

l\  Robertson  297 

V.  Tanner  389 

i\  Weimer  421 

V.  White  466 

Chappel  r.  Brockway  32 

Chappell  r.  Cliappeli  173a 

V.  Fields  536,541 

V.  State  50 

Chappell's  Case  245 

Charles   r.    Marsden  459 

Charlotte,  The  330 

Charman  r.  Henshaw  179 

Charter  v.  Stevens  434 

Chase  r.  Breed  77 

V.  Dow  288 

r.  Ingalls  423 

V.  Nat.  Trust  Co.  279,  286 

'V.  Phoenix  Ins.  Co.  553 

v.  W&stmore  384 

Chase  Co.  v.  Nat.  Trust  Co.  285 

Chasemore  v.  Richards  53 

Chase  Nat.  Bank  r.  Faurot  269 

Chasteauneuf  r.  Caperyon  305 

Chauncy  v.  Arnold  27 

Chautauqua    School    v.    National 

School  536, 540 
Chemical    Nat.    Bank    r.    Arm- 
strong 401 
Cheney  r.  Campbell  279 
v.  Libby  260 
Cherry  v.  Frost                   400.  400,  499 
Chesley  t:  Welch  106 
Chester  v.  Dickinson  172 
V.  Dorr  459 
V.  Jumel  81 
Chester  Co.  v.  Securities  Co.        477fl 
Chew's  Appeal  148 
Chicago  r.  Gage  361 
Chicago  Citv  Bank  r.  Bremer         271 
Chicago  Co.'  r.   National   Co.  498 
Chicago  R.  v.  Chicago  Bank  517a 
V.  James  227 
V.  Merchants'   Bank  446 
V.  Third  Nat.  Bank  245 
Chicago,  &c.  R  R.  Co.  v.  Ames      257 


SECTION 

Chicago  Terminal  v.  Barrett  38 

Chicago  Title  Co.  v.  Kemblcr  Co.  23 

Chick  V.  Pillsbury  454 
Chicopee    Bank    v.    Philadelphia 

Bank  451 

Child  V.  Baylie  138,  139 

Chilton  V.  Carrington  388 

Chipman'  v.  Farmer.s'  Nat.  Bank  275 

Chippendale  V.  Bank  156,  161 

Chippendale,  Ex  parte  239 

Chouteau  v.  Alleiu  408 

V.  Boughton  75 

Chouteaux   v.    Leech  313 

Christ  Church  Hospital  v.  Fuechsel  345 

Christhilf    v.    Bollman  42a 

Christie  t'.  Gosling  148 

Christmas  v.  Russell  77 

Chubb  r.  Upton  485 

Church   r.   Brown  32 

V.  Wells  132 

Church.   &c.   r.   Grant  146 

Churchill   v.   Cole  279 

Chynoweth   i\    Tenney  421 

Cicero  V.  Clifford       '  477 

Cincinnati  i\  Morgan  390 

Cincinnati  Co.  v.  Rosnagle  344 

Cincinnati  R.  R.  Co.  ?■.  Clarkson  489 

Cincinnati  Traction  Co.  v.  Pope  520 

Cissna  Loan  Co.  r.  Gawley  271 

Citizens'  Bank  r.  Dowse  411 

Citizens'  Bank  v.  McKinley  425 

Citizens'  Ins.  Co.   v.  Ligon  194 

Citizens'  Nat.  Bank  v.  Mitchell  173a 

City  r.  Lamson  477 

City  Bank,  Ex  parte  474 

V.  Bruce  486 

r.  Hocke  27o 

City  Fire  Ins.  Co.  r.  Olmsted  399,  498 

City  Hotel  V.  Dickinson  490 

City  of  Memphis  v.  Bethel  275 

Civilta,  The,  v.  Restless,  The  328 

Claffin  r.   Boorum  275,279,283 

('.  Carpenter  101 

Claiborne  r.  Creditors  192 

Clandy  r.  Royal  League  559a 

Clara,'  The     "  328 

Clark  V.  Banks  108 

V.  Barnes  24 

V.  Barnwell  320 

V.  Bowen  366 

V.  Boyd  77 

V.  City  of  Janesville  85 

V.  Clark  140 

V.  Continental  Ins.  Co.  493 

t\  Farrington  489 

V.  Fell  386 

V.  Harvey  108 


TABLE    OF    CASES. 


XXX IX 


SECTION 

Clark  V.  Hjraan 

189 

V.  Iowa  City 

476 

V.  Janesville 

476,477 

V.  La  nam 

82 

V.  Leach 

183 

V.  Lowell,  &C.R. 

381 

V.  Sidway 

172 

i\  Sisson 

279 

v.  Spencer 

281 

V.  Wilson 

441 

V.  Woollen,  &c.  Co. 

229 

Clark  Co.  r.  Shelton 

126a 

V.  Willimantic  Co. 

521 

Clarke  v.   Rowland 

127 

V.  Lord  Abingdon 

361 

V.  Lord  Onnonde 

99 

V.  Russel 

449 

V.  Seton 

361 

V.  Thompson 

77,  81 

V.  White 

364,  372 

Clarkshury  v.  Davis 

491 

Clarkson  r.   Stevens 

307 

Clay   V.   Field 

194 

Clayton   Town-Site   Co.  v.    Eh-iig 

Co.  452 

Clearwater  v.  Meredith  232 

Clemens  v.  Caldwell  260 

Clementson  v.  Blessing  171 

Cleveland  v.  Lodor  273 

V.  Martin  77 

V.  Richardson  372 

Cleveland  Nat.  Bank  r.  Amos         371 

Clifton  f.  Mutual  Ins.  Co.  553 

Climio  V.  Wood  113,124 

Clinchfield  Co.  v.  Lundv  193 

Cline  v.  Libby  430 

Clodfetter  v.  Cox  78 

Close  V.  Gravel  Co.  82 

V.  Waterhouse  380 

Clough  r.  French  360 

Cluff  r.  Mut.  Ben.  Life  Ins.  Co.       551 

Cobb  V.  BusAvell  297 

V.  Hartenslein  287 

V.  Howard  471 

V.  Illinois  Central  R.  189 

V.  Morgan  268 

Cobe  r.  Cuyer  267,  271,  275 

Co  burn  r.  Page  166 

Cochran  r.  Flint  110 

r.  Green  75 

V.  Retberg  325 

Cochrane  r.  Advertising  Agency     124o 

Cockaj'ne  r.  Harrison  140 

Cockburn  v.  Kingsley  299fl 

Coddington   r.  Ideel  191 

Codman  v.  Brooks  75 

V.  Freeman  421 


SECTION 

Codrington  v.  Johnstone  109 

Codwise  v.  Gelston  364 

Coe  V.  Columbus  R.  237,  426 

Coifield  Co.  r.  Howe  Co.  520 

(^offman  v.  Sammons  26 

Coggs  r.  Bernard        395,  401,  402,  416 

Cohen  v.  Life  Ins.  Co.  171 

V.  Todd  34 

Cohn.  V.  Arkin  371a 

V.  Lunn  446 

Col.  Bank  v.  Boettcher  466 

Colburn  v.  Gould  369 

Colcuitt  V.  Stultz  409 

Cole  V.  Gushing  456 

Colegrave  v.  Dios  Santos  119,  123,  125 

Colehour  v.  Savings  Institution        269 

Coleman  r.  Coleman  562 

V.  Columbia  Oil  Co.  486 

V.  Pearce  190 

V.  Stearns  Mfg.  C).  124 

Coler  V.  Cleburne  477 

Coles  V.  Clark  426,  430,  431 

Colgate  r.  U.  S.  Leather  Co.  245 

Collenberg,  The  313 

Collier  r.  Barr  274 

V.  Imp.  Films  Co.  536 

Collins  V.  Bradbury  446 

Collins  Co.  r.  Goes  529 

CoUinson  r.  Wier  49 

Colorado  v.  Giacominini  30 

Colson  v.  Arnot  462,  477 

Colt  r.  Ives  498 

Columbia  Land  Co.  v.  Daly  199 

Columbia  Metal  Co.  v.  Halper  520 

Columbian  Ins.  Co.  v.  Ashbv  332 

Colvard  r.  Waugh                  '  417 

Comanche  Co.  v.  Lewis  477 

Comins  r.  Newton  421 

Commercial  Bank  r.  Burch  78 

V.  Kortwright  497 

V.  N.  O.  Man.  Co.  239 

V.  Pfeiffer  471 

1-.  State  of  Mississippi  243 

Com.  Mut.  Ins.  Co.  v.  Union  Mut. 

Ins.  Co.  552 
Commonwealth  v.  Butler                543o 

r.  Chace  50 

V.  Commercial  Bank  243 

v.  Commissioners  477 

V.  Cullen  220 

v.  Essex  Co.  242 

V.  Gill  223 

V.  Love  458 

V.  Smith  237 

V.  St.  ]\Iarv's  Church  224 

V.  Thornton  50 

V.  I'nion,  Fire.  &p.  Co.  241 

V.  Vandegrift  228 


xl 


TABLE    OF    CASES. 


SECTION 
CommonAvealth  v.  Worcester  228 

Ck)mmonwealth  Trust  Co.  V.  Salem 

Co,  425,  436 

Compania-Bilbania      V.      Spanish- 
American  Co.  324,  326 
Compania  Mexicana  v.  Waite  38 
Compton  V.  Collins                               285 
V.  Jones  75 
V.  State                                         38? 
Comstock  V.  Buchanan                        188 
V.  Comstock                                   395 
Conard  V.  Atlantic  Ins.  Co. 

416,  420,  428,  442 
Conchnian  t".  Wright  418 

Conderman  v.  Smim  421 

Condon  v.  Pearce  457 

Confidence,  The  313 

Congregational    Society   v.    Flem- 
ing 132 
V.  Stark  132 
Congress  Spring  Co.  v.  Edgar  50 
Conkling  V.  Shelley                     419,  424 
Conn.  Life  Insurance  Co.  i\  Dins- 
comb                                                    244 
Connally  v.  Spragins                           419 
Oonneaut  Lake  Co.  v.  Quigley          42a 
Connecticut,  The                                  328 
Connecticut  V.  Johnson                      264 
Connecticut  Life  Ins.  Co.  v.  Akens  551 
V.  Schaefer                                     546 
Connecticut    Mut.    Life    Ins.    Co. 

V.  Burroughs  547 

V.  Luchs  546 

Connecticut,    &c.    R.    R.     Co.    v. 

Bailey  490 

Conner  v.  Carpenter  430 

Connor  v.  Donnell  269 

V.  Myers  285 

c.  Squiers  113,  123 

Conners  r.  Sullivan  459 

Connors  V.  Old  Forge  Banlc  470 

Conover  v.  Earl  156,  163 

Conrad  v.  Saginaw  Co.  121 

Consolidated  Tank  Co.  v.  Collier        62 
Constant  v.  Klompus  391a 

Continental  Co.  v.  Madden  424 

Continental  Gin  Co.  v.  Arnold      370a 
Continental  Nat.   Bank   v.   Flem- 
ing 271,  275 
Conway  v.  Cutting  77 
Cook  V.  Barnes                                     286 
V.  Bell  81 
V.  Black                                         389 
V.  Com.  Ins.  Co.                            311 
V.  Cook                                            133 
V.  Curtis                                         316 
V.  Fowler                                        255 
V.  Guerra                                          34 


SECTIOX 

Cook  V.  Jennings 

320 

V.  Lillo 

34ii 

V.  Lister 

:?7i 

V.  Satterlee 

445, 

446 

V.  Warren 

453 

V.  W^hiting 

113 

Cookendorfer  v.  Preston 

452 

Cool  r.  Stone 

360 

Coolidge  V.  Payson 

448 

Coon  V.  Swan 

267, 

284 

Coope  V.  Eyre 

172, 

196 

Cooper  V.  Bailey 

164 

V.  Brock 

417 

V.  Ciutis 

237,  238, 

243, 

244 

V.  Eastern  Co. 

328 

V.  Frederick 

512 

V.  James 

536 

V.  Johnson 

121, 

122 

V.  Kennedy 

100 

V,  Mass.  Mut.  Life  Ins.  Co.      551 

V.  Parker  366 

V.  Ray  400 

V.  Vallev  Co.  482 

V.  Willomatt  406 

V.  Woolfitt  106 

Cooney  f.  English  52 

Coons  V.  McKees  Borough  82 

Cope  V.  Cordova  320 

V.  Dry  Dock -Co.  329 

Copeland  V.  Fairview  53 

V.  Stein  383 

i\  Stephens  35 

Coppin  f.  Greenlees  232 

Corbett  v.  Clark  446 

V.  Lewis  165 

V.  Underwood  398,  409 

Corbin  V.  Eagle  Co.  529 

Corcoran  V.  Powers  275,  286 

V.  Webster  117 

Cordova  Shop  Re  217 

Cork  R.  R.  Co.  v.  Paterson  490 

Corlies  f.  Estes  271 

Cornell  V.  W^oolley  561 

Corn  ell- Andrews  Co.  f.  Boston  & 

P.  R.  126a 

Cornins"  V.  Burden  519 

•       r.  McCuUough  489.  513 

Corsica,  The  32S 

Corven's  Case  96 

Corwin  Town  v.  Moorhead  113 

Costello  V.  Crowell  446 

Cot  a  r.  Buck  446 

Cotton,  Ex  parte  126 

i:  Beattv  231 

Coty  V.  Barnes  416,  417.  427 

Coulter  r.  Robertson  267 

Countess  of  Durham.  The                 328 

County  of  Bates  v.  W'inters  477 


TABLE    OF    CASES. 


xli 


SECTION 

County  of  Clay  v.  Savings  477 

County  of  Henry  V.  Nicolay  477 

County  of  Rollo  V.  Douglas  477 

Coursin's  Appeal  161,  163,  166 

Court  v.  Myers  426 

Covell  V.  Loud  409 

Covert  V.  Rhodes  77 

Cowart  V.  Co  wart  113 

V.  Singletary  82 

Cowdin  V.  Huff  543a 

V.  Perry  157 

Cowell  V.  Simpson  386 

Cower  r.  Tatum  456 

Cewgiel  v.  Jones  255 

Cowing  r.  Altman  469 

Cowles  v.  McVickar  269 

CoW'ling  V.  Cowling  563 

Oowper  V.  Green  386 

Cox  V.  Hickman  173,  176,  178 

V.  National  Bank  455 

r.  Title  Guarantee  Co.  39 

Coyne  v.  Caples  209 

Craddock  v.  Riddlesburger  103 

Craft  f.  Russell  422 

Craig  V.  Craig  542 

V.  Dimock  425 

V.  Leslie  133 

V.  Missouri  70,  349 

V.  Parkis  79 

f.  Pleiss  266 

v.  Sibbett  458 

V.  Stewart  452 

V.  Warner  191 

Craig  Co.  Re  126a 

Ci-ain  V.  Paine  77,  440 

Cramer  v.  Bachmann  191 

i:  Lepper  263,  279 

Cramp  v.  Playfoot  146 

Crandall  Investment  Co.  r.  Ulyatt  122 

Crane  v.  Brigliam  ll3,  124 

V.  Freese  54 

r.  Gough  77 

Cranston  V.  West  Coast  Ins.  Co.     367 

a-aven  v.  Atlantic  R.  2.39 

Cravcr  v.  Mossbach  164 

Crawford  v.  Bank  of  Wilmington  256 

V.  Brooke  80 

V.  Johnson  266 

Crawford  Brothers,  The  329 

Crawshay  v.  Collins    183f,  185,  192,  194 

Craycraft  V.  National  Loan  Ass'n     244 

Crease  v.  Babcock  244,  513 

Creed  v.  Creed  562 

f.  Lancaster  Bank  78 

V.  People  161 

Cregler  v.  Durham  193 

Crim  V.  Starkweather  455 

Crippen  i.  Morrison  117 


Criscoe  r.  Hambrick 
CVisfield  f.  Storr 
Crisniond  r.  Jones 
Crocker  r.  Carson 


SECTION 

166a 

149 

546 

156,  165 


Crocker-Wheeler   Co.  v.   Recrea- 
tion Co.  126a 
V.  Whitney  75 
Croly  V.  Weld  543 
Cromelien  r.  Mauger  75 
Crompton  v.  Prati  423 
Cromwell  v.  Sac  County  477 
Crosby  r.  Baker  421 
V.  Mason  253 
Crosier  r.  Crosier  446 
Cross  I-.  Beard  325 
V.  Burlington  Bank  170 
V.  Hcpner  271 
V.  Mann                                  267,  284 
V.  Page  Co.  82 
V.  Weare  Co.  124a 
i:  Wilkins  379 
Crossfield  r.  Such  156 
Crotty  V.  Union  Life  Ins.  Co.  546 
Ci-oughton  V.  Forrest  182 
Crow  V.  Oxford  477 
Crowel  r.  Bark  Radaraa  328 
Crowell  v.  Jones                       126o,  272 
Crowfoot  r.  Gurney  77 
Crownfield  v.  Phillips  191 
Crowther  r.  Bell  482 
Crozier  r.  Krupp  532 
Cruess  v.  Fessler  185 
Ci'uikshank  r.  Corny ns  254 
Cruse  I".  Paine  505 
Crutchly  r.  Mann  445 
Cruttwell  V.  Lye  185 
Ci-ystal  Ice  Co.  r.  Gas  Co.  53 
Cu'bbins  r.  Avres  122 
Cuddy  r.  Horn  322 
Cudworth  r.  Scott  432 
Cullen  r.  Armstrong  100 
Culliford  r.  Vinet  325 
Culling  V.  Tuffnell  113 
Cullwick  V.  Swindell  124 
Cumber  v.  Wane                          366,  372 
Cummer  c.  Atlas  Co.  533 
Cummings  V.  Fullam  81 
Cumniins  V.  W^ire  274 
Cunningham  V.  Hall  3r09 
/•.  Irwin  371 
Cupples  V.  Level  34 
Curd  r.  Wnnder                           430,  431 
Curling  r.  Long  319 
Curnui  r.  Smith  115 
r.  State  of  Arkansas   242,  244,  349 
Currie  r.  Misa  307 
Currier  r.  Barker  40 
V.  Howard  77 


I 


xlii 


TABLE    OF    CASES. 


Currier  v.  Knapp 

V.  Lockwood 
Curry  v.  Scott 
Curson  v.  Monteiro 
Curtis  V.  Butler 

V.  Davidson 

V.  Ins.  Co. 

V.  Leavitt 

V.  New  York  Ins.  Co. 
Curtiss  r.  Martin 
Cushier  v.  Adams 
Cushing  v.  Breed 
Cushman  r.  Haynes 

V.  U.  S.  Ins.  Co. 
Cutchen  V.  Coleman 
Cuthbert  v.  Dobbin 

V.  Haley 

V.  Wolfe 
Cuthbertson  v.  Bank 
Cutler  V.  Reynolds 

V.  Thomas 
Cutting  V.  Damerel 
Cynthia,  The 

D. 

Dable  Co.  V.  Flint 
Dabney  v.  Cottrell 
Dagall  V.  Mann 
Daggett  V.  Pratt 
Daland  i".  Williams 
Dalby  v.  India,  &e.  Life 

Dale  V.  Hamilton 

f.  Kimpton 
Dale  Tire  Co.  V.  Hyatt 
Daley  v.  Minn  Loan  Co. 
Dalton  Mach.  Co.  i>.  Corp. 
Daly  r.  Proetz 
Dalzeil  v.  Dueber 
Dame  f.  Dame 

V.  Hadlock 

V.  Wood 
Damon  v.  Granby 
Dana  v.  Fieidler 

V.  Sawyer 

V.  Third  Nat.  Bank 
Dana,  The 

Dana  Co.,  Matter  of 
D-.nforth  v.  Streeter 
Daniel  v.  Gracie 

V.  Streely 

V.  Sinclair 
Daniels  v.  Hatch 

V.  Henderson 

V.  Kyle 

V.  Pond 
Dansey  f.  Richardson 
Danville  v.  Pace 


SECTION 

SECTIOIT 

423 

Da  Prato  Co.  v.  Giuliani  Co. 

536 

44.1 

D-arby  v.  Callaghan 

27 

485,  489 

Darcey  i'.  Hospital 

52 

36S 

D'Arcy  v.  Tamar  R.  R.  Co. 

226, 

229 

477 

Darden  t".  Schuesslcr 

281 

457 

Darling  i'.  Idarcli 

193 

r)4(; 

Darracott  f .  Pennington 

173 

398 

Darragh  f.  Elliotte 

400 

545 

Darrington  v.  Bank  of  Alabama 

349 

360 

Dartmouth   College  v.  Woodward 

42b 

215,  216,  241, 

242, 

243 

161 

Daskam  V.  Ullman 

81 

84 

Davenport  v.  MeChesney 

422 

549 

Davenport  v.  Palmer 

467 

279 

David  v.  Conard 

253 

357 

Davidson  r.  Almeda  Co. 

502 

279 

t\  Cooper 

27 

80 

i\  Kelly 

369 

285 

V.  Lanier 

459 

372 

Davies  Re 

162 

170 

Davies  v.  Bowes 

535, 

,  53"6 

514 

V.  Maryland  Casualty  Co 

5595 

314 

v.  Vernon 

98 

Davies'  Policy  Trusts  Re 

156 

Daviess  v.  Newton 

81 

518 

Davis,  The 

330 

352 

V.  Anable 

368 

31 

V.  Barr 

81 

256 

v.  Bigler 

385 

143 

V.  Bowsher 

382 

Ass.  Co. 

V.  Bradley 

383 

545,  546 

V.  Brig  Seneca 

209 

172 

V.  Cook 

189 

78 

V.  Converse 

280 

534 

V.  Eyton 

108 

271 

V.  Funk 

407 

Com'n     241a 

V.  Johnston 

208 

431 

V.  Keyes 

193 

524 

V.  McCready 

458 

113 

V.  McFarlane 

103 

212 

V.  Morris 

36 

254 

V.  Moss 

114, 

,  127 

229 

V.  Patrick 

173 

257 

V.  Rider 

267 

452 

r.  Smith 

161, 

188 

382 

V.  Walker 

253 

307 

Davis  Co.  i\  Whitmore 

502 

156 

Davis's  Appeal 

487 

74 

Davison  f>.  Holden 

201 

28 

Day  V.  Holmes 

496, 

,  505 

126a 

V.  McLea 

367 

263 

V.  Noble 

311 

366,  372 

t\  Swift 

400, 

426 

437 

V.  Vinson 

74 

466 

Dayton  r.  Moore 

271 

121 

V.  People's  Savings  Bank 

427 

379 

Deady  V.  Nicholl 

40 

289 

Deal  V.  Palmer 

113 

TABLE    OF    CASES. 


xliii 


SECTION 

Dean  v.  Allalley                         119,  121 
V.  Am.  Mut.  Life  Ins.  Co.  551 
V.  Conkey                                     370a 
V.  Ilerrick                              269,  274 
V.  Texas  202 
V.  Williams  264 
Deane  v.  Caldwell  35 
Dearing  v.  Hockersmith  468 
Dearie  v.  Hall  78 
De  Barry  v.  Withers  81 
De  Bekker  v.  Stokes  Co.  536 
Debow  V.  Colfax  106 
Debs  Re                                             241a 
Decker  v.  Adams  81 
V.  Smith  533 
De  Courcey  v.  Colling  429 
V.  Little  425 
Dederick  v.  Leman  366 
Dedham  Bank  v.  Chickering  224 
Deeks  v.  Strutt  63 
Defreese  v.  Lake  560 
De  Gendre  v.  Kent  143 
Degraffenreid  v.  Scruggs  113 
De  Groff  v.  Linen  Thread  Co.  23G 
De  Haven's  Estate  Re              173a,  547 
Deisch  v.  Worten  Co,  369 
De  la  Chaumette  v.  Bank  of  Eng- 
land 351 
Delancy  v.  Van  Aulen  543 
Delano  v.  Butler  485 
V.  Montague  25 
Delta  Land  Co.  V.  Sherwood  257 
Delval  V.  Gazuon  82 
Demi  i\  Bossier  108 
De  Moltke-Huitfeldt  V.  Garner         271 
Dennett  v.  Cutts  383 
V.  Hopkinson  106 
Denison  v.  Tyson  445 
Dennistoun  v.  Stewart  453 
Denny  v.  Cabot                             173,  178 
V.  Cleveland  R.  477 
V.  Van  Dusen  437 
Denton  i\  Peters  456 
Denver  v.  Roane  191 
De  Peyster  v.  Clendining  152 
Deposit  Ass.  Co.  v.  Ayseougli  491 
Depuy  f>.  Clark  407 
Des  Moines  Bank  v.  Arthur  458 
Des  Moines  Co.  v.  Uncaphor  430 
Detroit  Co.  v.  Mine  Supply  Co.        533 
Detroit  Service  Co.  v.  Schermack      82 
Detroit  Steel  Co.  v.  Sisterville  Co.   126a 
Devaynes  v.  Noble  371 
Devers  t\  May  104 
Devine  v.  Edwards  257 
Devlin  v.  Le  Tourneau  34 
Devon  v.  Ham  372 
Dewar  v.  Mowinckel  471 


SBXTIO.X 

Dewees  v.  Middle  States  Co. 

457 

V.  States  Co. 

452 

Dewey  v.  Bow-man 

395 

Dewing  v.  Perdicaries 

502 

r.  Sears 

445 

Dewitt  V.  Brisbane 

75 

I".  Keystone  Nat.  Bank 

254 

De  Wolf  V.  Johnson 

267 

D'Eyneourt  r.  Gregory 

116, 

120 

Dibert  r.  D'Arey 

59 

Dickenson  v.  Edwards 

288 

Dickerman  r.  Day 

267, 

,  275 

Dickey  v.  Brown 

271 

Dickinson  v.  Burr 

81 

r.  Dickinson 

193 

v.  Kline 

491 

V.  Seaver 

75 

V.  Tyson 

77 

Diederich  t'.  Rose 

42a 

Dies  V.  Wilson  County  Bank 

446 

Dieterich  v.  Fargo 

60 

Dietrick  v.  O'Brien 

40 

Dillingham  f.  Bolt 

425 

V.  Snow 

219 

Dillon  V.  Barnard 

389 

Dingley  f.  Dingley 

149 

Dingman  f.  Kelly 

27 

Divoll  V.  Atwood 

285 

Dix  V.  Coal  Co. 

49 

V.  \  an  Wyck 

279 

Dixon  v.  Buell 

81 

V.  Stansfield 

383 

t;.  Yates 

389 

Doak  r.  Bank  of  State 

416 

■V.  Brubaker 

427 

Doane  v.  Garretson 

438 

f.  Russell 

376 

Dobscheutz  v.  Holliday 

113, 

121 

Dodd  V.  Watson 

165 

Doddington  v.  Hallett 

208, 

209 

Dodge  r.  Brown 

458 

V.  Emerson 

368 

V.  Pond 

146, 

147 

V.  Tulleys 

260 

Dodge  Co.  V.  Construction  Infor- 

mation Co. 

535 

Dodgson  r.  Bell 

91 

Dodson  f.  Corey 

100 

Doe  r. 

40 

V.  Batoman 

30 

V.  Bird 

32 

V.  Byron 

36 

V.  Carter 

32 

V.  Clarke 

32 

V.  Gold  win 

40 

V.  Gunnis 

100 

V.  Hawke 

32 

V.  Humphreys 

40 

xliv 


TABLE    OF    CASES. 


Doe  V.  Jackson 

V.  Jones 
V.  Keightley 
V,  Lawrence 
V.  Lock 
V.  Marchetti 
V.  Moflfatt 
V.  Palmer 
V.  Peck 
V.  Price 
r.  Turner 
V.  Watkins 
V.  Watts 
V.  Wells 
V.  Woodbridge 
V.  Woodman 
Dolman  v.  Cook 
i\  Pricliard 


SECTION 
40 
39 
40 
28 
28 
38 
26 
40 
32 
25 
25,  106 
40 
25 
39 
39 
40 
279 
180 


Domestic   Sewing  Machine   Co.  i\ 

Watters  3'81 

Donahoe  v.  KetteU  323 

Donald  V.  Hewitt  417 

V.  Suckling  395,  403,  404,  407 

Donnelly  v.  District  369 

V.  People  241 
Donner  v.  Quarterman                       166a 

Doolittle  V.  IMcCullougli  80 

Dorr  V.  Waldron  307 

Dorriel  v.  Eaton  408 

Dorsey  v.  Wayman  371 

Doty  V.  Bates  188 

Dougal  I'.  Cowles  448 

Dougherty  v.  Van  Nostrand  185 

Doughty  V.  Savage  372 

V.  Weston  82 
Douglas    V.    Knickei'bocker    Life 

Ins.  Co.  550 

V.  Shumway  101 

Dovey's  Appeal  79 

Dow  V.  Gould  298 

V.  Moore  202 

Dowling  V.  Bank  188 

V.  Eggemann  383 

V.  Exchange  Bank  186 

Downes  v.  Church  444 

Downey  v.  Hicks  367 

V.  Savage  176 

Downie  v.  ^^^lite  490 

Downing  V.  Farmers'  Ins.  Co.  548 

V.  Marshall  233 

V.  Potts  223 

Downs  V.  Collins  194 

V.  Planters'  Bank  454 

Dows  V.  Nat.  Exchange  Bank  399 

Doyle  V.  Bush  165 

V.  Mizner  220 

V.  Scott  36 

V.  Stevens  427 


SECTION 

Drake  v.  Hall  173a 

V.  Lux  285 

V.  Thyng  189 

V.  White  408 

V.  Wells  101 

Draper  v.  Hitt  367 

V.  Pierce  366 

V.  Springfort  477 

Dray  V.  Dray  166 

Driesbach  v.  Wilkesbarre  Bank      272 

DriscoU  V.  West  Bradley  Co.  501 

Drohan  v.  Norton  179 

Drucklieb  v.  Harris  227 

Drucklier  V.  Harris  217 

Druid,  The  311 

Drummond  v.  Griffin  431 

Drury  v.  Cross  257 

V.  Morse  268 

V.  Wolfe  269 

Dry  v.  Boswell  178 

Drybutter  v.  Bartholomew  482 

Dry  Dock  Bank  v.  American,  &c. 

Co.  275 

Dryfus  V.  Byrnes  271 

Dublin  V.  Attorney-General  222 

Dubois  V.  Kelley  127 

Dubose  V.  Parker  271 

Duckett  V.  Satterfield  326 

Dudley  v.  Barrett  368 

Dudley  v.  Price  512 

V.  Warde  112,  119,  120 

Duer  V.  Corbin  Co.  520 

Dueringer  V.  Klocke  560 

Duffield  V.  Elwes  77 

Dugan  V.  United  States  458 

Duke  V.  Cahawba  Nav.  Co.  497 

Duke  of  Beaufort  r.  Neeld  81 

Duke  of  Newcastle  v.  Lincoln  99 

Dumergue  V.  Rumsey  122 

Dunavan  v.  Flynn  449 

Dunavant  v.  fields  126a 

Duncan  V.  Brennan  397,  410 

V.  Hill  505 

V.  Magette  256 

V.  McCullough  451 

Duncklee  V.  Webber  30 

Duncomb  V.  N.  Y.  &c.  R.         236,  239 

Duncuft  V.  Albrecht  503 

Dunklin  i\  Wilkins  75 

Dunlap  i\  Moore  38 

V.  Watson  193 

Dunn  V.  Keyle  226 

V.  Meserve  400 

Dunning  f.  Crowfutt  49 

V.  Stearns  417,  419 

Dtmton  Re  421 

Diipee    V.    Boston    Water    Power 

Co.  232,  236 


TABLE    OF    CASES. 


xlv 


SECTION" 
43G 


Co. 


53(5 

35 
275 
505 
435 
156 

50 
270 

77 
238,  446 
179 
366 
548 
428 
263 
194 

76 
309 

31 
16fi 


Dupuy  V.  Gibson 
Dii  Puj'  V.  Post  Telegram 
Diirand   r.  Howard 
Durant  r.  Banta 

V.  Burt 
Durfee  v.  Grinnell 
Durfee's  Estate  Re 
Durgan  r.  Davles 
Durkee  v.  City  Bank 
Durst  r.  Swift 
Dutton  v.  Marsh 

V.  Woodman 
Duval  V.  McLoskey 
Duvall  V.  National  Ins,  Co. 
D'Wolf  V.  Harris 
Dyar  v.  Slingerland 
I^er  r.  Clark 

V.  Homer 

V.  Lewis 

I*.  Wightnian 

V.  Wilbur 

E. 

Eadie  r.  Slimmon  547 

Eager  v.  Crawford  173 

Eagle,  The  334 

Eagle  Bank  r.  Kignev  270 

Earl  of  Stafford  v.  Buckley  542 

Earle  r.  Carson  517 

V.  Grant  408 

V,  Keelv  126a,  127 

V.  \\Tiiting  255 

Early  v.  Burtis  124 

V.  Reed  188 

V.  Rogers  368 

Earp's  Appeal  143,  145 

East  Kingston  r.  Towle  50 

East  Lincoln  v.  Davenport  477 

East  River  Bank  v.  Hoyt  272 

Eastabrook    v.    Union   Mut.  Life 

Ins.  Co.  551 

Easter  r.  Virginian  Ry.  257 

Easterlin  r.  Rylander  273 
Eastern      Plank      Road      Co.      v. 

Vaughan  220 

Eastern  R.  i'.  Boston  &  Maine  R.    240 

Eastman  r.  Commonwealth  351 

V.  Dunn  38,  170 

r.  Perkins  23 

r.  Wright  78 

Easton  r.  Strother  191 

Bates  V.  Montgomery  Bank  272,  283 

Baton  V.  Aspinwall  513 

V.  Lyon  30 

Eaves  v.  Estea  116,  124 

Eddy,  The  39 la 

Edelstein  v.  Mecklowitz  275 

Edghill  r.  Mankey  106 


SECTION 
446 


Edis  V.  Bury 

Edison  V.  Allis-Chalmers  Co. 

Edison  Electric  Co.  v.  Blount 

r.  De  Mott 
Edmonds  v.  Mutual'  Life  Ins.  Co. 
Edmiston  v.  Wright 
Edson  V.  Newell 
Edwards  v.  Cottrell 

V.  Countess  of  Warwick 

V.  Elliott 

V.  Hall 

V.  Ice  Co. 

V.  Johnson 

V.  Mayes 

V.  Peterson 
Effinger  v.  Kenny 
Egbert  v.  Lippmann 
Ege  V.  Kille 
Eggleston  v.  Mundy 
Ehrensperger  v.  Anderson 
Ebrics  r.  De  Mill 
Eichelbcrger  v.  Bamitss 

V.  Mann 
Eidmon  v.  Baldwin 
Eiler's  Music  V.  Reine 
Eisenhart  V.  Slaymaker 
Elder  v.  Rouse 
Eldredge  v.  Bell 
Elgin  r.  Gross-Keely  Co. 
Elizabeth*  r.  Pavement  Co 
Elliot  r.  Davis 
Elliott  V.  Bishop 

r.  Chesnut 

V.  Edwards 

V.  First  Bank 
Ellis  ?;.  Branin 

V.  Dunham 

V.  Paige 
Ellston  v.  Deacon 
Elmore  Cotton  Mill  Re 
Elswick  V.  Ramey 
Elwell  V.  Skiddy 
Ehves  r.  Briggs  Gas  Co. 

V.  Maw 

112,  113,  118,  120,  121,  127 
Ely  r.  Carnley  434 

Emanuel  r.  Misicki  283 

Emerick  r.  Coakley  547 

Emerson  r.  Y>odge  528 

r.  Heeiis  103 

Emery  r.  Hobson  469 

V.  Himtington  332 

r.  Irving  Nat.  Bank  471 

Emlcn  r.  Lehigh  Coal  Co.  256 

Emmerson  r.  Claywoll  81 

Empire  State   Co',  r.   Cohen  82 

Em])ire   Trust  Co.   v.   Coleman       287 

r.  Manhatan  Co.  453 


523 
462 
447 
548 
188 
425 
437 
145 
307 
482 
446 
167a 
393a 

74 
346 
523 
113 
432 
351 
446 
140 
370o,  494 

20 

173a 

164 

407 

32 

82 
522,  533 
188 
112 
456 
307 
467 
284 

81 

38 

188 

271 

299a 

321,  325 

53 


xlvi 


TABLE    OF    CASES. 


SECTION 
Emrich  r.  Ireland  113 

Endicott-Joliiison  Co.  r.  Simpson    369 
Endsor  v.  Simpson  209 

Engineering^  Co.  r.  Beam  370a 

Englaiui,  Tlie  214 

V.  Curling  183 

V.  Dearborn  484 

English  V.  MeElroy  395,  409 

Ennis  r.  Hutchinson  161,  166 

Enslava  v.  Crampton  267 

Kpstein  v.  Dunbar  426 

Equitable  Co.  r.  Harger  458 

Equitable  Soc.  r.  Union  Pac.  R.       508 
Equitable  Trust  Co.  r.  Christ         119 
V.  Fowler  269 

Erickson  v.  Jones  127 

V.  Nesmith  517 

Erie  Bank  v.  Smith  401 

Erie  Dispatch  v.  Compress   Co.       472 
Ernest  v.  Nicholls  554 

Erwin  v.  Downs  451 

Eslava  r.  Crampton  266 

Essex  I".  Essex  186 

Essex  Co.  V.  Pacific  Mills  345 

Estabrook  v.  vSmith  456 

Esterly  r.  Cole  253 

Etheridge  v.  Binney  177,  188,  191 

V.  Ladd  451 

Ettinger  V.  Christian  Schuck  27o 

Ettlinger  r.  Kruger  34 

Eunson  t\  Dodge  530 

Eureka  Company  v.  Bailey  Com- 
pany 229.  529,  534 
Evans  r.  Beekwith  253 
V.  Eaton  526 
V.  Evans  194 
V.  Hardy  105 
V.  Herring  426 
V.  Inglehart  105,  106,  140 
V.  Powis  366 
V.  Roberts  101,  103,  105 
V.  United     States     Life     Ins. 

Co.  550 

Evarts  v.  Killingsworth  Man.  Co.  242 
Everett  v.  Hall  423 

V.  Ingram  286 

Everman  v.  Robb  100 

Evertson  v.  Nat.  Bank     476.  477,  479 
Ewald  V.  Louisville  244 

Ewing  V.  Howard  281 

Excelsior,  The  329 

Excelsior  Co.  v.  Smith  126a 

Exchange  Bank  v.  MeLoon  77 

i;.  Rice  448 

Exchange  Nat.  Bank  r.  Little        446 


F.  SECTION- 

Factors'  Ins.  Co.  )■.  Marine  Co.       400 
Fairbanks  v.  VVarrum  53 
Fairburn  v.  Eastwood  122 
Fairchild  v.  Fairchild  186 
Fairlee  v.  Denton  77 
Faith  V.  East  India  Co.  324 
Falconer  v.  Campbell  219 
Falk  V.  Moebs  446 
Fall  River  Co.  v.  Borden  172 
Fallon  V.  O'Brien  50 
Fannie,  The  328 
Fant  V.  Fant  81 
Farewell  v.  Coker  382 
Farmer  v.  Francis  148 
Farmers'  Bank  v.  Bell  422 
V.  Burchard  272 
V.  Butchers'  Bank  467 
r.  Rathbone  459 
V.  Wasson  495,  501 
Farmers',  &c.  Bank  v.  Dearing       219 
Farmers'   Loan,   &c.    Co.    v.   Com- 
mercial Bank  113,  421 
V.  Hendrickson  113,  426 
Farnsworth  v.  Allen  452 
V.  Boardman  199 
Farnum  v.  Hefner  108 
Farr  v.  Grand  Lodge  156 
V.  Johnson  185 
V.  Lodge  162 
V.  Pearce  185 
V.  Semple  253 
Farragut.  The  328 
Farrant   v.  Thompson  123 
Farrar  r.  Beswiek  207 
r.  Chanflfecete  126 
;•.  Pillsbury  370a 
r.  Stackpoie  123 
Farrell  r.  Bean  419 
V.  Passaic  Water  Co.  502 
Farwell  v.  Jacobs  63 
Faulkner  v.  Hill  410 
Faull  V.  Tinaman  81 
Faunce  r.  State  Mut.  Life  Ass.  Co.  552 
Fay  15.  Muzzey                      113,  119,  121 
V.  Noble  ■  172,  236 
Fearns  r.  Young  140 
Fcigenspan   r.   McDonnell  191 
Felcher  v.  McMillan  122 
Feigner  r.  Slingluff  259 
Fellows  r.  Johnson  127 
V.  Stevens  372 
Fenn  r.  Bittleston  430 
v.  Harrison  456 
Fennings  v.  Grenville  165 
Ferguson  r.  Clifford  430 
r.  O'Brien  126a 
Ferris  r.  Bond  445 
V.  Boxell  366 


TABLE    OF    CASES. 


xl 


Vll 


SECTIOX 

Ferry   v.   Ferry  263 

Fessenden  v.  Coolidge  440 

Fidelity  Co.  v.  Stafford  82 

Field  V.  Burnam  254 

V.  Farrinfrton  387 

V.  Holland  371 

V.  LaiHsont  Co.  508,510 

V.  Magaw  75,  77,  78 

V.  Xew  Voi-k  78 

Fielder  Lumber  Co.  r.  Smith  82 

Fi field  r.  Farm^ers'  Bank 

113. 115a, 124a 

r.  Nat'l  Bank  124a 

Figlia  Maggiore,  The  471 

Fikes  r.  Manclie-ter  430 

Filburn  c.  Aquanim  Co.  50 

Findlay  v.  Corn  Ex.  Nat.  Bank         82 

Finley  v.  Transport  Co.  52 

Finney  v.  Watkins  121 

Fire  Ins.  A.s<o.   f.   Wickhani  366 

First  Nat.  Bank  v.  Almy  172 

V.  Boyce  "399,404,400 

r.  Carson  72,  76 

V.  Clark  77 

V.  Davis  271,  365 

i\  Eichmeier  49 

r.  Fair  78 

V.  Kelly  399 

I'.  Leaeii  467 

l:  Maxfield  75 

V.  O'Byrne  82 

v.  Ottawa  74 

r.  Plankinpton  279 

V.  Securities   Co.  82 

V.  Steel  Co.  77 

Firth   Sterling  Co.    r.   Bethlehem 

Co.  528 

Fischer  r.  Raab  192 

Fish  I'.   Delaware  R.  299o 

Fishel  Re  271 

Fisher  r.  Bidwell  283 

r.  Brown  41  lo 

i\  Dixon  119 

V.  Essex  Bank  498 

V.  Evansville,  &c.  R.  R.  Co.     245 

V.  Fisher  409 

V.  Knox  78 

V.  Leland  458 

V.  Otis  267 

V.  Sargent  253 

Fitch  v.  Harrington  179 

t\  Sutton  212.366 

Fitzgerald  v.  Blocker  410 

i\   Rawlings  547 

Fitzherbert  r.  Shaw  121 

Fitzpatrick  v.  Flannagan  364 

Fitzsimmons'.e  Appeal  79 


SECTION 

Fitzsimmons  v.  Ogden 

366 

V.  Bauni 

201) 

Flad   Oyen,   The 

307 

Flagg  V.  Pierce 

427 

Flanagan  v.  Welcli 

42a, 426 

Flanders  v.  Chamberlain 

439 

V.  Thomas 

439 

Fleckner  r.  U.  S.  Bank 

224 

Fleece.  The 

330 

Fleig  V.  Sleet 

367, 309 

Fleming  V.  Hector 

172 

V.  Law 

82 

Fletcher  r.  Alexander 

332 

V.  Ash'burner 

133 

r.  Pierson 

469 

V.  Reed 

192 

Flight  V.  Reed 

2S9 

Flinn  r.   Fredrickson 

434 

Flint  r.  Eureka  Marble  Co.  173 

V.  Flemvling  319 

V.  Pierce  228,237 

Fliteroft's  Case  226 

Flora,  The  328 

Florence,  The  329 

Florence  Co.  r.  Brown  460 

Florida  Central  R.  c.  Schutte         47S 

Florida.  The  214,320 

Flory  r.  Denny  416,418 

Flower  r.  Detroit  526 

Floyd  V.  Wallace  190 

Flynn  v.  Allen  81 

Fobes  V.  Shattuck  166 

Fogg  V.  Blair  485,  494,  517o. 

V.  Johnston  192 

Foley  r.  Addenbrooke         121.  122,  128 

r.   Buniell  152 

Folger  r.  Chase  244 

V.  Weber  305 

Follett  r.  Heath  422 

Eollins  r.  Dill  42?> 

Folsom  f.  Marsh  536 

Fontain*'  r.  Tyler  562 

Foot  V.  Berkley  27 

r.  Sabin  189 

Foote,  Appellant  562 

r.  Blanchard  253 

V.  Colvin  106 

v.  Gooeh  115a 

r.  Salem  477 

Forbes     r.     Alabama     Machinery 

Co.  "  126a 
r.  Am.  Mut.  Life  Ins.  Co.         550 

7\  Marshal!  222 

r.  Gorman  42a. 

Force  r.  Elizabeth  477 

Ford  V.  Cobb  llfi 

t\  Cotosworth  325 


xlviii 


TABLE    OF    CASES. 


SECTION 

Ford  r.  Dallam 

455 

V.  Garner 

77 

V.  Guano  Co. 

436 

V.  Hancock 

275 

V.  Peering 
V.  Tirrell 

98 
254 

V.  Tynte 
V.  Vandyke 
Forman  v.  Proctor 

97 

263 

421,423 

Forney  v.  Adams 
Forster  v.  Mackreth 

188, 189 
188 

Forsyth  V.  Beveridge 
Fort  V.  Barnett 

383 
369 

Fort  Madison  Bank  v.  Alden  481 
Fort  Worth  Co.  r.  Bridge  Co.  233 
Fort  Worth  v.  Fair  Assoe'ii  42o 
Forth  r.  Simpson  380 
Forster  r.  Wandlass  257 
Foss  r.  Marr  109 
Foster,  Ex  parte  393 
V.  Blackstone  79 
V.  Busteed  307 
V.  Colby  324 
v.  Jul  i  en  451 
i\  MeKinnon  456 
v..  Perkins  427 
V.  Prentiss  129 
t\  United   States   Ins.   Co.  188 
Fourth  Nat'l  Bank  v.  Mills  Co.  383 
Fourth  Nat.  Bank  v.  Willingham  426 
Fourth  Street  Bank  V.  Yardley  77 
Fowkes  V.  Manchester,  &c.  Asso- 
ciation 549 
Fowler  v.  Bott  31 
V.  Brantly  458 
V.  Bush  367 
V.  Bushby  367 
V.  Davenport  257 
V.  Fowler                               146,383 
V.  Howell  Co.  526 
V.  Ludwig  367 
V.  Merrill  425 
V.  Rathbones                        331,332 
V.  Stoneum  417 
Fox  V.  Clifton                            180,  184 
v.  McGregor  387 
v..  State  of  Ohio  348 
Fraker  v.  Reeve  409 
Frank  i'.  Haldeman  53 
v.  Miner  425 
V.  Morris  281 
Franklin  r.  Meyer  422 
v.  Neate  405 
Franklin  Bank  r.  Freeman           470a 
V.  L\Tich  448 
V.  Pratt  440 
Franklin  Fire  Ins.  Co.  v.  Hart  494 


SECTION 

Franklin  Glass  C».  v.  Alexander    516 

Franklin  Ins.   Co.   l".   Lord  442 

Frans   v.   Young  163 

Franzen  Re  35 

Frazer  v.  Cuthbertson       208,212,214 

Frazier  v.  Trow  466 

Freeborn  v.  Smith  170 

Freedom,  The  321 

Freeman  i\  Baldwin  417 

V.  Freeman  430,435,436,439 

V.  Newton  75 

V.  Specialty  Co.  170 

V.  United  Fruit  Co.  322 

Freese  v.  Arnold  165 

V.  Brownell  279 

Fremont  Mfg.  Co.  v.  Thomsen  232 

French  v.  Fuller  511 

V.  Harding  499 

V.  Haskins  433 

Freshfield   Trusts  78 

Fretz  r.   Stover  346 

Freund   r.  Importers'  Bank  467 

Fridley  r.  Bowen  397 

Friedlander  v.  Tex.  R.  471 

Frisbee  r.  Langworthy  427 

Fritts   V.   Palmer  233 

Fritz's  Estate  75 

Frog  Co.  V.  Haven  509 

Froman  r.   Fitch  536 

Fromme  t\  Jones  426 

Frost  t\  Clarkson  503 

V.  Frostburg   Coal   Co.  223 

V.  Mott  427 

V.  Shaw  396 

Frothingham  v.  Everton  387 

Fry  V.  Bank  of  India  324 

V.  Coleman  267 

v.  Ford  108 

V.  Jones  28 

V.  Kilborn  34 

V.  Lexington,  &a  R.  R.  Co.     489 

V.  Miller  427 

V.  Sanders  189 

Fuentis  v.  Montis  398 

Fugitt  V.  Nixon  455 

Fuller   V.  Bilz  82 

V.  Ferguson  172 

V.  Fuller  166 

V.  McLeod  431 

V.  Parrish  417 

V.  Smith  370a 

V.  Tabor  113 

V.  Taylor  113 

V.  Van   Geesen  236 

r.  Webster  299 

Fullerton's  Appeal  357 

Fulton,  Ex  parte  361 


TABLE    OF    CASES. 


xlix 


SECTION 

Furlong  v.  Bartlett 

207 

V.  Pearce 

280 

Furness  v.  Randall 

320 

Furniiss  V.  Ferguson 

81 

Furnival  v.  Crew 

30 

G. 

Gabell  v.  Shevell 

31 

Gabriel  v.  Evill 

170 

Gaffield  v.  Haj^ood 

127 

Gafford  v.  Stearns 

161 

Gage  V.  Maryland  Coal  Co. 

325 

V.  Morse 

325 

r.  Whittier 

431 

Gager  r.  Babcock               214, 

311,313 

Galigher  v.  Jones 

505 

Gallagher  v.  Shipley 

121 

Galland  Re 

383 

Galpin  v.  Chicago 

254 

Galton  V.  Hancock 

361 

Galveston  City  Co.  v.  Sibley 

499 

Galveston  R.  V.  Cowdry 

113 

Galway  v.  FuUerton 

77 

Gamble  V.  Dawson 

482 

i\  Loffler 

167a 

Gammon  v.  Huse 

193 

Gannett  V.  Cunningham 

79 

Gansevoort  r.  Williams 

188 

Gardiner  v.  Childs 

184 

Gardner  i\  Adams 

75 

V.  Barnett 

256 

V.  Cleveland 

166 

V.  McEwen 

421, 428 

V.  North  Ins.  Co. 

548 

V.  Smith 

77 

V.  Watson 

370a 

Garland,  Ex  parte 

194 

Garlick  v..  James 

407 

Garnsi'v  c  Gardner 

77 

Garrard  r.  Haddan 

462 

r.  Moody 

386 

Garrick  Theater  Co.  r.  Gimbel 

38 

Garrison  v.  Howe 

513 

Garrity  i\  Cripp 

273 

Gas  Co.  V.  Thurber 

122 

Gasser  v.  Wall 

167a 

Gate  City  Bank  r.  Thrall 

275 

Gaters  v.  Maddeley 

69 

Gates  i\  Andrews 

365 

n.  Beech er 

451 

V.  Hackenthal 

274 

Gaty  i\  Holliday 

402 

Gatzcrt  r.  Lucey 

82 

Gaul  r.  Willis 

269 

Gault  V.  Thurmond 

271 

Gavin  v.  Walker 

177 

SECTION 

Gawan  v.  Barclay  124 

Gay  I".  Gardiner  254 

V.  Rooke  256 
Gayler  v.  Wilder                    75,  521,  528 

Gazley  v.  Williams  35 

Gazzanx  v.  Armstrong  449 

Geach  r.  Ingall  549 

Gebhart  v.  Sorrels  269 

Geiser  v.  Kershner  366 

Gelpcke  v.  Daibuque  476,477 
General  Smith,  The                  317,391a 

Genesee  Chief,  The  334 

Geohegan  v.  Union  R.  254,257 

George  V.  Concord  345 

George  and  Richard,  The  328 

Georgia  Granite  R.  v.  Miller  227 
General   Electric  Co.    v.  Hoskins 

Co.  520 
General  Rubber  Co.  V.  Benedict      509 

Gentry  r.  Fife  370a 

Geppert  a  Stone  Co.  126a 

German  v.  German  140 
German  Alliance  Co.  V.  Barnes     559a 

German  Ass'n  v.  Leavens  287 
German  Bank  i\  United  States       479 

German  Ins.  Co.  v.  Kansas  559a 

German  Mining  Co.  Re  239 
German  Savings  Bank  v.  Wulfe- 

kuhler  232 

Germania  Ins.  Co.  v.  Bouldin         548 

Getchell  iv  Maney  77 

Gerrey  v.  Wliite  418 

Gerrish  v.  S'weetser  80 

G.  H.  R.  V.  Freeman  62 

Gibbons  t\  Mahom  143 

Gibbons  Re  16 

Gibson  v.  Carraker  106 

V.  Cook  77 

V.  Goldthwaite  225 

Gibson  r.  Linthieum  42r) 

V.  W'arden  188,418 

Giffert  v.  West  76 

Gifford  ?v  Allen  372 

Gilbert  v.  Bell  34 

V.  Dennis  453 

V.  Manchester  Iron  Co.  223 

Gilbert's  Case  498 

Gilchrist  r.  Patterson  433,434 

Gilchrist  Tr.   Co.  V.  Boston  Ins. 

Co.  326 

Gilder  r.  Jater  278 

Gile  r.  Stevens  130 

Gilkey  v.  How  220rt 

Gill  i\  Bartlett  18 

V.  Cubitt  458 

r.  De  Arman  123 

V.  Kuhn  180 


TABLE    OF    CASES. 


SECTION 

Gill  V.  Pinney  42f) 

V.  Wells  521) 

Gill's  Appeal  261 

Gillan  v.  Simkin  322 

Gillespie  v.  State  287 

Gillet  r.  Fairchild  50 

Gillett  r.  Balcoin  10!) 

r.  Campbell  77 

V.  Mason  50 

V.  Thornton  18:5 

Gilley  i".  Burley  148 

Gilliat  i\  Lvnch  410 

Gilligan  Co.  v.  Casey  222 

Gilman  v.  Brown  386 

Gilmore  r.  Ferguson  273 

V.  Gale  432 

V.  Merritt  176,  177 

Gilpin  17.  Hollingsworth  161 

Gilson  V.  Gwinn  381 

V.  Martin  397 

Gimbel  v.  Barrett  257 
Ginn  v.  Mortgage  Security  Co.        271 

Girard  Fire  Ina  Co.  v.  Marr  401 
Girard  Ins.  Co.  r.  Mut.  Ins.  Co.       553 

Girardy  v.  Richardson  41 

Gittings  V.  Nelson  395 

Given  v.  Kelly  156,  161,  165 

Givin  V.  Moore  455 

Gladhill,  Ex  parte  357 

Gladstone  i:  Birley  384 

Gladwell  v.  Turner  453 

Glasgow  V.  Lipse  346 

Glaze  i\  Blake  423 

Gleason  v.  Childs  274 

Glegg,  Ex  parte  122 

Glenn  v.  Liggett  299,  516 

V.  MarbuTv  516 

Glennan  v.  Rochester  Co.  82 

Glidden  r.  Bennett  113 

Globe  Ass'n  r.  Brega  426 
Globe  Marble  Mills  Co.  r.  Quinn     123 

Globe  Mills  r.  Quinn  116 

Glover  v.  Austin  164 

Glue  Company  v.  Upton  520 

Glyn  V.  Baker  474 

n  East  India  Dock  Co. 

321,399,400,471 

Goddard  r.  Chase  126 

r.  Merchants'  Bank  462 

V.  Pratt  175,  193,511 

V.  Sawyer  422 

^^  Winchell  53 

Godfrey  v.  Fames  525 

r.  Hughes  370a 

V.  Leigh  268 

V.  White  166o,  191 

Godin  r.  London  Assurance  Co.       386 


Godley  r.  Crandall 
Godsall  V.  Boldcrs 
Goell  t\  Mor.se 
Goesele  v.  Bimeler 


SECTION 

510 

546 

161.  163,165 

172 


Goetz  V.  Kansas  Citv  Bank      461,  462 

Goetz's  Estate           '  510 

Coff  r.  Kilts  50 

Goldberg  v.  West  End  Co.  259 

Golden  r.  Manning  320 

Goldman  r.  Murray  82 

Goldsmidt  r.  Church  Trustees   408. 409 

V.  First  Methodist  Church       408 

Goldsmith  v.  Sachs  183 

Goldstein  r.  Hort  398 

Golowitz  V.  Hendlin  371 

Gompertz  ix  Bartlett  458 

Goode  V.  Burton  389 

V.  Cheeseman  372 

r.  Harrison'  179 

Goodenow  v.  Dunn  395 

Goodhue  r.  Palmer  278 

Goodman  v.  Harvey  458 

r.  Oshkosh  371 

V.  Simonds  458 

i:  Whitcomb  192 

Goodnow  i\  Warren  455 

Goodrich  r.  Buzzell  286 

V.  Jones  113,  116,  121 

V.  Rogers  273 

ir.  Stanley  78.369 

r.  Willard  380,434 

Goodridge  v.  Lord  324 

Goodright  t'.  Cordvvent  40 

Goodwin  r.  Bishop  271 

V.  Dick  491 

V.  Hardy  510 

V.  Robarts  474 

V.  Mass.  Ins.  Co.  553 

Googins  r.  Gilmore  421,  422,  430 

Gordon,  Ex  parte  334 

Gordon  r.  Downey  81 

i\.  Drury  81 

V.  East  India  Co.  305 

V.  James  104 

V.  Lowell  364 

V.  Richmond  R.  510 

r.  United  States  262 

Gore  V.  Mason  503 

Gorgier  r.  Mieville  478 

Gorham  r.  Summer.s  425 

Gorham  Co.  r.  White  541 

Gorman  i\  Pacific  R.  R.  Co.  219 

r.  State  358 

Gorst  V.  Lowndes  151 

Gosden  i\  Dotterill  352 

Goshen  v.  Hurtin  446 

Gosman  Re  253 


TABLE    OF    CASES. 


li 


SECTION 

Goss  r.  Emerson  405 

r.  Helbing  124 

Gossett  r.  Drydale  106 

Gott  V.  Cook  147 

r.  Dinsmore  202 

Gottfried  r.  Miller  528 

Gottlieb  r.  Hartman  400 

Gould  v.  Emerson  547 

r.  Rees  532 

i\.  Sterling  477 

Goulet  r.  Asseler  430 

Gowan  v.  Foster  209 

Gower  v.  Gower  16 

V.  Moore  455 

Graff  V.  Pittsburgh  R.  491 

Grafton  Co.  v.  State  510 

Gragg  V.  Martin  76 

Graham  r.  Cooper  284 

V.  Goudy  81 

r.  Meyer  190 

Grange  v.  Penm  Ins.  Co.  548 

Granger  v.  Bassett  145 

r.  French  82 

r.  Stewart  326 

Granite  Bank  r.  Ayers  451 

V.  Richardson  407 

Granite  Brick  Co.  r.  Titus  486 

Granite  City  Bank  r.  Cross  288 

Grannis  r.  Stevens  281 

Grant  r.  Chambers  462 

r.  Ellicott  459 

V.  Grant  361 

l\  Hunt  448 

V.  McLachlin  307 

V.  Monticelio  369 

V.  Skinner  417 

r.  Walker  525 

l\  Walter  520 

Grapeshot,  The  312.  .391a 

Grattan  r.  Metropolitan  Life  Ins. 

Co.  549 

Graves  v.  Berdan  41 

V.  Dunlap  49 

r.  Lebanon  Xat.  Bank  361 

r.  Ueld  105 

Gray   r.   Bennett  354 

'r.   Bledsoe  383 
r.  Brown                               279.286 

r.  Carr  325 

r.  Coffin  498 

1-.  Graziani  393ff 
r.  Hemenwav                        245.  510 

r.  Hold.-^hip"  129 

V.  Portland   Bank  493 

V.  Raper  446 

r.  Russell  536 


Gray  /•.  Smith 

f.  State 
Gray  Eagle,  The 
Greacen  v.  Buckley  Co. 
Great  Eastern,  The 


SECTIO.N 
193 
256 
328 
217 

315,323 


Great  Western  Co.  r.  Loe.wenthal  490 

Greddles  v.  Wallace  183 

Green  v.  Ashby  77 

V.  Bass  429 

r.  Crapo  487 

V.  Farmer  380 

V.  Graves  218 

I'.  Jacobs  417 

V.  Phillips  113,  123 

V.  Rutherford  241 

r.  Sevmour  220 

a  Van  Buskirk  298.299 

Green  Bay  Canal  Co.  r.  Paper  Co.    38 

Greenby  r.  Wllcocks  73 

Greene  v.  Messick  Grocery  Co.  27a 

V.  Nash  509a 

Greenlee  v.  Young  81 

Green ough  i\  Smeed  456 

Greenville  r.  Green  222 

Greenwood  r.  Marvin  75 

Gregg  r.  Chamber  of  Commerce       222 

Gregory,  The  328 

Gregory  v.  Bewley  274 

n.  Rosonkrans  56 

Grev  r.  Friar  361 

Gribbling  r.  Boh  an  82 

Griffin  r.  City  Bank  477 

r.  New  Jersey,  &c.  Co.  271 

r.  Ransdell  117 

r.  Weatherby  446 

Griggsbv  r.  Russell  548 

Grill  f.'Collier  Co.  328 

p.  Iron  Screw.  &c.  Co.  321 

Grim  r.  Wicker                    162,  164,  165 

Grimes  r.  Hagood  254 

Grinncll  r.  Cook  .380 

Gri.sbv  i'.  Russell  547 

Griswold  r.  Waddington  171.  192 

Gross  r.  Eiden  381 

Groton  Man.  Co.  r.  Gardiner  417 

Grounds  r.  Ingram  419 

Grove  ;".  Great  Nortlurn  Loan  Co.  279 

Grover  r.  Grover  81 

Groves  r.  Wright  140 

Grovevold  r.  Federal  Co.  477a 

Grow  r.  A I  bee  285 

Grubh  r.  Brooke  271 

Grubhe  r.  La  hay  369 

fJiiardian    Mut.    Life    Ins.    Co.  r. 

TTogan  546 

Guardian  Tru.«it  Co.  f.  Straus  550a 

Guck.rt  r.  Hacke  220a 


lii 


TABLE    OF    CASES. 


SECTION 

Guillon  r.  Peterson  197 

Gunderson  v.  Bierson  49 

Gunn  V.  Central  R.  171 

V.  Head  263 

V.  McAden  369 

Gunnison  v.  Gr^g  279 

Gunsten  V.  Green  462 

Gurney  v.  Behrend  471 

V.  Womersley  456 

Gushee  i\  Robinson  417 

Guthrie  n.  Weaver  52 

Guthrie's  Trustees  v.  Akers  517 

Guyman  v.  Burlingame  446 

Guynn  v.  Daugherty  254 

H. 

Haag*  V.  Reichert  82 

Haak  v.  Linderman  386 

Hackenberry  v.  Shaw  256 

Hackett  i\  Amsden  129 

V.  Martin  78 

Haflick  r.  Stober  127 

Hagar  r.  Clark  323 
V.  Reclamation  District 

342, 354,  373 

V.  Union  Nat.  Bank  501,510 

Hage  w.  Campbell  427 

Hagerman  Co.  v.  McMujry  53 

Haggerty  v.  Foster  198 

V.  Taylor  200 

Haile  v.  Pierce  446 

Hailes  v.  Albany  Co.  529 

V.  Van  Wormer  520 

Hakes  V.  Hotchkisa  372 

Hale  V.  Barrett  386 

V.  Hale  269 

Hall  v.  Bradbury  451 

IX  Edson  172 

V.  Farmers*'  Bank  258 

V.  Flanders  77 

V.  Glass  Co.  82 

V.  Graham  254 

V.  Lanning  189 

V.  Marston  371 

V.  Newcomb  456 

V.  Oagett                            _  191 

V.  Robinson  59 

V.  Sampson  430,  431 

V.  Scott  256 

V.  Smith  366 

t\.  Steel  449 

V.  Wadsworth  40 

Hall-Borchert  Co.  v.  Ellanan  Co.    526 

Hall's  Will,  In  re  140 

Hallett  V.  Wylie  31 

Halliday  v.  Holgate  375,  405,  407 


SECTIOX 

Halloran  v.  Whitcomb  81 

Hallowell  Bank  v.  Howard  351 

Ham  V.  Kendall  113 

V.  Van  Orden  76 

Hambleton  V.  Central  Ohio  R.         502 

Hamburger  v.  Settegast  32 

Hamilton  i\  Baker  391a 

V.  Huntley  124 

V.  Lycoming  Mut.  Ins.  Co.       558 

V.  Newcastle  R.  238 

V.  Rogers  421 

V.  State  54 

V.  Vought  458 

Hamlin  v.   Mack  50 

Hammill  v.  Hammill  193 

Hammond  v.  Ann.  Mut.  Life  Ins. 

Co.  553 
V.  Hastings  499,  501 
V.  Hopping  267 
Hammonds  v.  Barclay  378,  383 
Hammer  V.  Barker  170 
Hamper,  Ex  parte  178 
Hampshire  v.  Wickens  32 
Hampson  v.  Owens  81 
Hampton,  The  441 
Hamridge  V.  De  La  Crou4e  188 
Hancock  v.  Bewley  162 
t:  Caflfyn  30 
V.  Franklin  Ins.  Co.  410 
Hancock's  Appeal  80 
Handley  v.  Howe  425 
V.  Stutz  485,512 
Haney  v.  Schooner  Rosabelle  307 
Haiikey  v.  Becht                 172,  173,  185 
Hani^^r.  Kempton  279 
Han^3;:Jp.'..Phelps  380, 386 
Hanmaii&  *.  N.  Y.  Typewriting  Co.  499 
-  Hannam  V.  Dockett  50 
.Harmey  n.  Eve  313 
Hannibal  r.  Fauntleroy  477 
Hannis    Distilling    Co.    V.    Balti- 
more 241a 
Hansen  r.  Prince  34 
Hanson  v.  Keely  126a 
V.  Millett  51 
Hapgood  r.  Hewitt  528 
Harbison  Re  255 
Hardaway  v.  Semmes  298 
Harden  v.  Gordon  315 
Harding  v.  Cobuxn  419,421 
V.  Foxcroft  206 
Hardy  v.  Sprowle  165 
Hare'f.  Henty  469 
t\  Horton  128 
V.  Waring  503 
Hargrave  v.  Conroy  178 


TABLE    OF    CASES. 


liii 


Marker  v.  Anderson 

V.  Dement 
Harkness  v.  Sears 
Harlan  v.  Harlan 
Harmer  V.  Bell 
Harms  v.  Stern 
Harmon  v.  Nat.  Bank 

v.  Short 


SECTION 

465 
403 
114, 120 
121 
391 
536 
436 
430 


Harpending  v.  Dutch  Church  231 

Harper  v.  Butler  81 

y.  Graham  366 

V.  Phoenix  Ins.  Co.  551 

V.  Virginian  R.  502 

Harpham  v.  Hajnes  458 

Harral  v.  Wright  163 

Harrill  v.  Davis  170 

Harriman  v.  Harriman  366 

Harrington  v.  Brittan  440 

V.  Harrington  99,  148 

V.  Miles  50 

V.  Price  98 

IX  Rich  77 

V.  Samples  422 

Harris  r.  Clanton  446 

V.  Clark  84,164 

V.  Frink  106 

V.  Johnson  1 

V.  McGregor  220 

Harris' E.state  i?0  160 

Harrison  r.  Armour  486,513 

17.  Foster  140 

V.  Jackson  188 

V.  Sterry  188 

V.  Tennant  192 

Hart  V.  Alexander  193 

V.  Bonton^Bellefontaine  R>.  56 

V.  Boiler  367 

V.  Eastern  Union  R.  R.  Co.      236 

V.  Goldsmith  •         283 

V.  Marks  161 

V.  Shaw  319 

V.  State  50 

V.  Tomilinson  1!T3 

V.  Windsor  30,  31 

Hartdagcn  Re  299a 

Hartford,  &c.  Ins.  Co.  v.  Hadden    279 

Hartford  Life  Ins.  Co.  v.  Unsell      553 

Hartley  v.  Case  453 

V.  Eagle  Ins.  Co.  271 

V.  White  189 

Hartman  V.  Greenhow  478 

V.  Keystone  Ins.  Co.  549,  551 

Hartnett  i\  St.  Louis  Co.  516 

Hartshorn  v.  Day  528 

V.  Saginaw  Co.  523 

Hartwell  r.  Kelly  113 


SECTION 

Harvard  College  v.  Amory  487 
Harvey  v.  Cherry  163 
V.  Harvey  119 
V.  Lenville  Improvement  Co.  509a 
V.  Varney  183 
v.  Weitzeiikorn  491 
Harwood  v.  Hildretli  357 
V.  Tucker  77 
Hasbrouck  i\  Winkler  164 
HaScall  V.  Whitmore  458 
Hasey  V.  White  Pigeon  Sugar  Co.  448 
Haskell  V.  Mitchell  456 
Haskins  v.  Ryan  64 
Haslett  V.  Glenn  106 
V.  Kunhardt  455 
Hatch  r.  Bates  437 
V.  Douglas  269 
V.  Mut.  Life  Ins.  Co.  551 
l\.  Wallanub  Co.  305 
Hathaway  r.  Haynes  395 
i\  Trenton  M.  L.  Ins.  Co.          550 
Hathorn  v.  Lewis  426 
Hatton  V.  Car  Maintenance  Co.       380 
v.  Kansas  City  R.             126,  126a 
Haux'hiirst  v.  Hovey  260 
Havelock  i\  Gcddes  324 
Haven  i\  Grand  Junction  R.    229, 476 
V.  Haven  98 
Hawes  v.  Humphrey  561 
Hawkins  r.  Co.  Com'rs  433 
V.  Glenn  516 
V.  Hersey  124a 
V.  McDougal  166a 
Hawkin's  Co.  v.  Morris  435 
Hawkstone  Street  Re  126o 
Hawkeye    Loan    Asa'n   v.    Black- 
burn 271 
Hawley  V.  Howell  269 
r.' Upton  497,498 
H^thorne  r.  Beckwith  152 
IX  Calef     ,  514 
Hay  V.  Palmer  145,  542 
Hayden  v.  Binney  l63 
Hayes  v.  Fish  183 
V.  Taylor  425 
t\  Waggener  543o 
Hayes  Merc.  Co.  r.  Bell  161 
Hayes  Re  ?5 
Hayford  v.  Cunningham  391 
Hayling  v.  Okey  107 
Haymes  r.  Cooper  3S9 
Haynes  v.  Nice  371 
V.  Thorn [xson  81 
Hays  V.  Doane  ^      113 
r.  Hathorne  458 
f.  Riddle  400 


liv 


TABLE    OF    CASES. 


SECTION 

Hayvvard  v.  Andrews 

76 

r.  Le  Baron 

260,274 

i\  Scneenbaugh 

290a 

Haywood  P.  R.  Co.  v.  Bryan 

489 

Hazard  v.  Smith 

267 

Hazelden  v.  Hanier 

498 

Hazeltino  v.  Railroad  Co. 

510 

Head  t\  Goodwin 

425 

V.  Providence  Ins.  Co. 

226 

Heald  v.  Hay 

74 

Healey  v.  Tappan 

139, 140 

Heard  r.  Eldredge 

143 

V.  Fairbanks 

103 

Heath  v.  Cable  Co. 

299a 

V.  Cook 

278 

V.  Hall 

73 

V.  Page 

274,281 

V.  Waters 

191,194 

Heaton's  Estate  Re 

143 

Hedderich  n   Smith 

129 

Hedley  v.  Steamship  Co. 

311 

Heeler  r.  Lutz 

82 

Heidenreich  r.  Bremner 

190 

Heilman  V.  Heilman 

148 

Heiliger  r.  Ritter 

82 

Heilwig  r.  Nybeck 

100 

Heisrodt  v.  Hackett 

50 

Heitsoh  V.  Minneapolis 

285 

Heizer  v.  Heizer 

542 

Hellawell  r.  Eastwood 

113 

Heller  r.  Hufsmith 

165 

Helium  '/'.  Knechat 

214 

Hellyer  v.  Briggs 

422 

Helme  i'.  Phil.  Life  Ins.  Co. 

553 

V.  Strater 

140 

Helmer   r.   Krolick 

446 

Hemenway  v.  Hemenway 

140 

Hemmenway  v.  Fisher 

258 

Hemphill  v.  Yerkes 

77 

Hendee  V.  Pinkerton 

229 

Henderson  v.  Cross 

148 

v.  Moore 

366 

1?.  Morgan 

425 

«.  Vaulx 

140, 152 

Hendry  r.  Hendry 

256 

Henkel  r.  Heyman 

198 

Henley  v.  Bush 

77 

Hennessey  i\  Walsh 

259 

Henry  v.  Brown 

81 

r.  Cherry 

64 

V.  Dick  Co. 

534& 

17.  Great  Northern  R. 

508 

V.  Philadelpliia  Co. 

398 

V.  Milham 

80 

Henry  Re 

528 

Henry  Clay  Co.  v.  Barkley 

126a 

SECTION 
207 
345 
27a 
536 
78,81 
256 


Hcnshaw  v.  Clark 

Hepbtirn  r.  Griswold 

Herb  r.  Day 

Herbert  v.  Fields 

Hercules  In.s.  Co.,  In  re 

llercfordsliire.  In  re 

Herkimer     Manuf.,     &c.     Co.     r. 

Small  410 

Herlakenden's  Case  100 

Herndon  v.  Chicago  241a 

Herrick  r.  Dean  281 

V.  Wolverton  452 

Herring  Vi.  First  Nat.  Bank                82 

V.  N.  Y.  R.  242 

Ilerskell  r.  Bus-hnell  28 

Hervey  r.   Fonts  82 

Hesketh  r.  Blanchard  178 

Hess  V.  Werts  202 

Hewett  r.  Buck  214 

Hewett  Re  160 

Hewitt  r.  Sturdevant  209 

■Heywood  v.  Pickering  405,  469 

Hickman  V.  Booth  126a 

V.  Cox  178 

VI  Perrin  427,428 

Hicks  V.  Kelsey  520 

Hidden  V.  Waldo  383 

Higgin.5  r.  Keuffel  541 

""r.  Kasterer  53,56 

r.  Scott  376 

r.  Whitney  32 

Higg,s  17.  Assam  Tea  Co.  474.  501 

Higbtower  V.  Beall  267 

Hill  V.  Beebe  425,440 

V.  Bostick  369 

V.  Frazier  226 

V.  Hill  98,  161 

«.  Hunt  260 

i\  Mem,phis  477 

V.  Pine  River  Bank  501 

V.  Reiner  161 

v.  Robbins  371 

V.  Sewald  113,  124 

V.  Went  worth  116 

r.  Whalen  536 

V.  White  32 

V.  Wooster  520,531 

Hill     Man.     Co.     r.  Providence 

Steamship  Co.  42,  213,  334 

Hillock  Vl  Traders  Ins.  Co.  188 
Hillsdale  Distillery  Co.  r.  Briant      82 

Hilsendegen  r.  Clothing  Co.  42« 

Hilyard's  Estate  542 

Hinckley  t\  Arev  366 

V.  Wilson   Co.  214,313 

Hingston  v.  Wandt  379 


Hinneman  v.  Roscnback 
Hinsdale  r.  Miles 
Hiscoek  v.  Varick  Bank 
Hitobins  i".  Kilkenny  R.  R.  ( 
Hitchman  r.  Walton 
Ilite  V.  Hito 
Hitt  V.  Allen 
Hoagland  t".  Cincinnati.  &o. 

Co. 
Iloare  r.  Dawes 

V.  Parker 
Hobart  v.  Stone 
Hobson  V.  Marsli 
Hodgdon  r.  New  York  R. 
Hodges  V.  Green 

V.  Hurd 

V.  N.  E.  Screw  Co. 
Hodgkinson,  Ex  parte 
Hodgson  r.  Butts 

V.  Loy 

r.  Temple 
Hodkinson  r.  Wyatt 
Hodsdon  v.  Life  Ins.  Co. 
Hodson  V.  Ball 
Tlof  i\  Mager 
Hoffman  v.  Bank 

t".  Bank  of   Milwaukee 

V.  Carow 

i\  Le  Fraunik 

V.  Union  Ferry  Co. 
Hoge  V.  Lansing 
Hogg  V.  Emerson 
Holbrook  r.  Burt 

V.  Cliamberlin 

V.  Ins.  Co. 

V.  Oberne 
Holcombe  v.  City  R. 

V.  Trenton  Co. 
Holden  v.  Thurber 
Holder  v.  Soulby 

V.  Taylor 
Holderness  v.   Shackels 
Tlolladay  v.  Holladay 
Holland  r.  Clianibers 

r.   Mosteller 
Hollar  V.  Southern  Bell  Co. 
Holliday  r.  Pegrani 
llollingsworth  r.  Hanunond 
Hollinsworth   v.   Dow 
Holman  v.  Gauz  S.  S.  Line 

V.  Lock 
Holmes  v.  Bailey 


Bell 

Oerry 

Holt" 

Jacques 

Schmeltz 


rAr.r.E  of  cases. 

Iv 

SECTIO.N 

SECTIOX 

34r> 

Holmes  V.  Sproul 

425 

451 

i\  Tremper 

121 

408 

Holroyd  r.  Marshall            70 

,395,421 

).         513 

Holt  V.  Crucible  Steel  Co. 

426 

123 

f.  Murray 

357 

143 

Holtzapffel  i\  Baker 

31 

253 

Home  Ins.  Co.  v.  Green 

453 

.  R. 

Homer  r.  Guardian  Ins.  Co. 

553 

480 

V.  Slielton 

140.  1.52 

173,177 

Hood  r.  Whit  well 

53,100 

141,308 

Hook  V.  Bolton 

126a 

366 

Hooker  r.  Eagle  Bank 

76,81 

401 

Hookham  r.  Pottage 

185 

320, 325 

Hool  r.  Groverman 

323 

132 

Hooper  v.  Bank  head 

163 

427 

V.  Lusby 

188,210 

232 

V.  Mueller 

42a 

188 

Hoopes  V.  Ferguson 

267 

212,426 

Hoover  r.  Weber 

34 

380 

Hoover  Co",  v.  Atlantic 

126« 

170. 175 

V.  Neill 

254 

286 

Hope  r.  Hayley 

79 

553 

Hopkins  v.  Hopkins 

149 

146 

r.  Ware 

466 

425 

Hopkins  Re 

38 

461 

Hopkinson  v.  Forster 

85. 466 

462 

Hopkirk  r.  Page 

455 

205 

Hoppin  r.  Buffum 

500 

536 

Hopple  r.  Brown 

477 

328 

Horn  V.  Baker 

113, 126 

458 

V.  Gilpin 

20S 

526, 532 

r.  Hansen 

256 

80 

r.  Hardware  Co. 

126a 

121, 122 

V.  Thompson 

80 

170 

Horno  v.  Rouquette 

454 

173 

Horner  i\  Uitsoh 

280 

4 

v.  U.  S. 

475 

491.513 

Horry  v.  Glover 

142 

101 

Horton  r.  Davis 

305 

370 

Horton   Mfg.    Co.   r.   White 

Lily 

30 

Mfg.  Co. 

526 

206,  200 

Hortsman  v.  Henshaw 

449, 462 

278 

Hosmer  r.  Sargent 

437 

281 

Hotchin  r.  Kent 

227 

260 

Hotchkiss  i\  Greenwood 

520 

38 

V.  Hunt 

430 

27a 

V.  Nat.  Bank 

476 

254 

Hotel  Marion  r.  Waters 

38 

380 

Hough  r.  Horsey 

279 

326 

Houghton  r.  Burden 

281 

423 

V.  Brantingham 

156 

400,471 

r.  First  Nat.  Bank 

468 

430 

V.  Hapgood 

133 

284 

r.  Matthews                 382 

, 383, 385 

255 

r.  Payne 

270 

445 

Hoiilchan  r.  Kennebec  Co. 

370a 

286 

Houle  r.  Abramson 

121 

Ivi 


TABLE    OF    CASES. 


SECTION 

House  V.  House  119 

Houser  v.  Fayssoux  459 

t'.  Kemp  395,417 

Houston  R.  V.  Van  Alstyne  499 

Howard  v.  Brown  361 

V.  Continental  Life  Ins.  Co.     553 

V.  Fessenden  113 

V.  Fletcher  371 

■u.  Ives  454 

V.  Shepherd  471 

V.  Smith  387 

Howard  Co.  Re  128 

Howe  V.  Boston  Carpet  Co.  232 

V.  Carpenter  283 

f.  Earl  of  Dartmouth  140,  487 

V.  National  Co.  520,525 

V.  Starkweather  507 

V.  Union  Ins.  Co.  553 

Howell  i\  Hanforth  145 

V.  Harvey  192 

V.  Knickerbocker     Life  Ins. 

Co.  555 

V.  Mclvers  73 

V.  Price  361 

V.  Schenck  108,  109 

Howkins  v.  Bennet  266 

Howland  v.  Continental  Ins.  Co.     553 

Hoxie  V.  Chaney  185 

Hoy  V.  Pittsburgh  Ei.  113 

Hoyle  V.  Plattsburgh  E.  225 

V.  P.  &  M.  R.  225 

Hoyt  V.  Bridgewater,  &c.  Co.  267,  269 

V.  Holley  185 

V.  Sprague  194 

V.  Thom.p.son  298 

Hozey  n.  Buchanan  305 

Hubbard  v.  Callahan         250,255,289 

V.  Charlestown  Branch  R.  R. 

Co.  254, 257 

Hubbell  V.  Flint  371 

Hudson  V.  Bradley  212,  367 

Hudson  Iron  Works  r.  Medart        520 

HuflFaker  v.  National  Bank  451 

Hugg  V.  Augusta  Ins.  Co.  320 

V.  Baltimore,  &o.  Mining  Co.     332 

Hughes  V.  Young  31 

Hughes-Buie  Co.  v.  Mendoza  82 

Huguley  r.  Morris  173 

Huiskamp  r.  Wagon  Co.  187 

Hull  V.  Anderson  393a 

V.  Carnley  431 

V.  Culver  77 

V.  Hull  147 

V.  Mass.  Bonding  Co.  82 

Humble  v.  Mitchell  62,  503 

Hummel  v.  Brown  254 

Humphrey  Advertising  Co.  Re        217 


SECTIOX 

Humphrey  v.  Mut.  Ins.  Co.      546,  547 
V.  Tayleur  157,  159 
Humphreys  i\  Morton  256 
V.  Reed  386 
V.  Union  Ins.  Co.  332 
Hunt  V.  Bay  State  Iron  Co.  113 
V.  Conrad  75 
V.  Divine  473 
Hunt  r.  Iron  Co.  113 
V.  Potter  122 
V.  Rou.«manier  73 
V.  Smith  258 
Hunter,  Ex  parte  182 
Hunter  v.  Bullock  146 
V.  Fry  324 
Hunterdon  County  Bank  v.  Nas- 
sau Bank  498 
Huntington  v.  Porter  81 
V.  Savings  Bank  483 
Huntingdon'  Co.  r.  Park  Land  Co.      82 
Hurd  i\  Darling  207 
Hurst,  In  re  77 
Hurst  r.  Craig  Furniture  Co.       126o 
Hurt  v.  Salisbury  220 
V.  Wilson  79 
Husband  t'.  Linehan  502 
Huson  V.  Pitman  80 
Huston  V.  Clark  124 
Hussey  V.  Winslow  445 
Hutchins  i\  Byrnes-  226,  229 
V.  King  100 
V.  Masterson  114 
V.  Page  170 
t:  State  Bank  68.  500 
v.  Turner  188 
Hutchin.son  v.  Ford  100 
V.  Howard  383 
Hutton  V.  Arnett  419 
Huyck  V.  Meador  445 
Hyams  v.  Calumet  Co.  245,  509 
Hyams  V.  Old  Dominion  Co.  510 
Hyatt  r.  Sewing  Machine  Co.  361 
Hyde  v.  Finley  274 
V.  Parrat  138 
V.  Skinner  30 
V.  Stone  207 
Hyer  v.  Caro  214 
Hyne  v.  Osborn  82 
Hynes  v.  Stewart  192 

I. 

lage  V.  Bossieux  81 

Ibbottson  i\  Rhodes  150 

Idalia  Realty  Co.  r.  Norman  127 
Ideal  Goods  Co.  v.  Eastern  S.  S. 

Co.  326 


TABLE    OF    CASES. 


Vll 


SECTION 

Igoe  v.  Hansen  126a 

Illinois,   The  328 

Illinois  Society  V.  Winthrop  549 

Ilsley  r.  Jones  448 

Imboden  v.  Hunter  437 

Imperial   Bldg.   Co.    v.   Board   of 

Trade  220a 

Imperial  Brass  Co.  v.  Nel.son  523 

Imperial  Land  Co.  v.  Bank  239 

Imperial  Land  Co.,  In  re  85,474,475 
Imperial  Refining  Co.  v.  Wyman  201 
Inbusch  r.  Farwell  188 

Independent  Stores  v.  Earles  254 

India   &   London   Life   Ass.    Co., 

In  re  554 

Industria,  The  328 

Ingersoll  v.  Barnes  124a 

V.  Gourley  82 

Ingraham  v.  Terry  244 

Ingram  i\  Smith  148 

Insurance  Co.  v.  Kiger  472 

V.  Wilkinson  549 

Interboro  Co.  v.  Doyle  477a 

International    Harvester    Co.     f. 

McAdam  2n9a 

International  Co.  v.  Cramp  Co.       533 
V.  Gaylord  520 

r.  Sievert  520 

International  R.  r.  Anderson  Co.  217 
Installment  Co.  v.  Skellett  393a 

Ins.  Co.  V.  Burroughs  556 

Interurban  Land  Co.  r.  Crawford  38 
Investment  Co.  v.  Board  of  Edu- 
cation 264 
lona.  The  328 
Irby  V.  Cage  167a 
Irion  V.  Knapp  82 
Irvine  v.  Forbes  172 
V.  The  Hesper  329 
Irving  Bank  r.  Wetherald  467 
Irwin  r.  Pittsburgh,  &c.  R.  R.  Co.  258 
Isaacson  r.  Harwood  368 
Ivens  V.  Elwes  361 
Ivy  Press  v.  McKechnie                   222 


J. 


Jack  r.  Davis 

81 

Jackson,  Ex  parte 

193 

Jackson  v.  Brownell 

28 

V.  Bull 

148 

V.  Clopton 

383 

V.  Hartwell 

235 

V.  Henry 

279 

V.  Hodges 

372 

V.  Hogan 

16 

r.   Hooper 

167a, 

1730,222 

V.  Jackson 

157 

SECTIOX 

Jackson    r.  May  268 

V.  Newark  P.  R.  Co.  510 

V.  Packard  267 

V.  ParkliurSt  38 

V.  Rounseville  132 

V.  Schoonmaker  27 
Jackson   Lumber  Co.  v.  Western 

Union  Co.  82 

Jacniel  Packet,  The  314 

Jacobs  V.  Knapp  380 

V.  Latour  385 

V.  Williams  227 

Jacobus  r.  Mantel  !o  227 

Jacquith  v.  Worden  414 

Jaffrey  r.  Cornish  367 

Jaicks  V.  Oppenheimer  387 
James  r.  Campbell                      518,529 

V.  May  499 
James  River,  &c.  Co.  v.  Littlejohn       81 

Janes  r.  Paddell  24 

Janvrin  r.  Fogg  416 

Jardine,  Ex  parte  419 
Jarechi  v.  Philharmonic  Society     113 

Jarratt  f.  McDaniel  422 
Jarvis  v.  Rogers  398,  404,  410 
Jarvis's  Appeal                   266,271,276 

Jason,  The  313 

Jasper  Trust  Co.  r.  Lampkin  370a 

Jeannie,  The  326 

Jebson  v.  Cargo  of  Hemp  326 

Jeffery  r.  Selwyn  491 

Jefferys  r.  Boosey  535 

Jeffrey  V.  Neale  31 

Jeffs  V.  Day  75 

Jenckes  v.  Goffe  421 

Jenkins  r.  McCurdy  113 

V.  White  460 

Jenkins  S.  S.  Co.  r.  Preston  313 

Jenkinson  v.  Finance  Co.  82 

Jcnness  i\  Carleton  194 
Jennes  v.  Northwestern  Life  Ins. 

Co.  551 

Jennings  r.  Broughton  490 

v.  bark  170 

Jensen  r.  Wilslep  371 

Jermyn  v.  Moffitt  74 

Jerome  r.  McCarter  395 

Jesup  V.  City  Bank  410 

Jessie  Piano  Co.  V.  Haelberg  31 

Jewel's  Case  2,S 

Jewett  r.  Dockray  78 

V.  Kecnholts  109 

Jewison  r.  Dioudoune  180 

Jocelyn  r.  Nott  146 

Johansen  Co.  r.  Alles  421 

Johns  V.  Clother  491 

r.  Winters  33 

John  Hancock  Ins.  Co.  v.  Daly  549 

Johnson,  Tlie                               '  328 


Iviii 


TABLE    OF    CASES. 


SECTION 

Johnson  v.  Helanger 

82 

V. 

Campbell 

383 

r. 

County 

85 

I'. 

Crioliton 

189 

V. 

Frisbie 

445 

r. 

Ilatliorn 

503 

r. 

Iledrick 

260. 263 

i\ 

Hill 

381 

r. 

Hogau 

186 

r. 

Irby 

81 

r. 

Jeffries 

426 

V. 

Johnson 

143 

V. 

McFry 

165 

V. 

Mosher 

123 

V. 

Newman 

62 

r. 

Nortliern   Trust   Co. 

34 

r. 

Smith 

79 

V. 

Stark 

477 

V. 

Stear 

404,  407 

V. 

Underbill 

499 

r. 

Wiseman 

113 

Johnson  Co.  v.  January 

477 

Johnson  Re 

96 

Johnston  i\  Bornhtnm 

189 

V. 

Brannan 

366 

V. 

Button 

191 

r. 

Scott 

547 

V. 

Southern  Well  Co. 

528 

Johnstone  r.  Cox 

74 

Jonau 

r.  Blancbard 

199 

Jones 

Re 

141 

Jones 

V.     Berryhill 

459 

V. 

Brinker 

322 

r. 

Brown 

165 

V. 

Bullitt 

366 

V. 

Cable 

156 

V. 

Carter 

62 

V. 

Chair  Co. 

124 

V. 

Clark 

204 

V. 

Concord  &  Montreal 

R.        510 

r. 

Cresote  W'orks 

82 

r. 

Flint 

103 

V. 

Gay 

271 

V. 

Gordon 

458 

V. 

Gould 

170 

n. 

Guaranty  Co. 

422 

V. 

Huggeford 

79,433 

V. 

Johnsoni 

368 

V. 

Joyner 

278 

r. 

Kirksey 

282 

r. 

Kinney 

167a 

r. 

Leslie 

4 

r. 

Mai  lory                     253,257,2.60 

V. 

McLean 

271 

V. 

Moncrief  Co. 

34 

V. 

Perkins 

370 

V. 

Reynolds 

75 

r. 

Richardson 

421 

r. 

Simmons 

140,  152 

SECTION 

Jonvs  r.  State  48 

V.  Swayze  427 

V.  Tarleton  388 

V.  Thomas  109 

V.  United  States  371 

V.  Ward  we  II  453 

•*;.  Webster  430 

Jordan  v.  Farn.-worth  425 

i\  Miller  189 

V.  Young  311 

Jordy  r.  Llaxwell  371a 

Josslyn  r.  McCabe  127 

Jouilliard  v.  (Jrcenman  345 

Joy  r.  Midland  Bank  1 

Jubilee,  The  330 

Jnchter  r.  Boehn  438 

.luliana,  The  315 

Jump  r.   Bernier  82 

Juniata  Bank  r.  Hale  453,  455 

Junkin  r.  Uurpee  123 

Jury  V.  Barker  446 

Justice  i\  Stonecipher  446 

K. 

Kalm  r.  Smelting  Co.  204 

V.  Wilhelm'  42a 

Kalamazoo  Trust  Co.  v.  Merrill       191 

Kalem  Co.  r.  Harper  536 

Kane  v.  Bloodgood  79 

V.  Gott  147 

Kansas  City  R.  r.  Anderson  113 

Karnak,  The  471 

Karr  r.  Sehade  305 

Karrick  v.  Hannaman  192 

Karthans  r.  Ferrer  188 

Kate  Heron,  The  305 

Kater  t-.  Steinruck  430 

Katz  v.  Miller  34 

Kaufmann  i'.  Kaufmaiin  257 

Kavanagh  v.  Bank  of  America     477a 

Kavanaugh  r.  Day  288 

V.  Mclntyre  "  190 

V.  Royal  League  299a 

Kaysing  v.  Huges  419 

Kean  f.  Johnson  237,  245 

Keckley  i\  Coshocton  Co.  547 

Keel  V.  Larkin  367 

Keeler  v.  Keeler  117 

r.  Salisbury  369 

Keelev  Co.  v.  Hargreaves  82 

Keene^  r.  Beard  465,  469 

Keener  v.  Bank  of  United  States    253 

Keith  V.  Burrows  425 

Kelley  f.  Brooklyn  445 

V.  Hemmingway  446 

KeUogg  V.  Krauser  78 

V.  Page  345 

V.  Ricliards  366 

v.  Tompson  400 


TABLE    OF    CASES. 


lix 


Kelly  f.  Brewing  Co. 
V.  Miller 
V.  Terrell 
V.  Thomas 
V.  Williams 


SECTION 

42b 
38 
25 

299a 
42a 


Kelsey  r.  Univ.  Life  Ins.  Co.  548,  549 

Kelton  V.  Leonard  188 

Kemp  V.  Derrott  40 

V.  Westbrook  407,  411 

Kempster  v.  Evans  75 

Kendall  v.  Hamilton  157 

V.  Kendall  16 

V.  Robertson  279 

V.  United  States  76,  77 

Kendig  v.  Linn  267 

v.  Marble  280 
Kennard  r.  Broii2;li  123 
Kennebec,  &c.  iCR.  Co.  r.  .Jar vis  489 
Kennebec  Co.  v.  Augusta  Ins.  (Si- 
Bank  Co.  188 
Kennebec  R.  R.  Co.  r.  Kendall  228 
Kennedy  v.  Boykin  166a 

V.  Gibson 

V.  Hazleton 

V.  Parke 

V.  Steamboat  Co. 
Kennerson  f.  Tliames  Co. 
Kenney  v.  Hannibal  R. 
Kenny  L\  Union  R. 
Kent  V.  Quicksilver  Co.    228.  239,  508 

V.  Walton  267 

r.  Wilson  370a 
Kentucky  M.  L.  Ins.  Co.  r.  -lenks  553 

Keokuk,  The  321,  391 

Keplinger  v.  De  Young  53'2 

Kermac  r.  Howard  547 

Kerr  v.  Kingsuury  122 

V.  Trego  245 

Kerrick  v.  Stevens  184 

Kershaw  r.  Kelsey  171 

Kessner  v.  Trigg  281,  283 

Ketchum  V.  Duncan  477 

V.  Foot  81 

V.  St.  Louis  371 

Keuper  v.  Mette's  Heirs  170 

Keyser  v.  Hitz  500 

r.  ^Morehead  166 

Keystone  Co.  v.  Adams  520 

Kidd  V.  Boone  27,  360 

Kidder  v.  Norris  371 

Kidney  r.  Persons  407 

Kiernan  r.  Miisic  Co.  42a 

Kihlholz  c.  Wolf  271 

Kilgore  r.  Dempsej-^  270 

V.  Emmitt  289 

Kilgore  r.  Lvlo  126a 

Kilholz  r.  Wolf  271 

Kilpatrick  r.  Tolinson  147 


350 

r. 

525 

r. 

80 

V. 

328 

r. 

334 

V. 

50 

V. 

279 

Kingr 

SECTION 

Kimball,  The  191,  392 

Kimball  v.  Huntington  81 

r.  The  Anna  Kimball  367 

r.  Morrison  432 

/•.  Williams  257 

Kimball  Co.  v.  Polakow  132 

Kimber  v.  Barber  505 

Kimberlev  v.  Arms  191,  204 

Kimbro  v.  Bullitt  1S2,  188,  191 

Kiml)rougli   v.  Lukins  269 

Kimmel  v.  Bittner  469 

Kincaid's  Appeal  132 

King,  Re  77 

King  V.  Andrews  371 

V.  Capper  68 

V.  Central  Ga.  R.  82 

V.  Crowell  454 

V.  Doane  461 

/■.  Excise  Com'rs  241 

V.  Green  398 

V.  Grocery  Co.  82 

r.  Holmes  451 

Pasmore  246 

Paterson  R.  R.  Co.         483,  510 

Richards  381 

State  289 

Strong  563 

Talbot  487 

Kingman  v.  Perkins  78 

Kingsbury  ?;.  Burrill  77 

Kingsley  v.  Holbrook  53,  101,  103 

Kinman  v.  Cannefax  367 

Kinnersley  v.  ]\Iussen  357 

Kinsell  r.  Billings  113 

Kinsey  r.  Kinsey  82 

Kinscy  Co.  v.  Ilcckermann  126a 

Kinsley  f.  Robinson  455 

Kinyon  v.  Stanton  469 

Kirby  Hall.  The  328 

Kirch  r.  Davies  123 

Kirk  V.  Hodgson  191 

Kirke  r.  Crystal  126a 

Kirkman  r.  Shawcross  384 

Kirkpatrick  r.  Wherritt  278 

Kirwan  r.  Latour  128 

Kitchel  V.  Schenck  275 

Kitchen,  In  re  62 

Kitchens  v.  Jones  133 

Kittrcdge  v.  Woods  121 

Klein  v.  Life  Ins.  Co.  553 

Kline  r.  McLain  27 

Knapp,  hi  re  383 

r.  Alvord  383 

r.  jMorss  532 

Kncass  v.  Schuvlkill  Bank  520 

Knecht  v.  Mut.  l>ife  Ins.  Co.  549 

Knevals  v.  Blauvelt  75 

Knickerbocker  r.  Weitz  547 


Ix 


TABLE    OF    CASES. 


SECTION" 

Knickerbocker  Ins.   Co.  v.  Dietz  553 

Knickerbocker  Life  Ins.  Co.  Re  550 

Knight  V.  Ellis  148 

V.  Gould  158 

Knightlinger  t:  Egan  50 

Knox  V.  Buffington  182 

Knudson  v.  George  167« 
Koehler  v.  Black  River,  &c.  Co. 

225,  226,  229 

Kohn  V.  Keeley  285 

V.  Sacramento  R.  477a 

Kollock  V.  Jackson  385 

Konig  V.  Bayard  449 

Korn  V.  Birnn  27a 

Korns  v.  Shaffer  437 
Kortright  V.  Buffalo  Commercial 

Bank  496 

Kosher  v.  Stuart  227 

Kountz  V.  Kennedy  462 

Kreisle  V.  Wilson  100 

Kranert  v.  Simon  422 

Krementz  V.  Cottle  Co.  520 

Kreuger  Be  193 

Kretzer  v.  Lorshbaugh  82 

Kretzinger  V.  Emering  257 

Kugler  V.  Taylor  81 

Kuhn  V.  Graves  425 

V.  Powell  254 

V.  Savings  Bank  465 

Kuhner  r.  Butler  281 

Kyle  V.  Laurens  R.  R.  Co.  257 


L. 

La  Belle  Iron  Works  v.  Savings 

Bank  502 

Lacam  v.  Mertins  361 

Lacey  v.  Giboney  434 

Lacliaise  V.  Marks  198,  199 

Lacombe  V.  Wain  325 

Lacustrine   Fertilizer  Co.  V.  Lake 

Guano  Co.  53 

Ladow  V.  Oklahoma  Co.  1 

Laflin  v.  Griffiths  427 

Lafou  f.  Chinn  182 

La  Grange  R.  V.  Rainey  243 

Laidley  v.  Bright  446,  470 

Lake  V.  Gibson  159 

Lake  Ontario  R.  R.  Co.  v.  Mason 

492,  494 
Lamb  v.  Goodwin  366 

V.  Parkman  324 

Lambard  v.  Pike  3'86 

Lambert's  Case  187 

Lamberton  v.  Windom     401,  405,  409 
Lampet's  Case  138 

Lancaster  Bank  v.  Woodward  468 


SECTION 

Lancaster    Nat.    Bank    v.    Taylor 

445,  462 

Landon  v.  Emmons  430 

Lane  v.  Brainerd  492 

V.  Cotton  379 

V.  Dobyns  164 

V.  Hallum  383 

V.  King  109 

V.  Steward  455 

Lane  County  v.  Oregon  354,  373 

Lanfear  v.  Blossom  471 

Langdon  v.  Buel  434 

V.  Paul  368 

Lange  v.  Kennedy  193 

Langenberger  l\  Kroeger  451 

Langford  v.  Nat.  Ins.  Co.  546 

Langley  V.  Berry  80 

Langston,  Ex  parte  384 

Langton  v.  Haynes  286 

V.  Horton  74 

Langworthy  r.  Chadwick  139,  152 

V.  Little  425 

Lanigan  v.  Bradley  Co.  77 

Lannes  v.  Courege  164 

Lansden  v.  McCarthy  75 

Lapp-Gifford  v.  Muscoy  Co.  371a 

Lapham  v.  Norton  113,  123 

Larkey  Be  42a 

Larkin  v.  Misland  30 

Lasher  v.  Carey  82 

Lassell  V.  Reed  121 

Lassman  v.  Jaeobson  271 

Latham  V.  United  States  345 

Latta  r.  Kilbourn  184,  191 

r.  Miller  106 

Laud  V.  Smith  166a 

Laughlin  V.  Fairbanks  80 

Laughlin  i:  O'Reily  163 

Laughran  v.  Ross  127 

Lavenson  v.  Soap  Co.  124,  128a 

Laverone  v.  Mangianti  50 

Law  Guarantee  Society  554 

Lawler  V.  Vette  281 

Lawless  v.  Hackett  357 

Lawrason  v.  Mason  473 

Lawrence  V.  Cowles  266 

f.  Evarts  419,  421 

V.  Fletcher  221 

V.  Goodstein  38 

V.  Martin  76 

V.  McCalmont  401,   405.   409 

V.  Schmidt  469 

V.  Tucker  422 

Laws  v.  Rand  46G 

Lawton  v.  Lawton 

119,  120,  121,  122.  127 

V.  Salmon  120,  121 

Lays  V.  Hurley  191 


TABLE    OF    CASES. 


Ixi 


SECTIOX 

SECTIOX 

Lazarus  v.  Andrade 

421 

Levy  V.  Lock 

198 

Leach  v.  Cowan 

370a 

V.  Reich 

435 

V.  Kimball 

416,  430 

V.  Walker 

185 

Leader  v.  Homewood 

127 

Lewenberg  v.  Berud 

131 

Leahi  v.  Dugdale 

81 

Lewey's  Island  R.  R. 

Co.  v. 

Bol- 

Leake,  &c.  Orphan  House  v.  Law- 
rence 257 
Leather  Goods  Co.  v.  Eastern  S. 

S.  Co.  320 

Leathers  v.  Blessin  334 

V.  Carr  81 

Leavitt  v.  De  Lanny  275 

V.  Maykell  38 

V.  Morrow  369 

V.  Putnam  457 

Le  Breton  v.  Stanley  Co.  82 

Leazure  v.  Hillegas  232 

Lee  V.  Baldwin  408 

V.  Davis  193 

V.  Fellowes  278 

V.  Fisk  508 

V,  Hill  254 

V.  Kilburn  417 

V.  Oppenheimer  369 

f.  Risdon  100,  105.  127,  129 

r.  Smith  26 

Leeds  v.  Townsend  173a 

Leeds  Baking  Co.,  In  re  453,  454 

Leef  V.  Go  Id  win  371 

Leese  v.  Martin  382 

Le  Fe^Te  v.  Castaguis  173 

Legal  Tender  Cases  337,  341,  345,  350 

Legault  V.  Malader  49 

Legg  r.  Asgill  352 

V.  Evans  376 

Leggett  ('.  Avery  529 

Leggott  V.  Barrett  185 

Lehigh  Bridge  Co.  v.  Lehigh  Coal 

Co.  242 

Lehman  r.  Jones  455 

Lehmever  v.  Moses  42a 

Twitch  "r.  Wells  499 

Leiter  r.  Poindexter  446 

Leland  v.  Hayden  143 

V.  Sprague  423 

Lemmon  v.  Whitman  267 

Lemont  r.  Lord  320 

Leon  V.  Galceran  315 

Leonard  v.  Farrington  82 

V.  Springer  82 

r.  Wildes  264 

Ije  Rov  V.  Globe  Ins.  Co.  510 

t'.' Johnson  179,182,188 

r.  Tatham  520 

Lethbridge  r.  Adams  196,  202 

Tossing  r.  Grimland  417 

Levi,  The  316 

Levitt  V.  Brendell  425 


ton  516 

Lewis  V.  Berry  77 

V.  Commissioners  477 

V.  Gehlew  367 

V.  Gehlen  367 

V.  Hoblitzell  81 

V.  Jones  121 

V.  Kinney  209 

V.  McKee  321,  471 

V.  Mott  404,  407 

V.  Ocean  Co.  127 

V.  Palmer  426,  433 

V.  Payne  101 

V.  Phoenix  Life  Ins.  Co.  546 

V.  Rosier  53 

Lexington  Brewing  Co.  V.  Hamon      82 

Libby  v.  Hopkins  371 

Liberty  Savings  Bank  V.  Campbell  189 

Lieey  r.  Licey  77 

Lickbarrow  v.  Mason 

3'78,  383,  458.  470,  471 

Liddy  v.  Kennedy  40 

Life  Ins.  Co.  v.  Murtagh  540 

V.  Pike  545 

Liford's  Case  115 

Liggett  Co.  Re  397 

Lill  V.  Egan  188 

T.  Gleason  456 

Lilley  r.  Fifty  Associates  28 

V.  Life  Ins.  Co.  258 

Lilly  «.  Hays  75 

Linahan  v.  Barr  113,  121 

Lincoln  v.  Claflin  258 

V.  Fitch  244 

Lindsay  v.  Hill  288 

V.  Parrott  457 

Lines  v.  Atlantic  Tran.sport  Co.        320 

Line  weaver  r.  Slagle  198,  200 

Linick  r.  Nutting  1 

Linnehan  V.  Sampson  50 

Linton  r.  Wilson  113 

L'lnvincible  330 

Lionborger  r.  Rouse  350 

Lippincott's  E.state  16 

Lippitt  I'.  Thames  Co.  457 

Lipsky  V.  Borgmann  113 

LipsoJm  r.  Goldstein  439 

Little  r.  Hall  539 

V.  Harrington  164 

V.  Phn-nix  Bank  465,  466 

Littk'ficM  r.  Perry  528 

/".  I'inkham  74 

Little  Rock  V.  Bank  477 


Ixii 


TABLE    OF    CASES. 


SECTION 
Liverpool,  The  3'30 
Liverpool    Ins.    Co.    r.    Massachu- 
setts 204,  221 
Liverpool    Marine    Credit    Co.    v. 

Hunter  298,  299 

Livingston  v.  Harris  278 

V.  Littell  458 

V.  Ralli  183 

V.  Tremper  211 

Lloyd  V.  Ashby  177 

V.  Mason  363 

I^bdell  V.  Stowell  166 

Lobsitz  V.  Lissbeger  199 

Lochlan  v.  Reynolds  146 

Loch  Rannoch,  The  313 

Locke  V.  Lewis  187,  188 

V.  Palmer  417,  437 

V.  Stearns  190 

Lock-port,  The  320 

Lockwood  r.  Mitchell  271,  284 

V.  Mutual  Life  Ins.  Co.  547 

V.  Slevin  426 

V.  U.  S.  Steel  Co.  482 

Lo€W  V.  Mclnerney  281 

Logan  V.  McNaugher  202 

Logs  of  Mahogany  323 

Lohman  r.  N.  Y.  R.  486 

Lomas  v.  Wright  361 

London  Loan,  &c.  Co.  i\  Drake 

129,  432 

London,  &c.  Railway  Co.,  In  re      486 
London  Realty  Co.  v.  IMordan          286 

Long  t\  Long  437 

V.  Symonds  499 

Long  Dock  Co.  v.  Mallery  430 

Longbottom  v.  Berry  113,  124 

Longley  v.  Little  513 

Longstaff  v.  Meagoe  124 

Longworth  V.  Higham  366 

Longyear  r.  Hardman  482 

Lonsdale  i*.  Lafayette  Bank  473 

Lonsdale's  Estate  80 

Look  V.  Comstock  427 

Loom  Co.  V.  Higgins  526 

Loomis    V.    Eagle    Life,    &c.  Ins. 

Co.  546,  555 

v.  Knox  260 

V.  Loomis  78,  79 

V.  Marshall  173,  178 

V.  O'Neal  161 

V.  Wainwright  372 

Tx)osen  v.  Schissler  176 

Lord  V.  Brooks  42f,  143 

r.  Dall  544,  546,  550 

Lord  Bolton  v.  Tomlin  27 

Lord  Dungannon  v.  Smith  146 

Lord  Petre  v.  Heneage  96 

Loring  v.  Salisbury  Mills  500 


SECTION 

Lormer  v.  Allyn 

421 

Lougher  V.  Williams 

35 

Louisiana,  The 

328 

Love  V.  Blair 

420 

V.  Howard 

31 

Lovell  V.  Davis 

326 

V.  Minot 

487 

Lovett  V.  Brown 

387 

Low  V.  Mumford 

211 

V.  Pew 

76 

V.  Prichard 

274, 

,  278 

Lowe  V.  Milkr 

165 

V.  R.  R.  Co. 

490 

V.  Schuyler 

259, 

,  263 

V.  Warbington 

32 

Lowndes  v.  City  Nat.  Bank 

255 

Loval,  The 

214 

Love  V.  Payne 

193 

Lovell  V.  Boston  &  Me.  R. 

299a 

Lucas  V.  Bank  of  Darien 

188 

V.  Pitney 

238 

V.  Spencer 

280 

Ludford  V.  Barber 

38 

Ludlow  V.  Cooper 

172 

Ludwig  V.  Huntzinger 

255 

Lulu,  The 

312, 

391a 

Lum  V.  Robertson 

243 

,  244 

Lunn  V.  Thornton 

421 

Lushington  v.  Sewell 

125 

Lusk  V.  Smith 

257 

Luthy  V.  Ream 

509a 

Luxton  V.  Bridge  Co. 

219 

Lyde  v.  Russell 

122 

,  127 

Lyden  v.  Spohn-Patrick  Co.  173a 

Lyell  V.  Walbach  370a 

Lykens,  &c.  Co.  v.  Dock  53 

Lyle  V.  Palmer  113 

Lyman  V.  Boston  &  Maine  R.  166 

Lynch  v.  Dalzell  77.  558 

Lynch  v.  Roller  Mills  100 

Lynde  v.  Rowe  124 

Lyon  V.  Byington  258 

V.  Jones  437 

V.  Railway  Pass.  Ass.  Co.        556 

V.  Reed  38 

V.  Tweddell  192 

Lvsaght  V.  Bryant  454 

Lyth  V.  Ault  193,  365,  366 

M. 

Maas  r.  Chatfield  269 

V.  Kansas  R.  477 

Machine  Co.  v.  Murphy  532 
Mackav  v.  N.  Y.,  N.  H.  &  H.  R.      245 

V.  Roberts  328 

Mackie  v.  Davis  81 

Mackintosh  v.  Trotter  129 


TABLE    OF    CASES. 


Ixiii 


SECTION 

Mackley's  Case  485 

Mackreth  v.  Symmons  389 

Macomber  v.  Grape  Juice  Co.           202 
r.  Parker                       395,  400,  417 

Macon  Co.  r.  Richter  486 

V.  Shores  477 
Macungie  Bank  f.  Hottenstein         279 

Maddin  v.  Edmondson  368 

Maddox  v.  Maddox  151 
Madison    County    Bank    r.    Could 

198,  199 

JMadison,  &c.  R.  R.  Co.  v.  WTiite- 

neck  219 

Maekotter  v.  Maekotter  166 

Magee  r.  Catching  417 

Maggie  Hammond,  The  391 

Maguire  v.  Park  124 

Mahony  v.  Ashlin  444 

Majot's  Estate  156 

Makin  v.  Watkinson  31 

r.  Wilkinson  30 

Malcom  f.  Lovenilge  423 

Maiden  Bank  v.  Baldwin  451 

Mallett  V.  Stone  268 

Ma II in  v.  Wenham  74 

Mallory  v.  Oil  Works  171 

V.  Travellers'  Ins.  Co.  556 

Maloney  v.  Bruce  198 

Maltbie  r.  Olds  23 

f.  Northwestern,    &c.  R.    R. 

Co.  491 

Mandeville  v.  Mandeville  173 

r.  Welch  77,  466 

!Mandlebaum  v.  McDonell  147 

Manfield  v.  Maitland  319 

Manger  v.  Shipman  50 

Mangles  v.  Dixon  81,  547 

Manker  v.  Tough  167a 

Mann  v.  Mann  352 

Manning  r.  Gasharie  172,  202 

r.  Hollenbeck  385 

i;.  International  Co.  334 

V.  :Monaghan  430,  431 

V.  Tvler  281 

V.  Wells  379 

Manistee  Watch  Co.  Re  ^lla 

Manitoba,  The  328 

Manning's  Case  138 

Manse  r.  Hossington  370a 

Mansfield  v.  biackburne  122 

Manufacturing  Co.  v.  Corbin  529 

Manwaring  r.  .Jenison  124a 

Maples  V.  Millon  100 

Mapps  r.  Sharpe  283 

Marble  Co.  v.  Ripley  191 

V.  Spafford  194 

Marcardier  v.  Chesapeake  Ins.  Co.   323 


SECTION 

March  v.  Eastern  R.  R.  Co.  510 

r.  Pigot  544 
Marconi     Wireless     Tel.     Co.     r. 

Simon  532 

Marfield  V.  Goodhue  387 

Maria  Jane,  The  329 

Maria  Martin,  The  328 

Marie,  The  330 

Marie  Palmer,  The  214 

Marine  v.  Lyon  262 

Marine  Bank  v.  Fiske  395 

V.  Wright  471 

Mariners'  Bank  v.  Sewall  244 

Marine  Re  473 

]Marion.  &c.  R.  R.  Co.  v.  Hodge       448 

Market  Nat.  Bank  v.  Raspberry        82 

Markham   v.  Jandon  409,  505 

Marks  v.  ^Mdiehee  267,  283 

Marlborough  Co.  r.  Smith  225 

Marlett  f.  Jaekman  194 

Marquet  v.  Mina,  Ins.  Co.  546 

Marseilles  Co.  v.  Aldrich  172 

Marsh  v.  Fulton  County  477 

V.  Hand  164 

V.  Home  401 

V.  Martindale  266 

V.  Nichols                      523,  527,  534 

V.  \V"oodbury  425 

Marshall  V.  Blackshire  50 

V.  Blew  141 

r.  Johnson  183 

Marshall  County  V.  Cook  477 

Martin  r.  Gray  176,  177 

V.  Johnson  288 

V.  Margham  147 

V.  Martin  Co.  245a 

V.  Reid  400 

Marvin  r.  Feeter  281 

Marvine  r.  Hymers  266,  269 

Mary,  The  330 

Maryland  Casualty  Co.  v.  Grace        547 

V.  Omaha  Co.  259 

Maryland    Fire    Ins.    Co.    v.  Dal- 

rvmple  409 

Maryland  Trust  Co.  v.  Bank  232 

Marzetti  v.  Williams  466 

Mason  v.  Connell  170 

r.  Eldred  188 

V.  Fenn  127 

V.  Pcambic  Co.  244,  517a 

V.  Searles  284 

t'.  The  Blaireau  329 

Mass.  V.  Western  Un.  Tel.  Co.  258 

Mass.  Ins.  Co.  v.  Duncan  556 

Masten  r.  Cummings  437 

Mather  r.  Eraser        113,  117,  119,  124 

r.  lyord  Maidstone  462 

Mathews  r.  Livingston  42b 


Ixiv 


TABLE    OF    CASES. 


SECTION 

Mathewson  r.  Strafford  Bank         455 

Matlock  V.  Straughn  425 

Matthews  v.  Hanson  126a 

t\  Haydon  451 

Matthias  v.  Cook  289 

Mattingly  v.  Darwin  441 

Maiiison  v.  Farnham  194 

Maugham  v.  Sharpe  416 

Maurel  v.  Smith  536 

Maxey  V.  Knight  253 

Maxfield  v.  Jones  82 

Maxted  V.  Paine  505 

Maxwell  v.  Willett  269 

May  V.  Babeock  321 

V.  Breunig  42a 

V.  Campbell  269 

V.  Parker  164 

Maybee  v.  Crozier  281 

Mayhew  Ex  parte  501 

Mayn  v.  Mayn  157 

Maynard  V.  Shaw  414 

Mayor  Re  31 

V.  Brooklyn  Fire  Ins.  Co.  32 

V.  Soulier  433 

MacArthur  Bros.  Co.  v.  Kerr  554 
MacDonald  v.  ^Etna  Indemnity  Co.  554 
MacRackan  v.  Bank  of  Columbus   280 

McAllister  t\  Jerman  285 

V.  New  Eng.  Ins.  Co.  553 

V.  N.  E.  Mut.  Life  Ins.  Co.       553 

MeAndrews  v.  Thatcher  332 

McArthur  v.  bchenck  278 

V.  Sears  321 

MeAuliffe  v.  Mann  129 

McAvity  v.  Lincoln  Co.  81 

M'Bride  v.  Mar.  Ins.  Co.  319 

McCaffrey  v.  Woodin         100,  395,  421 

McCallister  r.   Sappingfield  49 

V.  Shannondale  Co.  228 
McCammon  v.  Cooper  20 
McCartee  r.  Orphan  Asylum  So- 
ciety 231,  234 
McCarthy  u.  Goold  396 

V.  Grace  427 

McCarver  i\  Griffin  421 

McCaskey  Co.  v.  Mantz  520 
MeClain  v.  Ortmayer 

520,  523,  525,  532 

McClineh  v.  Sturgis  218 

MeClintock's  Appeal  253 

McClure  v.  Hill  434 

V.  Oxford  477 

McClurg  t\  Kingsland  519,523 

McCombie  v.  Davies  385,  398 

McConnell  v.  Blood  113,  124 

McCord  V.  Cooper  425 

V.  Ohio  E.  R.  Co.  493 

McCormick  v.  Gray  191 


SECTION 

McCowen  v.  Barnett  458 

V.  Pew  254 

McCowell  V.  Arkansas  Co.  225 

McCoy  V.  Hock  380 

McCracken  v.  Hall  113 
McCrary  i:  Slaughter       172,  185,  188 

McCue  Re  551 
M'CuUooh  V.  State  of  Maryland 

219,350 

McCullough  V.  Randall  20 

McCully  V.  Pittsburgh  R.  R.  Co.      490 

McCutchen  v.  Rice  448 

McDaniel  l\  Barnes  371 

McDaniels  v.  Flower  Co.  509 

V.  Lapham  366 

V.  Robinson  379 

McDearman  i\  McClure  166 

McDermot  V.  Taft  49 

McDonald  v.  Beer  268 

McFadden  v.  Allen  124 

V.  Leeka  202 

V.  Palmer  285 

V.  Turner  417 

McFarlane  v.  Robertson  546 

McFeron  v.  Doyens  126o 

McGahey  v.  Virginia  478 

McGarvey  v.  Prince  395 

McGhee  V.  Cox  34 

McGilton  V.  Stockyards  50 

McGilvery  V.  Capen  323,  324 

McGonnell  V.  Railways  Co.  254 

McGorrish  v.  Dwyer  124 

McGowan  v.  McGowan  185 

McGregor  v.  Brown  101 
M'Gruder  v.  Bank  of  Washington 

451,455 

McGuire  v.  Benoit  430 

V.  Bidwell  369 

MoHenry  r.  Jewett  509 

Mcintosh  r.  Lytle  463 

Mclntyre  Re  498 

McKeage    v.    Hanover    Fire  Ins. 

Co.  113,115,122 

McKee  v.  Buford  188 

V.  Judd  75 

McKeithen  v.  Pratt  161 

M'Kenzie  V.  Nevins  382 

McKinney  l\  Alvis  81 

McKinster  V.  Babeock  422 

McKleroy  v.  Southern  Bank  462 

McKniglit  r.  Ratcliffe  190 

McLae  v.  Sutherland  475 

McLarren  v.  Thompson  425 

McLaughlin  v.  Sauve  253 

McLean  v.  Bovee  106 

McLean  v.  Fleming  321,  391a 

McLemore  v.  Powell  460 


TABLE    OF    CASES. 


Ixv 


SECTION 

McMahon  r.  Davidson  213 

V.  New  York,  &c.   Co.  254 

McMail  V.  Michaels  414 

McManus   v.  Peerless  Co.  548 
McMillan  i\  Maysville,  &c.  R.  R. 

Co.  490 

V.  Solomon  41 

V.  Whitley  167a 

McMurray  v.  Moran  477 

McNally  v.  Connolly  129 

McNeal  r.  Emerson  434 

V.  Leonard  285 

McNeil  V.  Tenth  Nat.  Bank  499 

McNiel,  Ex  parte  316 

McOwen  v.  Zimmerman  126a 

McPartland  v.  Read  427 

McPherson  i\  Cox  324 

McPike  V.  McPherson  77 

McQueen  v.  Turner  166a 

McQuesney  v.  Heister  259 

McRea  V.  Central  Nat.  Bank  114 

McTaggart  V.  Rose  418 

McWilliams  v.  Webb  77 

Meacher  t'.  Fort  449 

Meads  v.  Earle  82 

V.  Meads  103 

Meagher  r.  Fogarty  173a 

Meagher    i.    Reed  184 

Mechanics'  Bank  r.  Harter  468 

V.  Merchants^  Bank  501 

V.  New  York  R.  R.  Co.  68.  482 

v.  N.  Y.  &  N.  H.  R.         485,  499 

Mechanics'  Savings  Bank  v.  Meri- 

den  Agency  Co.  232 

Medill   r.   Collier  515 

Medler  r.  Childers  82 

Meehan  v.  Valentine  178 

Meek  v.  Smith  241 

Mehan  r.  Thompson  392 

Meibus  V.  Dodge  50 
Meigs's  Appeal                           113,116 

Meissncr  r.  Brun  324 

Meixsell  v.  Williamson  424 

Melledge  r.  Boston  Iron  Co.  367 
Melton  V.  Fullerton  Co.          V26a,  127 

Melting  Co.  v.  Reese  202 

Memphis   V.   Brown  366 

Menendez  V.  Holt  193 

Menkins  r.  Lightnor  171 

Mensinger  r.  O'Hara  52 

Menzies  v.  Dodd  427 

Mephams  V.  Biessel  311 
Mercantile,  &c.  Bank  V.  Gladstone    321 

Mercantile  Co.  V.  Lance  263 

V.  Winer  126a 

Mercer  v.  Tinsley  434 

Mercer  County  v.  Hacket  476 


SECTIOX 

Merchants'  Nat.  Bank  r.  Beutel      367 

Merchants'  Bank  r.  Cook    216,  509,  511 

i\  Livingston  499 

V.  Spicer  445 

V.  State  Bank  85,  227,  467 

Merchants'    Nat.    Bank    r.    Nat. 

Eagle  Bank  462 

Merrell  v.  Garver  126a 

V.  Tice  538 

Merriam  v.  Wolcott  456 

Merrick  r.  Bank  of  Metropolis        224 

Merrill  v.  Bartlett  206,209 

V.  Emery  140 

V.  Englesby  81 

V.  Frame  30 

V.  Hodgkins  18 

V.  Mason  165 

V.  Smith  191 

V.  Myman  124 

Merrimae  Mining  Co.  v.  Levy       517 

Merriman   v.  Ward  371 

Merrit  r.  Pollys  193 

Merritt  i.  Judd  127 

I'.  Meisenheimer  370a 

V.  Walsh  206 

Merry  v.  Hoopes  185 

Merryman  v.  Bourne  30 

Merwin   v.   Shailer  212 

Mesiboosky  Re  271 

Metealf  v.  Kincaid  74 

V.  Pilcher  269 

Metcalfe  v.  Fosdick  417 

Metropolitan  Bank  r.  Jones  467 

r.  Sirret  198 

V.  Van  Dyek  345 

Metrop.  Life  Ins.  Co.  r.  Morrow        82 

Metropolitan  Ry.  v.  Chicago  227 

Meyer  v.  Hibsher  451 

t'.  Muscatine  269,  477 

Meygatt  l\  Schauffcr  Flaum  Co.     520 

Michigan  Bank  v.  Eidred         188,  456 

Michigan  Ins.  Co.  r.  Leavenworth 

73, 446 
Middlebrook  v.  Corwin  121 

Middleniore   r.   Goodale  30 

Middlesex,  &.c.  r.  Davis  445 

Midland  G.  W.  R.  f.  Gordon         508 
Miers  v.  Fuller  Co.  82 

Mifflin  r.  Smith  179 

Migcl  V.  Heeler  167a 

Mileham^s  Trust,  In  re  153 

Miles  r.  Conn.  M.  L.  Ins.  Co.  548 

Milholen  r.  Meyer  271 

Mill  r.  Baer's  Execntors  41 

Milldam  Foundrj'  v.  Hovcv  3.'>4 

Miller  r.  Baker  '       100.  127 

r.  Bates  274 


Ixvi 


TABLE    OF    CASES. 


SECTION 

Jliller  V.  Brass  Co.  529 

V.  Cook  266 
V.  Eagle  Life  &  Health    Ins. 

Co.  555 

V.  Eagle  Man.  Co.  521 

V.  Hoyle  79 

V.  Hull  267 

V.  Marston  380 

V.  Pancoaat  430 

V.  Porter  233 

V.  Race  475 

V.  Simpson  173o 

V.  Tiffany  288 

V.  United  States  89 

V.  Whitson  425 

Milligau  ?".  Drury  113 

Milliken  v.  Brown  365 

V.  Dehon  417 

Mills  V.  Bank  of  United  States      453 

V.  Buenos  Ay  res  Ry.  225 

V.  Gleason  477 

V.  Jefferson  256 

V.  Shirley  379 

Miln  V.    Spinola  212 

Milnes  v.  Branch  34 

Milton  V.  Mosher  188,207,418 

Milwaukee  Co.  v.  Avery  520 

Milwaukee  R.  R.  Co.  v.  Field  490 

Milwaukee  Store  r.  Katz  371 

Miner  v.   National   Co.  421 

V.  Paris  Bank  271 

Miners'  Bank  v.  Burriss  82 

Miner  Re  16 

Minneapolis  Co.  v.  Betcher  407 

Minneapolis  R.  v.  Beckwith  242 

Minnesota  Co.  v.  St.  Paul  Co.    56,  113 

Minnetonka  Co.  v.  Brick  Co.  82 

Minor  t\  Mechanics'  Bank  231 

Minot  V.  Paine  143 

V.  Russ  467 

V.  Sawyer  285 

V.  Thompson  140 

Minshall  v.  Lloyd  112 

Mishler  v.  Commonwealth  358 

Missio  V.  Williams  49 

Mississippi  R.  R.  Co.  r.  Harris     490 

Mitchell   V.  Black  427 

l\  Burlington  477 

V.Chambers  206,214,311 

V.  Doggett  267.277,286,289 

V.  Roberts  411a 

V.  Tarbutt  211 

v.  Union  Life  Ins.  Co.  546 

V.  Winslow  421 

Mitch  eson  v.  Oliver  212 

Moakley  v.  Riggs  151 

Moar  r.  Wright  81 


SECTION 

Mobile  R.  V.  Tennessee  510 
Moehring  v.  Mitchell  555 
Moeser  v.  Schneider  82 
Moffat  V.  Farquhar.son  209 
V.  Strong  139 
V.  Beeler  427 
Mogart  V.  Smouse  170 
Mohawk,  The  306 
Mohaiwk  Bank  V.  Corey  459 
Moline  i\  Brewing  Co.  34,  36 
Mollwo  V.  Wards  181 
Molyneaux  V.  Collier  366 
Monarch   Laundry   Co.   v.   West- 
brook  4 
Monast  v.  Manhattan  Ins.  Co.  548,  553 
Monckton  v.  Gramophone  Co.         540 
Monnot  V.  Ibert  422 
Montague  V.  Dent  122 
V.  Lobdell  81 
Montany  V.  Pock  417 
Montenegro  Co.  V.  Bueris  414 
Montgomery  v.  Chase  421 
V.  Lumber  Co.  100 
V.  Wharton  208 
Monthly     Installment     Co.     r. 

Skellett  431 

Monticello  V.  Grant  369 
Monument  National  Bank  v.  Globe 

Works  238 

Moody  V.  Brown  307 

V.  Ellerbe  433 

V.  Kyle  77 

Moon  V.  Jennings  166 

Moore  v.  Atchison  R.  227 

V.  Bank  of  Commerce  501 

V.  Davis  173 

V.  Downey  542 

V.  Gilmore  241o 

V.  Lowrey  77,258 

V.  Marsh  533 

V.  Metropolitan  Nat.  Bank        78 

V.  Murdock  430 

V.  Simonds  88,206,305 

V.  Valentine  123 

Moore  Re  138,  151 

Moore's  Estate  Re  194 

Moors  V.  Washburn  260,  397,  410 

l\  Wyman  400 

Moran  v.  Abbey  371 

V.  Commissioners  477 

Moran.  The  320 

Morel  V.  Miss.  Life  Ins.  Co.  556 

Mores  v.  Conham  403 

Moreton  v.  Milne  297,298 

Morey  v.  Hoyt  127 

Morgan  v.  Abergavenioy  97 

V.  Bank  of  N.  Y.  470 


TABLE    OF    CASES. 


Ixvii 


SECTION 

Morgan  r.  Britten  157 

V.  Congdon  380,381 

V.  Dod  417 

V.  Louisiana  237 

V.  Morgan  140 

V.  Stnrtiiers  488 

[M^orgcntliau  i'.   Ehrich  426 

Jlorison  v.  Moat  64 

Morley  Co.  v.  Lancaster  532 

Morley  r.  Bird  157 

Morning  Star,  The  329 

Morrell  V.  Trenton  Mut.  Life  Ins. 

Co.  546 

Morrell's  Appeal  487 

Morriel  v.  Daggett  26 

Morrill  v.  Saiiford  426 

Morris  v.  Burrows  471 

V.  Richards  452 

Morris  Canal  v.  Fisher  85,  476 

Morris  Canal   Co.   v.   Lewis  395 

Morris's  Appeal  124 

Morrison  v.  Bailey  465 

V.  Berry  113,  119 

V.  Muspratt  549 

Morrow   v.  Brenizet  63 

V.  Turney  418,426 

V.  Williams  139 

Morse  v.  Brainerd  38 

V.  Crofoot  278 

V.  Powers  422,427 

Mors  Le  Blanch  v.  Wilson  385 

Mortgage  Co.  v.  Aughe  285 

Morton  v.  Naylor  77 

V.  Perry  352 

V.  Pinckney  35 

V.  Thurber  271 

Moscowitz  V.  Sassulsky  173o 

Moses  V.  Loan  Association  278 

V.  Traveller's   Ins.   Co.  559b 

Moss  t>.  Averill  237 

V.  Gilmore  34 

V.  Harpeth  Academy  239 

V.  Oakley  513 

Moss's    Appeal  143 

Mote  V.  Chicago  R.  257 

Mott  V.  Palmer  113,115 

V.  Ruckman  305,323 

Moule  r.  Carrett  34 

Mount    Pleasant    v.    Hobart  3 

Mourne  Nat.  Bank  V.  Catlin  369 

Mowry  v.  Homd  Ins.  Co.      546,  549,  554 

V.  Todd  77 

V.  White  421 

V.  Whitney  520.531 

V.  Wood  408 

Moylan  v.  Moylan  255 

Wt.  Olivet  Cemetery  r.  ShuWrt        81 


SECTION 

Mueller  v.  Provo  422 

V.  Wiebracht  371 

Muilraan  r.  D'Eguino  446 

Muldon  V.  Whitlock  214 

Mulhall  V.  Quinn  74 

Mullaly  r.  People  50 

Mullen  V.  Morris  409 

Muller   V.   Dows  245 

V.  Kling  82 

V.  Philadelphia  286 

Mil  hey  Co.  r.  McKinney  42a 

Mum  ford  r.  American,  &c.  Ins.  Co.    274 

V.  Brown  30 

V.  Cantv  298 

V.  Nicoil  206,209 

Mumnia  V.  Potomac  Co.  242 

Munn  V.  Baldwin  453 

V.  Illinois  216 

Murdock  v.  Chenango,  &c.  Ins.  Co.    164 

v.  Columbus  Ins.  Co.  417 

V.  Finnev  78 

r.  Giffofd  113 

Murphy,  In  re  498 

V.  Adams  390 

V.  Manning  50 

V.  Mut.  Benefit  Life  Ins.  Co.       549 

V.  Sehwaner  27a 

V.  Stewart  188 

Murray  v.  Buell  75 

V.  Detroit  Co.  533 

V.  Graham  462 

V.  Judson  283 

V.  Lardner  85, 476 

V.  Life    Ins.    Co.  548 

V.  Pocatello  520 

V.  Richards  184 

V.  \\arner  471 

Murrell  r.  Murrell  172,  191 

Murrell  &  Co.  v.  Edwards  452 

Murtagh  v.  Costello  186 

i\  Thompson  256 

Mu&ier   v.    Trumpbour  173 

Musselman  v.  Oakes  445 

Mussey  v.  Eagle  Banik  467 

Musson  V.  Lake  451 

Mut.  Ass'n  t\  Barry  556 

V.  TTamlin  553 

Mutual   Ins.  Co.  v.  Board  Corp.     546 

Mutual  Life  Ins.  Co.  v.  Allen         547 

p.  Hillyard  171 

V.  Terry  551 

V.  Watson  82 

Mut.  Protection  Ins.  Co.  r.  Hani'- 

ilton  547 

Myers  ;;.  Davi.s  81 

V.  Kevatone  Mut.  Life  Ins.  Co.   552 

r.  South  Fi^ther,  Ac.  Co.           81 


Ixviii 


TAB1.E    OF    CASES. 


SECTION 

My«rs  V.  St.  Helen's  R.  R.  Co.       236 

V.  Willis  212 

Mygatt  V.  Sohaflfer  533 

N. 

Nally  V.  Home  Ins.  Co.  559ia 

Nash  V.  Ely  427 

i\  Nash  69 

Nassau  Hotel  V.  Barnett  82 

Nathaniel  Hooper,  The  319,  323 

Nat.  Bank  v.  Bangs  471 

V.  Colby  244 

V.  First  National   Bank  462 

V.  Olobe  Works  238 

V.  Hartford  R.  476,477,479 

V.  Landon  202 

t\  Levy  351,367 

V.  Lewis  266,  267 

V.  McKinley  434 

V.  Merchants'  Bank  471 

V.  Newell  482 

V.  Norton  193 

V.  Place  278 

V.  Sprague  425 

V.  Thompson  271 

V.  Wood  454 

National  Building  Ass'n  i\  Knab  27a 

National     Exchange     Bank     V. 

Granite  Co.  27a 

National  Hat  Co.  v.  Hedden  520 

National  Ins.  Co.  v.  Fleming  556 

National  Lancers  v.  Lovering  257 
National  Park  Bank  V.  Billings  76 
Nat.  Pemberton  Bank  v.  Lougee  113 
National  Soldiers'  Home  r.  Par- 

rish  254 

National  Tel.  News  Co.  v.  West- 
ern Un.  Tel.  Co.  535 
Nat.  Union  Fire  Co.  r.  Denver  R.    82 
Natural  Autoforce  Co.  v.  Winslow  121 
Natural  Ventilator  Co.  V.  Wins- 
low                                                    126a 
Naylor  v.  Collinge  122 
Neal  V.  Bainbridge  31 
Neal  V.  Freeman                                 258 
V.  Jefferson                                   42a 
Neale  v.  Janney                                 501 
Neary  v.  Cahill                                   163 
Needham  v.  Hill                          163,  165 
Neff  V.  Horner                                     476 
Neilson  v.  Moss  End  Co.                    192 
Nelson  v.  Eaton                                   239 
V.  First  Nat.  Bank                    425 
V.  Hurford                                    267 
V.  Woodruff                                  321 
Neptune,  The                                     317 


SECTION 

Nesbit  V.  Riverside  477 

Nesham  V.  Selby  25 

Nesone  V.  City  Nat.  Bank  299a 

Nevada,  The  328 

Nevan  v.  Roup  399 

Nevill  v.  Hancock  77 

v.  Snelling  265 

Nevitt  V.  Bank  of  Port  Gibson  244 
Newberry  v.  Colvin  323 

Newboldr.  Wriglit  398 

Newbury  r.  Dow  132 

Newburyport  v.  Fidelity  Ins.  Co.  259 
Newburyport  Bank  r.  Brookline  509 
Newby  v.  Hill  425 

New  Castle  Co.  v.  Ward  126« 

Newconib  i'  Raynor  460 

Newell  V.  Nixon  212 

New  England  Co.  r.  Rockport  Co.  81 
New    England    Ins.    Co.    f.    Brig 

Sarah  Ann  307 

N.  E.  Mut.  Life  Ins.  Co.  v.  Has- 

brook  553 

New  England  Trust  Co.  v.  Abbott  486 
V.  Eaton  143 

New  Glen  wood  Co.  Re  471 

Newhall  v.  Clark  449 

New  Haven  Trust  Co.  V.  Camp      299a 
N.  H.  Central  R.  R.  Co.  i\  John- 
son 494, 517 
New  Jersey,  &c.  Co.  r.  Turner        281 
New  Jersey  v.  Cruse  126a 
Newman  V.  Irwin  78 
i\  Kershaw                           279,281 
V.  Newman                                    166 
V.  Walters                                     329 
r.  Williams                                 275 
New  Orleans  v.  Globe  Ins.  Co.       124 
V.  Houston                                    242 
Newsome  r.  Davis                       407,  409 
Newsum  v.  Hoffman                         425 
Newton  i\  Gordon                                 50 
V.  Howe                                          163 
r.  Mut.  Ben.  Life  Ins.  Co.         551 
N.  Y.  Dry  Dock  Co.  v.  American, 

&c.  Co.'  271 

N.  Y.  Life  Ins.  Co.  V.  Flack      547,  549 
V.  Stathamj  553 

New  York,  &c.  R.  v.  Nickals  510 

New  York  Times  Co.  r.  Star  Co.  536 
New  York  Re  113 

Niagara  County  Bank  v.  Baker  272 
Niagara   Falls   Co.    v.    Sehermer- 

horn  126a 

Nichoff  i\  Dudley  173 

Nicholaus  v.  Thielges  173 

Nichells  V.  Buell  204 

Nichols  r.  Bellows  284 


TABLE    OF    CASES. 


Ixix 


SECTION 

Nichols  V.  Buell 

170 

V.  Holliday 

379 

V.  Levins 

269 

V.  Webster 

434 

Nicholson  v.  Caress 

157 

V.  Chapman 

381 

V.  Moog 

193 

Nickerson  r.  Babcoek 

274 

Nicolson  Pavement  Co.  V.  Jenkins  528 

Nierosi  v.  Walker  267 

Nightingale  r.  Burrell  149 

V.  State  Mut.  Life  Ins.  Co.  550 
Niles  f.  Ludlow  Co.                    508,  510 

Nixon  V.  Kiddy  371a 

Noble  r.  Beeman  Co.  446 

V.  Walker  269 

Nonantum  Co.  V.  Webb     •  75 

Nonotuck  Co.  v.  Adams  Ex.  Co.  299a 

Noonan  t\  McNab  183 

Norcum  v.  Lum  278 

Norfolk  R.  V.  Read  75 

Norman  v.  Thoniipson  366 

Norment  r.  Wittmann  173a 

Norris  v.  Fadden  42a 

V.  Smithville  242 

V.  Thomson  562 
North  Am.  Ins.  Co.  V.  Burroughs  556 

North  Bank  i:  Abbot  451 

North  Hempstead  v.  Hempstead  245 

North  Penn.  R.  R.  Co.  r.  Adams  256 

Northern  Bank  v.  Day  510 
Northern  Central  R.  Co.  f.  Canton 

Co.  113 

Northern  Trust  Co.  v.  Day  481 

North  Ferry  Co.,  Matter  of  509 
Nortlirop  r.  Newton  Turnpike  Co.   495 

Northup  r.  Railway  Pass.  Ass.  Co.  556 

North   Star,  The  328 

Northwestern  Ins.  Co.  V.  Adams  545 

V.  Wright  82 
Northwestern     Lumber     Co.     r. 

Parker  126a 

Norton  r.   Ladd  50 

V.  Phoenix  Life  Ins.  Co.  553 

Notman  r.  Anchor  Assurance  Co.  550 

Noyes  r.  Brown  77 
Nuckols  Re                                         299a 

Nudd  V.  Burrows  383 

Nussbaum  v.  Waterman  419 

Nye  V.  King  256 

N.  Y.  Ins.  Co.  V.  Hendren  551 

N.  Y.,  N.  H.  &  H.  R.  V.  Schuyler  485 
N.  Y.  &  P.  R.  Co.  p.  /Etna  Ins. 

Co.  558 


O.  SECTION 

Oakes  v.  Moore  376,378,380,381 
i\  Turquand  515 
Oakland  Cemetery  Co.  r.  Ban- 
croft 115 
Oakland  Cotton  Co.  r.  Jennings  214 
Oak  Pits  Colliery  Re  225 
Oates  i\  Frith  28 
Obey,  Tlie  328 
O'Brien  v.  Illinois  Surety  Co.  20 
Ocean  Bank  v.  Fant  451 
Ocean  Ins.  Co.  r.  Rider  383 
Oehsi  V.  Tilton  4,  112,  126a 
Oohler  v.  Hamhurg-Am.  Co.  334 
O'Connor  v.  Keely  34 
i\  Mechanics'  Bank  465 
Odell  V.  Odell  146,233 
Odenheimer  v.  Douglass  77 
Odden  v.  Jamison  491 
O'Donnell  v.  Burroughs           123,  124o 

V.  Hitchcock  113 

Ogden.  t*.  Saunders  256 

Ogilvie  v.  Knox  Ins.  Co.  491 

Ogle  r.  Eagle  Ins.  Co.  55 

Oglesby  v.  Attrill  517 

O'Hanion  v.  Grubb  426 

Ohio  Life  Ins.  Co.  v.  Ross  81 
Ohio,  &c.  R.  R.  Co.  V.  Wheeler 

221, 222 

Ohrloff  V.  Briscall  326 

O'Keefe   v.  Allen  74 

Okie  V.  Spencer  460 
Olcott  V.  Tioga  R.  224,  238,  437 
Old  Dominion  Co.   v.  Bigelow 

299a, 492 

Oldfield  V.  Attorney-General  146 

Olds  V.  Cummingsi  77 

Oleson  V.  Fader  426 

Oliphant  t\  Mathews  179 

Olive  V.  Martell  166 

V.  Smith  382 

Oliver  v.  Bank  of  Tennessee  455 

V.  Eaton  428 

V.  Loydon  38 

Olmstead  v.  Niles  101 

Olson  r.  Idora  Co.  393a 

Omaha  Hotel  Co.  r.  Wade  281 

O'Malley  r.  Heman  Co.  1 

Ombony  v.  Jones  122 

(VNeil  r.  Armstrong  315 

V.  Nat.  Bank  509 

O'Neill    r.   Concral    Film   Co.  536 

i\  Whigliam  409 

Ontario  Bank  r.  Ilanlon  471 

Ontario  Bank  r.   Lightbody  351 

Oppenheim  v.  Russell  384 

Ordway  v.  Colcord  258 

Orear  v.  McDonald  455 


Ixx 


TABLE    OF    CASES. 


SECTION 
Oreffon-Wasli.  R.  v.  East  Oregon 

Co.  34 

O'Reilly  v.  Guardian  Ins.  Co.         555 
V.  Morse  526,529 

Orford  Iron  Co.  f.  Spradley  238,  239 
Oridge  v.  Sherborne  452 

Oriental   Bank  V.  Blake  455 

Orlando,  The  307 

Orleans  v.   Phoebus  208 

Ormerod  v.  Tate  383 

Orpheus,  The  328 

Orr  V.  Union  Bank  470,  473 

Orrok  v.  Commonwealth  Ins.  Co.  332 
Orth  V.  Anderson  452 

Osborit  V.  Morgan  150 

V.  Schenck  161,  165 

Osborne  v.  Fridricli  278 

V.  Morgan  439 

Osborne  Re  143, 517o 

Osgood    i\    Pearsons  445 

V.  Pollard  437 

O'Shields  v.  Union  Foundry  510 

Otis  V.  Beckwith  547 

t\  Gardner  497 

Otis  Co.  V.   Interborough  Co.  520 

Otto  v.  Durege  275 

Ottumwa  Co.  v.  Christy  Co.  526 

Ottumwa  Co.  v.  Hawley  124 

Ottumwa  Woolen  Mill  v..  Hawley  124 
Ouderkirk  p.  Central  Nat.  Bank  401 
Ouston  V.  Hebden  209 

Outcalt  t'.  D-urling  386 

Overend,   Ex  parte  238 

V.  Oriental    Co.  460 

Overman  v.  Hoboken  City  Bank  468 
Overseers  of  Poor  v.  Sears 

231,488,509 
Overton  v.  WilUston  129 

Oviatt  V.  Sage  207 

Owens  V.  Miller  80 

V.  Reed  32 

Oxnard  v.  Blake  424,425 


Pacific  Improvement  Co.  r.  Jones  27a 

Pack  V.  Thomas  466 

Packard  v.  Dun.smore  87 

V.  Kingman  440 

Page  V.   Fowler  106 

V.  Heineberg  231,233 

V.  Ordway  422 

V.  Williams  263 

Paige  V.  Banks  537,  540 

Pairn^  V.  Ivester  299 

r.  Mason  425 

V.  Parbhurst  528 


SECTION 

Painesville  R.  R.  Co.  v.  King         510 
Painter  V.  Fidelity  Co.  52 
Palm  V.  Fancher  263 
Palmer  v.  Elliot  178 
V.  Forbes  113 
V.  Hoi  ford  146 
V.  Merrill  77,547 
V.  Palmer  82 
V.  Phoenix  Life  Ins.  Co.  5o3 
V.  Ridge  Mining  Co.  516 
V.  Stockwell  258 
V.  Williams  372 
V.  Yager  366 
Palmerton   ?'.  Huxford  366 
Palms  r.  Palms  146 
Palmtag  v.  Doutrick  400 
Palmyra  r.  Morton  228 
Paper-bag   Cases  528,530 
Pardee  r.  Fish  473 
Paris  i".  Paris  143 
Parish  i\  Wheeler  439 
Park  V.   Baker  115 
Parke  v.  Foster  253 
Parker  r.  Brancker  387 
V.  Canfield  178,  182 
V.  Cousins  269,365 
V.  Elder  164 
V.  Fergus  178 
V.  Green  371 
V.  Kelly  81 
V.  Macomber  193 
V.  Maxwell  274 
V.  Morrison  424 
V.  Palmer  425 
V.  Parker  366 
Parkhurst  v.  Almy  499 
Parks  V.  Booth  533 
V.  Hall  385 
V.  Innes  78 
Parmalee   v.    Cameron  80 
Parrott  v.  Byers  497 
Parry  v.  The  Peggy  315 
Par-shall  v.  Eggart             400,417,427 
Parsons  v.  Camp  113,  121 
V.  Copeland  126 
V.  Hughes  430 
V.  Jackson  477 
Parsons    Savings    Bank    v.    Sar- 
gent 419 
Parton   V.  Prang  64,  535 
Partridge   v.   Davis  456 
V.  Swazev                      418,419,422 
V.  Wells  186 
Paschal,   In  re  383 
Pasmore  v.  North  446 
Pass  V.  McRea  77 


TABLE    OF    CASES. 


Ixxi 


SECTIOW 

Passenger  Railway  Co.  r.  Phila- 
delphia 257 
Patapsco,  The  391a 
Patch  V.  Wheatlflnd  207 
Pate  V.  Brown  476 
Patent  File  Co.  &  Bank  Co.  AV-      236 
Paterson  v.  Powell  546 
Paton  r.  Coit  458 
V.  Sheppard  145 
Patten  r.  Curney  211 
Patterson  v.  Bird^iall  286 
r.  Chalmt-rs  206,209 
V.  Currier  369 
V.  Devlin  140 
V.  Edwards  389 
V.  Kentucky  518 
V.  Silliman  183 
V.  Youngs  199 
Patton  V.  Moore  115,116 
Paul  Boggs,  The  392 
Paul  r.  CuUum  173 
V.  Virginia  221.241o 
Pa.wlet  V.  Clark  _     219 
Pawsey  v.  Armstrong  17:5,  194 
Pawson  i".  Donnell  311 
Payne   f.    Gardintr  473 
V.  Mortimer  361 
V.  Newcomb  284 
Peabody  v.  Lcwiston  82 
Peacock  v.  Cumanings  191 
r.  N.  Y.  Life  Ins.  Co.  549 
V.  Rhodes  456 
Pearce  v.  Aldrich  Mining  Co.              1 
V.  Austin  458 
f.  Madison,  &c.  R.  R.  Co. 

231,238,245 

Pearly  v.  Smith  145 

Pearson  r.  Bailey  267 

V.  Bank  of   Metropolis  451 

V.  Dawson  385 

V.  Duane  322 

Peary  r.  Hovey  367 

Peck    V.    Batehelder  122 

V.  Mcl^ean  164 

Peckham  Ke  547 

Peirce  v.  Ocean  Ins.  Co.  307 

Pekin  r.  Reynolds  256,262 

Pelham  r.  Grigg  361 

Pi'lzer  r.  Steadniaii  368 

Pemberton  v.  King  127 

Penfold  V.  Univ.  Life  Ins.  Co.         551 

Penhallow  r.  Dwiglit  106 

Penn   r.  Whitehead  171 

Pennington   Bank    r.   Bauman        299n 

Pennock    r.   Coe  1 1  '^ 

r.  McCorniick  417 


SECTION 

Pennsylvania  R.'s  Appeal 

225, 226.  499, 502 

Pennsylvania  11.  r.  Miller  242 

V.  Minis  227 

r.  Unitt^  Stat&s  522 

Penn.     Steel    Co.     r.    New    York 

City  R.  254 

Penny     Savings     Bank     i.     Fitz- 
gerald 283 
Penny's  Case                                        49S 
Pennybecker   v.  McDougal  113 
Penobscot   R.    r.   Dummer                  508 
Penobscot,  &c.  R.  R.  Co.  v.  Dunn        490 
Penry  v.  13rown                                    122 
Penton   r.   Robart        100. 105, 121,  127 
People  v.  Commissioners  of  Texas    481 
V.  Devlin                                        191 
V.  Downs                                    2, 50 
V.  Dunbar  Co.                               241 
V.  Kankakee  Co.  241 
V.  Keese                                         218 
V.  Mackey                                      217 
V.  Manliattan  Co.                        246 
V.  Mead                                          477, 
V.  Oakland  Co.  242 
V.  Press  Association  509 
V.  Raymond                                    242 
V.  Seffridge  220 
V.  Throop  225 
V.  Tioga  77 
V.  Walker                                      243 
V.  Wanzer                                       50 
v.  Willcox                                     254 
People's  Bank  r.  Gayloy                   400 
t'.  Keech                                 156,  164 
People's  Ice  Co.  r.  Davenport  53 
People's  Savings  Bank  r.  Collins     278 
Peoria,  &c.   Ins.  Co.  r.   Hall            210 
f.  Lewis                                         254 
Pequawkctt  V.  Mathes                       361 
Perin  r.  Carey                                       233 
Perkett  r.  Manistee  R.  Co.  82 
Perkins  r.  Boardman                           385 
r.  Kirby                                     .34,39 
r.  Swank                                116.432 
V.  Telephone  Co.  82 
Perrine  r.  Chesapeake.  Ac.  Canal 

Co.  238 

Pcrring  r.   Hone  188 

IVrris  r.  Hexanii-r  536 

Perry   r.  Chandler  32 

r.  Granger  Ki.?,  166 

r.  Pettingill  421 

r.   Prov.  Life  Ins.,  &c.  Co. 

")">;').  556 
Perry    Re  1 

Persf.ns  r.  Oldli.-M  191 


Ixxii 


TABLE    OF    CASES. 


SECTION 

Petcrman  r.  Kingsley  42a 

Peters  v.  Warren   Ins.  Co.  332 

Peterson  r.  Roach  188 

V.  Union  Nat.  Bank  468 

Pettee  r.  Prout  450,  458 

Pettibone  v.  Griswold  410 

r.  Perkins  437 

V.  Stevens  438 

Pettis  V.  Kellogg  419 

Pettit  V.   First  Nat.   Bank  399 

Petty  V.   Overall  401 

V.  Styward  159 

Pettyjohn  v.  Oregon  Co,  332 

Peyroux  i\  Howard  392 

Phelps  V.  Ayres  127 

r.  Bellows  271 

V.  Call  361 

V.  Farmers',  &c.  Bank  483 

V.  Phelps  69 

V.  Raeey  50 

V.  Simons  161 

V.  Town  473 

Phelp's  Executor  l\  Pond  147 

Phene's  Trusts,  In  re  161 

Phila.  t\  Keely  371 

Philadelphia  Co.  v.  Garrison  82 

Phil.  Life  Ins.  Co.  v.  Am.  Life  & 

Health  Ins.  Co.  554 

Philadelphia  R.  v.  Adams  328 

V.  Catawissa  R.  240 

V.  Stichter  238 

Philadelphia  Savings  Institution, 

In  re  488 

Philbrick  r.  Ewing  122 

Philip  V.  Nock  533 

Philips  V.  Robinson  ^^ 

PMUips  V.  Baltimore  216 

V.  Blatchford  202 

V.  Bridges  459 

i\  Building    Association  267 

V.  Garner  49 

V.  Hawkins  434 

V.  Pearce  221 

V.  Portsmouth  82 

V.  Thurn  449 

V.  Wickham  242 

V.  Winslow  236 

Phillips'  Estate  546,547 

Phillips  Academy  V.  King  235 

Phillips     Limerick     Academy     v. 

Davis  489 

Philpott  V.  Jones  371 
Phipps  Estates  V.  Tong  Phong          38 

V.  Little  173a 

Phoenix  Co.  v.  Spiegel  525 

Phoenix  Ins.  Co.  V.  Raddin  548 
Phoenix  Life  Ass.  Co.  v.  Sheridan    553 


SECTIOX 

Photodrama  Co.  v.  Social  Corpo- 
ration 536 
Pickard  v.   Bankes  351 
V.  Marriage  427 
Pickering  r.  Cording  447 
r.  Stephenson  225 
Pierce  r.  Bryant  198 
r.  Cate                                           455 
V.  Faunce                                      433 
V.  Fuller  32 
V.  George                                       124 
V.  Milwaukee  R.                          237 
V.  Savings  Bank                          255 
V.  Swan  Point  Cemetery  52 
V.  Whitney                                    451 
Pierson   v.   Post                                     49 
Pigot  r.  Cubley                          408,  412 
Pike  r.  Balch                                       307 
Pindell  v.  Grooms                420,  423,  431 
Pinkerton  v.  Manchester,  &c.  R.  R. 

Co.  498 

Pinnock  v.  Harrison  386 

Piper  I'.  Hilliard  426 

Pirie  v.  Middle  Dock  Co.         331,  333 
Pitman  v.  Barret  256 

Pitt  r.  Berkshire  Life  Ins.  Co.       553 
Pitts  V.  Hall  156,  162,  172 

V.  Holmes  72 

V.  Whitman  528 

Pittsburg  R.  r.  Allegheny  Co.  510 

Pittsburgh  Co.  v.  Beler  Co.  520 

Pittsburgh,     &c.     R.     R.     Co.     v. 

Clarke  498, 501 

Pittsburgh  R.  R.  Co.  v.  Graham      490 

Place   V.   Langworthy  428 

Place  Re  32 

Planing  Co.  v.  Keith  523,  531 

Planters'  Bank  v.  Sharp  16 

Planters'  Ins.  Co.  v.  Tunstall  87 

Pleasants  V.  Meng  368 

Plow  Works  V.  Starling  528 

Plumbe  V.   Neild  143 

Plumer  V.  Marchant  361 

v.  Plumer  113,  121 

Plummer  v.  Erskine  371 

r.  Lvraan  448 

V.  North  Am.  Ins.  Co.  558 

V.  Shirley  417 

Plumiera  v.  Bricka  435 

Plumley  r.  First  Nat.  Bank  459 

Poindexter   v.   Greenhow  346,  349 

Polhemus  V.  Trainer  433 

Polk  r.  Oliver  193 

Pollard  V.  Bailey  514 

r.  Somerset  Fire  Ins.  Co.  81 

V.  Vinton  471 

Policy  V.  Johnson  109 


TABLE    OF    CASES. 


Ixxiii 


SECTION 

Pollock  V.  Helm  473 

Pomeroy   v.   Ainsworth  266 

I".  Bank  of  Indiana  244 

V.  Manhattan  Life  Ins.  Co.   77,  547 

V.  Smith  404 

Ponder  r.   Rhea  423 

Pondvill   Co.   v.   Clark  242 

Ponton  V.  McAdoo  219 

Pool  Shipping  Co.  v.  Samuel         326 

Poole's  Case  121, 122 

Pooley  V.  Driver  170,  181 

Poor  V.  Sears  223 

Poorman  v.  Mills  473 

Pope  V.  Abbott  38 

V.  Armstrong  383 

V.  Bank  of  Albion  467 

1-.  Curl  536 

V.  Jackson  113,  124 

Poipe  Man.  Co.  r.  Gormulby  Mfg. 

Co.  528 

Porter    v.   Burnett  62 

r.  Dement  425 

V.  Dunlap  78 

V.  Gold  Mining  Co.  232 

V.  Hanson  383 

r.  Tournav  139 

Portland  v.  N.'  E.  T.  &  T.  Co.       126a 

Posey  I'.  Decatur  Bank  451 

Post  V.  Bank  of  Utica  279 

V.  Jones  330 

v.  New  York  221 

V.  Tradesmen's  Bank  409 

Pothonier  v.  Dawson  387 

Potomac.  The  328 

Potter,  The  329 

Potter  i\  Bank  of  Ithaca  222 

v.  Holden  433 

Potts  r.  Creagher  520 

Poughkeepsie  PI.  R.  Co.  r.  Griffin   490 

Powell  V.  Brown  139 

r.  Mon.son  Co.  113,  120 

Powell  f.  Petteway  285 

V.  Waldron  62 

Power  V.  Garrison  126a 

Pratt  V.  Harlow  426 

r.  Hudson  River  R.  R.  Co.        227 

r.  Jewett  242 

V.  Pratt  225,510 

v.  Reed  312,391a 

r.  Taunton  Copper  Co.  502 

Pray  r.  North  31 

Preble  r.  Conger  422 

Presbyterian  Church  r.  Andruas     132 

Presbyterian    Cong.     r.    Carlisle 

Bank  497 

Prescott  V.  Ellingwood  77 

Presidio  County  v.  Bond  Co.  476 


SECTIOX 

Preston  v.  Briggs  127 

r.  Melville  143 

r.  Neale  379,381 

v.  ^^■alke^  263 

Price  r.  Brayton  100 

v.  Lyons  Bank  270,286 

i:  Neal  462 

V.  Pickett  105 

Price's  Appeal  16 

Prichard  v.  Prichard  20 

Prideaux  r.  Criddle  453,469 

Prince  Albert  v.  Strange  535 

Prindle  i\  Anderson  40 

Prior  r.  White  427 

Pritchard  v.  Norton  299 

Pritchett   i:  Mitchell         278.279,286 

Proceeds  of  the  Gratitude  392 

Proctor  V.  Terrill  278 

Progdon  V.  Murphy  139 

Prouty  V.  Ruggles  526,  532 

Provident  Life  Ins.  Co.  r.  Baum 

555, 556 
Prov.  Life  Ins.  Co.  r.  Fennell      549,  556 

Prov.  Life,  &c.  Co.  r.  Martin  549,  556 

Provost  i".  Patchin  311 

V.  Wilcox  441 

Public  Schools  r.  Heath  77 

Pudas  v.  :Mattola  370a 

Pugh  r.  Arton  122 

Pullen  r.  Monk  82 

Pull  is  r.  Somerville  255 

Pullman   v.  Upton  485 

Purcell  V.  ]\Iather  421 

Purdy   V.  Phillips  257 

Purner  /".  Piercy  101 

Purse  r.  Snaplin  562 

Purs'iance  V.  Angus  311 

Putnam  i\  Gushing  421 

V.  Storey  76 

V.  Wise'  207 

Pyle  i\  Western  Union  Co.  36 

Pyman  v.  Dreyfus  325 

Pyrennee,  The  330 


Quackenbush  i".  Sawyer  172 

Quain's  Appeal  35 

Quality  Car  Co.  r.  Corkill  446 

Queen  r.  Saddlers'  Company  228 

r.  Shickle                         '  49,50 

Quigley  r.  Welter  78 

Quiggle  V.  Vining  105 

Quillan,  The  332 

Quimby  v.  Varniim  456 

Quiney,  Ex  parte  122,  124 

Quincy  Bridge  Co.  r.  Adams  245 


Ixxiv 


TABLE    OF    CASES. 


SECTION 

Quinn  v.  Madigan  145 

V.  Moore  75 

V.  Quinn  204 

V.  Whitney  82 

Quitman  Oil  Co.  v.  Peacock  227 

R. 

Racine  Bank  r.  Case  367 

Racine  R.  v.  Farmers'  Trust  Co.     245 

Radiator  Co.  v.  New  York  State    482 

Radigani  v.  Hughes  126a 

Rahr's  Sons  v.  Buckley  42a 

Railroad  r.  Berks  County  231 

Railroad  Company  v.  Dubois  523,  524 

t\  Georgia  245 

V.  Howard  238 

V.  Johnson  345 

V.  Mellon  526 

V.  Trimble  528 

Railway  Co.  v.  Allerton    215.  225,  485 

t\  Sayles  529 

Railway   Cos.    r.   Keokuk   Bridge 

Co.  245 

Raitt  V.  Mitchell                 '  384 

Ralston  v.  Boady  41 

V.  jMoore  365 

V.  Wood  113 

Ramsay  v.  Peoria  Ins.  Co.  244 

V.  Warner  279,371 

Ramsdell   v.  Hulett          ^  256 

Ramsden  r.  Boston  &  AllJanj'  R.      379 

Rand  r.  Butler  146 

Randall  r.  Baker  418 

V.  Elwell  113 

V.  Russell  140 

V.  Van  Vechten  224 

Randel  v.  Brown  381 

Ranlett  v.  Blodgett  421,428 

Ransdell  r.  Boston  151 

Rathbone  f.  Orr  75 

Rawlins  v.  Turner  25 

Rawls  V.  American  Life  Ins.  Co. 

546, 548, 549 

Ray  V.  Young  127 

Ray  burn  v.  Day  253 

Rayner  v.  Bryson  263 

Rea  v.  The  Eclipse  214 

Read  v.  Blunt  361 

V.  Head  143 

V.  Wilson  428 

Reade  v.  Conquest  535 

Real  Estate  Co.  r.  Penn.  Co.  477 

V.  Wilmington   R.  275 

Reay  f.  Richardson  372 

Rebecca,  The  471 

Rector  v.  Dantley  Co.  254 


SECTION 

Reciprocity  Bank,  Re  500 

Reckendorfer  v.  Faber  520,531 

Red  Diamond  Co.  v.  Steidemann    126o 

Redington  v.  Chase  165 

Redlon  v.  Churchill  188 

Redmond  r.  Dickerson.  225 

Reed  v.  Engel  167o 

V.  Marble  78 

V.  Nevins  81 

V.  United  States  324,  325 

V.  White  214 

Reeder  v.  Nay  367 

Rees  V.  Warwick  448 

Reese  v.  Bank  of  Commerce  501 

v.  Bank  of  Montgomery  Co.      485 

Reeves  i".  Capper  400 

V.  Whitmore  421 

Reger  v.  O'Neal  274 

Regina  v.  Arnaud  231,484 

V.  Cheafor  50 

V.  Mayor  of  Chester  223 

V.  Powell  60 

r.  Registrar  202 

Reichard  r.  Manhattan  Life  Ins. 

Co.  549, 555 

Reichenbach  v.  McKean  405 

Reid  r.  Darbv  307 

V.  Holliiishead  189 

V.  Northern  Lumber  Co.  299a 

Reiff's  Appeal  145 

Reliance  Ins.  Co.  c  Garth  370a 

Rembert  v.  State  50 

Remmers  r.  Remmers  82 

Remsen   r.  Graves  457 

Rennell   v.  Kimball  214,258 

Renner  V.  Bank  of  Columbia  452 

Rensens  v.  Arkenburgh  263 

Reserve  Life  Ins.  Co.  v.  Kane  546 

Rex  V.  Brooks  50 

V.  Caipper  482 

V.  Collector  206 

V.  Dublin  241 

V.  Hull  Dock  Co.  482 

V.  Ogden  241 

V.  Searing  50 

V.  St.  Dunstan  122 

i:  West^vood  228 

Rexford   V.   Widger  27^ 

Rexroth  v.  Coon  50 

Rey  r.  Simpson  456 

Reynes  v.  Dvunont  382 

Reynish  i'.  Martin  151 

Reynolds  v.  Accidental  Ins.  Co       556 

1-.  Commissioners  236 

v.  Shuler  113 

i\  Smith  437 

Rhett  V.  Pee  455 


TABLE    OF    CASES. 


Ixxv 


SECTION 

Rhoades  i\  Reed  361 

Rhode  Island  Trust  Co.  v.  Noyes    138 

Rhodes  v.  Downing  42a 

Rialto  Co.  V.  Miner  217 

Rice  V.  Adams  129 

V.  Austin  178 

V.  Benedict  409 

V.  Silver  32 

V.  Williams  64 

Rich  V.  Levy  424 

V.  Roberts  425,426 

Richards,  In  re  113,  126 

Richards  v.  Butler  193 

V.  Heather  194 

V.  Hunt  193 

V.  Richards  69 

V.  Robin  502 

V.  Symonds  380 

Richardson  v.  Baker  286 

V.  Borden  113 

V.  Campbell  257 

V.  Copeland  113 

V.  Hogg  198 

V.  Jenkins  360,361 

V.  Scobee  275 

V.  Shaw  398a 

V.  Snider  193 

V.  United  States  324 

Richmond  v.  Bronson  257 

V.  Irons  514 

V.  Judy  172 

Richmond  R.  v.  Sneed  238 

Riehter  v.  Burdock  275,281 

Rickard  r.  Robson  146 

Ricker  v.  Loan  &  Trust  Co.  201 

Ricordi  v.  Mason  536 

Riddle  v.  Whitehill  192.  194 

Riddlesbarger  v.  Hartford  Ins.  Co.    555 

Rider  v.  White  50 

Ridgely  v.  Ridgely  138 

Ridgway  v.  Farmers'  Bank  224 

Ridgeway  v.  Underwood  76 

Rigg  V.  Lonsdale  49 

Riley  v.  Farnum  82 

V.  Gregg  278 

Riley  Co.  r.'Sears  Co.  281,  287 

Rindskoff  v.  Lyman  431 

Riney  v.  Hill  264 

Ringer  V.  Timber  Co.         271.281,288 

Ringlen,  Matter  of  227 

Riper  r.  Poppenhausen  198 

Ripley  v.  Colby  172,174.179 

f>.  Larmouth  422 

V.  Page  113 

V.  Railway  Pass.  Ass.  Co.        556 

Risley  v.  Phenix  Bank  87 

Risley,  Succession  of  547 


SFXTIOX 

Ritchie  r.  McMullen  40S 

Rittenhouse  v.  Leigh  171 

Ritter  v.  Stevenson  77 

Rivanna  Nav.  Co.  V.  Dawson    334,  486 

Rive-s  V.  Dudley  259 

('.  Duke  346 

Rixon.  V.  Emary  365 

Roakes  v.  Bailey  371 

Robarts  r.  Tucker  470 

Robbins  r.  Bacon  77 

f.  Fuller  193 

V.  Maddy  251 

V.  Parker  428 

Bobbins,  &c.  Co.  r.  Brewer  253 

Robbinson  r.  Harrison  127 

Robert  t\  Wyatt  400 

Roberts  r.  Barker  32,  121 

i\  Corbin  465,466 

V.  Dauphin  Deposit  Bank         124 

V.  Malin  261 

V.  McNeeley  288 

V.  Nat'l  Life  Ins.  Co.  547 

V.  Roberts  546 

r.  Yarboro  388 

Roberts-Manchester  Co.  r.  Wi.N<»      259 

Robertson  r.  City  of  Rockford       245 

V.  Corsett     '  124o,  170 

V.  Hayes  24 

V.  Metropolitan  Co.  553 

V.  Smith  177,211 

Robinson  i".  Bank  156 

V.  Bland  298 

v.  Elliott  426 

V.  Fitch  433 

V.  Harrison  126a 

V.  Hawksford  466 

V.  Hill  422 

V.  Holt  428 

V.  Hurley  407,408 

V.  Lane  244 

V.  Larrabee  385,386 

V.  Lyall  312 

V.  Manufaoturers'  Ins.  Co.       319 

t\  Marshall  78 

V.  McNeill  76 

V.  Security  Co.  193a 

V.  Tipton  77 

V.  Tongo  358 

Robinson     Codfish     Co.     i'.  Fi.sh 

Co.  126a 
Robison  r.  Beall  486 
Robson  r.  Dailev  421 
Rocho.ster  Co.  r."  Stiles'  Co.  75 
Rock,  &c.  Bank  r.  Wooliseroft  272 
Rock  Island  Plow  Co.  v.  Master- 
ton  299a 
Rocky  Mountain  Co.  v.  Lunt  165 


Ixxvi 


TABLE    OF    CASES. 


SECTION 

Roderick  v.  Sanborn  126a 

Rodijkeit  r.  Andrews  74 

Rodocanachi  r.  Buttrick  448 

Roe  I'.  Ashburner  27 

V.  Galliers  32 

V.  Gradell  Co.  491 

V.  Hayley  30 

V.  Snattinger  254 

RoflFey  v.  Henderson  127 

Roger  V.  Weir  385 

Rogers  V.  Batehelder  187,  188 

v.  Buckingham  271 

V.  Burlington  477 

V.  Coit  179 

V.  Crow  132 

V.  Jones  228 

V.  Mining  Co.  299a 

V.  Pierce  426 

V.  Sample  267 

V.  West  257 

Rohrle  v.  Stidger  .     408,410 

Rollins  V.  Clay  225 

V.  Stevens  189 

Rood  V.  Welch  425 

Rooke  V.  Thomas  242 

Rooney  V.   Second  Avenue  R.  R. 

Co.  383 

Root  V.  Pinney  274,284 

Roiper  V.  Williams  32 

Rosa  V.  Butterfield  279 

Rose  u.  American  Co.  371o 

V.  Bank  of  Australasia  331 

V.  City  of  Bridgeport  263 

V.  Hail  366 

V.  Munford  269 

V.  Page  437 

V.  Turnpike  Co.  242 

Rosebrough  v.  Ansley  268 

Rosenbaum  V.  Hayden  170 

Rosenberger  f.  Express  Co.  259 

Rosenblatt  v.  Weinman  173a,  498 

Rosenfeld  V.  Boston  Ice  Co.  553 

Rosetto  V.  Gurney  320 

Rosevelt  v.  Brown  513 

Ross  V.  Bradshaw  549 

V.  Decy  177 

Ross  Re  63 

Rosslyn's  Trust  147 

Rothchild  V.  Van  Alstine  425 

Roth  Re  35 

Rothwell  V.  Humphreys  188 

Roundy  r.  Hunt  357 

Row  V.  Dawgon  77 

Rowan  i\  Sussdorflf  49 

Rowe  V.  White  152 

Rowell  V.  Klein  106 

Rowland  v.  Rowe  454 


SECTION 

Rowney's  Case  106 

Rowson  V.  Earle  383 

Royal  Bank  of  India's  Case  228 

Royalton  v.  Royalton,  &c,  Co.        224 

Rubber  Co.  v.  Dubois  534 

V.  Goodyear  528,529,530,534 

Rubber-tip  Pencil  Co.  v.  Howard    520 

Rubel   Re  35 

Ruckman  v.  Outwater  81,  121 

Ruddell  r.  Ambler  285 

Rude  V.  Westcott  528 

Rudge  V.  Winnall  106 

Ruggles  f.  Buckley  191 

Rumball  t\  Metropolitan  Bank        474 

Rumbell,  The  305,  307 

Runkle  v.  Burrage  167a 

Runyan  v.  Coster  232 

Ruse  V.  Mut.  Ben.  Life  Ins.  Co.       552 

Rush   Co.  V.  Stubbs  113 

Rushforth  v.  Hadfield  382,  384 

Russ  V.  Barker  113 

Russell  V.  Allen  163,  165 

V.  Annable  188,189,361 

V.  Leland  174 

V.  Lytle  366 

f,  McLellan  220,  242 

V.  Russell  163,  166 

Russell  Road,  In  re  420 

Rutgers  V.  Hunter  30 

Rutland  R.  R.  Co.  v.  Thrall  493 

Ryan  v.  Forman  543a 

V.  Good  520 

V.  Maddu  77 

V.  U.  S.  346 

Ryder  v.  Alton,  &c.  R.  R.  Co.  510 

V.  Faxon  131 

s. 

Sabine,  The  330 
Sabine  V.  Paine                          281,457 

Sabin  V.  Smith  49 

Safford  v.  Vail  278 

Sage  r.  Lake  Shore  R.  245 

Sainabury  v.  Matthews  103 

Sale  v.  Smith  Co.  38 

Salemi  Bank  i\  Gloucester  Bank  224 

Saloman  r.  Pioneer  Co.  367 

Salt  Fork  Co.  r.  Eldredge  Co.  82 

Saltmarah  r.  Planters',  &c.  Bank  283 

r.  Smith  73 

V.  Spaulding  225 

Salt's  Co.  V.  Tingue  Co.  520 

Saltus  V.  Ocean  Ins.  Co.  320 

Sammis  v.  Clark  257 
Sampson  v.  Camperdown  Mills 

127, 129 


TABLE    OF    CASES. 


Ixxvii 


Sampson  v.  Graham 

V.  Shaw 
Sandberg  r.  Scougale 
San  Bernardo,  The 
Sandenian  v.  Scurr 
Sanders  v.  Anderson 

V.  Branch  Bank 

V.  Daris 

V.  Wheel  Co. 
Sanderson  v.  Bowes 


SEDITION 

116 
604 
191 
329 
323 
445 
369 
405 
370a 
451 

Sandford  v.  Wiggins  Ferry  Co.       307 

Sands  v.  Church  279 

i\  Gilleran  255 

Sasdwich  Mfg.  Co.  v.  Krake  74 

Sanford  r.  Litchenberger  255 

San  Francisco  v.  Water  Works       218 

Sanger  r.  Baumberger  361 

Sanitary  District  v.  Cook  122 

Sanner  v.  Smith  267 

Santa  Cruz  v.  Wykes  477a 

Santissima  Trinidad,  The  330 

Sapphire,  The  328,  329 

Saragossa,  The  330 

Sargent  i\  Franklin  Ins.  Co.    497,  501 

V.  Slack  49 

V.  Usher  431 

1-.  Webster  224 

Sasson  v.  Haegle  121,  122,  127 

Saunders  v.  Lambert  276,  284 

V.  McCarthy  371,437 

V.  Wilsome  368 

Savage  v.  Ball  4»5 

Savannah  R.  v.  Lancaster  479 

Saville  v.  Barohard  382 

V.  Robertson  177 

Sawyer  r.  Freeman  209 

V.  Long  124 

V.  Pennell  425,428 

V.  Turpin  426,427 

Saxton  V.  Williams  431,4.32 

Saye  v.  Hill  126a,  127 

Sayre  IK  Hewes  426 

r.  Wheeler  446 

Scaffolding  Co.  V.  Whitney  520 

Scantlobury  r.  Tallcott  446 

Scarfe  v.  Jardine  193 

Scari.sbrick  v.  Skelmersdale  147 

Scarpellini  v.  Acheson  69 

Schaeffer  v.  Missouri  Ins.  Co.  489 

Schanz  v.  Sotscheck  275,  281,  285 

Schaper  v.  Bibb  129 

Schemmer  r.  North  123 

Schenoctadv,  &c.  Plank  Road  Co. 

V.  Thatcher  489 

Schermerhorn  v.  Talman  274,  279 

Schiebel  Co.  r.  Clark  520 

Sohieffelin  r.  Carpenter  38 


SECTION 

Schimmelpennich  v.  Bayard  449 

Schmertz  V.  Shreever  188 

Schmidt  v.  Gaukler  278 

V.  Marconi  Co.  486,  508 

V.  Webb  385 

Schmitt   V.  Dooling  82 

Schmittdiel  v.  Moore  437,439 

Schneider  v.  Prov.  Life  Ins.  Co.        556 
Schnitzer  r.  Kramer  446 

Schofield  V.  Baker  455 

Scholefield  v.  Eiehelberger        171,  194 
RchoUenberger  f.  Brinton  345 

Schooner    Freeman    v.    Bucking- 
ham 391 
Schooner  Sarah,  The                           319 
Schoonmaker  V.  Gilmore  334 
Schow  Re                                           299a 
Schulten  V.  Lord  199 
Schultz  r.  Hastings  Lodge              27a 
Schwartz  i".  Germania  Ins.  Co.         553 
Schwenk  v.  Wyckoff  74 
Scoles  V.  Universal  Life  Ins.  Co.    549 
Scotland,  The                                       328 
Scott  V.  Crews                                      401 
V.  Depeyster                                226 
V.  Henry                                        417 
V.  Jones  81 
V.  Lifford                                     453 
V.  Liverpool  &  London  &  Globe 

Globe  Ins.  548 

V.  Lloyd  266 

V.  Miller  311 

V.  Parkview  Co.  370a 

V.  Raynient  183 

V.  RejTiolds  254 

V.  Sh  reeve  81 

r.  West  148 

Scottin  r.  Stanley  212 

Scovill  V.  Thayer  485 

Scudder  r.  Calais  Steamboat  Co. 

88, 307 
Seabury  v.  Am.  Ende.  526 

Seager  v.  Drayton  446 

Seamen's  Bank  r.  M'CuUough        271 
Sears  r.  Wingate  321 

Seaton  r.  Commonwealth  52 

Seaver  v.  Lincoln  451 

Second  Nat.  Bank  r.  Merrill  122 

Security  Ins.  Co.  r.  Dillard  5.11 

Security  Savinsrs  Co.  r.  King  467 

Sedbury  v.  Duffy  271 

Sedgworth  r.  Overend  211 

Seedhouse  v.  Broward  124 

Seeger  r.  Duthie  325 

r.  Pettit  122,126,129 

Seeley  v.  Seeley  81 

Seibert  v.  Bakewell  198 


Ixxviii 


TABIJi    OF    CASES. 


SECTION 

Selden  r.  Illinois  Trust  Co.  82 

V.  Williams  82 

Selleck  v.  French  256 
Selma,  &c.  R.  R.  Co.  i\  Tipton        492 

Selvvyn  Co.  v.  Waller  167a 

Semple  Co.  r.  Detweiler  401 

Sensenig  v.  Pennsylvania  R.  82 

Sessions  v.  Richmond  271 

V.  Romadka  r)28,  529 

Settembre  ('.  Putnam  204 

Seven  Brothers,  The  334 

Seving  v.  Gale  372 
Sewall    V.    Boston    W'ater    Power 

Co.  482, 499 

Sewell  V.  Nichols  383 

t'.  Price  417 

Sexton  V.  Breese  109 

V.  Graham  161 

Seybert  v.  Pittsbura:  477 
Seymour  v.  Osborne 

519, 520, 530,  531,  532,  534 

V.  Sturgess  576 

Shackle  v.  Baker  185 

Shader  v.  Pass.  Ins.  Co.  556 

Shaeffer  v.  Blair  172 

Shaffer  v.  McCulloch  508 

V.  McKee  470 

Shafner  v.  Shafner  106 

Shafto  V.  Powel  358 

Shamburg  i\  Ruggles  180 

Shamokin  Bank  r.  Street  445 

Shanks  v.  Klein  186 

Sharon  Canal  Co.  r.  Fulton  Bank    171 

Sharpe  v.  Pearce  419 

Sharpless  v.  Grand  Lodge  552 

Shattuck  V.  Oakland  Co.  225 

Shaver  v.  Bear  River  M.  Co.  236 

Shaw  V.  Clark  366 

v..  Farnsworth  27 

V.  Gilmore  76 

V.  Huzzey  140 

V.  Lead  Co.  62 

V.  Merchants' Bank    400,403,471 

V.  Pratt  371 

V.  R.  399 

V.  Spencer  499 

V.  Wlishire  417 

Shaylor  v.  Mire  453 

V.  Mix  453 

Shea  V.  McEvoy  426 

V.  Vahey  457 

Shearer  v.  Babson  431 

V.  Shearer  82 

Sheehv  u.  Mandeville  177,365,366 

Sheen  r.  Rickie  112,114 

Sheets  v.  Selden  30 

Shelburne  v.  Letsinger  418 


SECTION 

Shelburne    Falls    Nat.    Bank    v. 

Townsley  453, 454 

Sheldon  r.  Edwards  432 

V.  Houghton  185 

V.  PruesSner  255 

Shelley  v.  Shelley  148 

Shelmer's  Case  352 

Shelton  v.  Aultman  271 

t\  French  398,  403 

Shepherd  v.  Busoh  369 

i\  Harrison  321,471 

Sh&pard  v.  New  York  257 

V.  Pybus  309 

Sheppard   i..   Shelton   .  163 

V.  Steele  307,391 

V.  Taylor  315 

Sherman  r.  Smith  514 

Sherrard  v.  Sherrard  145 

Sherry  v.  Proal  27a 

Sherwood  v.  Johnson  357 

V.  St.  Paul  186 

Shibley  V.  Angle  517 

Shields  i:  Ohio  245 

Shiels  V.  Byrd  126a 

Shipman  v.  Stratesville  529 

Shoe  &  Leather  Bank  v.  Dix  446 

Shoemaker  v.  Benedict  189 

V.  Sim]>son  116 

Shoop  V.  Fidelity  Co.  257 

Shorter  V.  Dail  414.425 

Shotwell  V.  Webb  81 

Shwarz  V.  Sweitzer  271 

Sibley  v.  Aldrich  379 

Siebeneck  t".  Anchor  Savings  Bank  460 

Siedenbach  v.  Riley  400 

Sieg  V.  Greene  389 

Siegel  r.  Chidsey  192 

Sieveking  v.  Maas  325 

Sigerson  i\  Mathews  455 

Sigourney  r.  Munn  194 

Silesia,  The  330 

Sill  V.  Worswick  295,296 

Silliman  v.  Fredricksburg  R.  477 

Silver  Lake  Bank  r.  North  233 

Simon  f.  Etgen  254 

Simmons  v.  Almy  383 

V.  Bank  of  Greenwood  465 

V.  Jenkins  430 

V.  Leonard  194 

V.  Ross  82 

Simonds  t\  Turner  31 

Simons  v.  Farren  32 

V.  McClain  156 

Simonton  r.  Vail  289 

Simipson  v.  Evans  269 

V.  Fogo  299 

V.  Fullenwider  266,279 


TABLE    OF    CASES. 


Ixxix 


SECTION 

Simpson  c.  Pacific  Ins.  Co.  466 

V.  Tumey  454 

V.  Wilson  528 

Sims  V.  Harris  164 

Simson  i".  Ing-ham  371 
Sinclair  r.  Maritime,  &c.  Ins.  Co.    556 

Singer  r.  Carpenter  185 

c.  Kelly  199 

Singer  Man.  Co.  r.  Clark  .'598,  406 

Single  V.  Plielps  426 

Singleton  v.  Singleton  106 

V.  St.  Louis  Life  Ins.  Co.  546 
SircTi  Laboratories  r.  Garbutt        299a 

Skelly  V.  Bristol  Bank  256 

Skiff  i\  Solace  430 

Skillman  v.  Titus  466 

Skinner  v.  Somes  81 

Skolny  v.  Richter  199 

Skowiiegan  Bank  v.  Cutler  498 
Slaymaker   v.   Gettysburg   Bank 

68, 500 

Slayton,  Ex  parte  328 

Slee  V.  Bloom  243 

Sloan  V.  Williams  74,  75 

Small  V.  Herkimer  Manuf.  Co.        489 

V.  Robinson  381,406 

l\  Smith  459 

Smallman  t\  Whilter  322 

Smart   v.   Sandars  387 

Smiley  v.  Smiley's  Adm.x.  173a 

Smilie  v.  Stevens  81 

Smith,  Annie  H.,  The  209 

Smith  V.  iEtna  Life  Ins.  Co.  549 

u.  Anderson  201 

V.  Argall  198 

V.  Bank  167a 

V.  Barham  140 

V.  Bartholomew  365 

V.  Beattie  416,417 

v.  Blake  124 

V.  Bodim-  173 

V.  Chicago,  &c.  R.  R.  Co.  246 

V.  Coolbaugh  423,439 

V.  Coopers  264,284 

V.  Craig  82 

V.  De   Silva  209,214 

V.  DodAs  35 

r.  Glanton  289 

V.  Glass  Co.  82 

f.  Hollister  285 

V.  Hunt  38 

V.  Hurd  509 

V.  Keels  366 

r.  Mach  271 

V.  Marvin  280,284 

V.  McLean  425 

r.  Mercer  453 


Smith  c.  Miller 

V.  Mitchell 

V.  Moore 

V.  Morrill 

V.  Nichols 

t\  Odom 

V.  Paton 

V.  Peat 

V.  Poiilon 


.SECTION 

466 

27a 

217 

460 

520, 529 

113,123 

2G6 

34 

454 


V.  Prattville  Man.  Co.  225,510 
V.  Robinson.  285 
V.  Rogers  81 
V.  Sac  County  477 
V.  Saddle  Co.  520 
V.  Shippers'  Oil  Co.  408 
V.  Smith  227,242 
V.  Southern  Foundn-  Co.  510 
V.  Stoddard                "  267,283 
V.  Swormstedt  245 
V.  Thompson  75 
V.  Waggoner  116 
V.  Walker  282 
V.  Wolf  271 
f.  Zurcher  426 
Smithurst  v.  Edmunds  395,417 
Smith  Wogan  Co.  r.  Rice  435 
Smitliwick  v.  Ellison  121 
V.  Whittey  271 
Smyth  r.  Hawihorn  194 
V.  Tankers  ley  165 
Snead  r.  Watkins  381 
Snedeker  r.  Warring  113.  115 
Snell  V.  Harrison  166 
Snider's  Sons  Co.  r.  Troy  220a 
Snodgrass  r.  Reynolds  184 
r.  Sweetser  470 
Snow  r.  Perkins  119,121 
Snyder  i\  Leland  198 
Society  for  Savings  r.  New  Lon- 
don*                    ■  477 
Sohier  v.  Eldredge              143,  144,  145 
Solomons  v.  United  States  524,  528 
Solon  V.  Sav.  Bank  256 
Somerset  R.  R.  Co.  r.  Cashing       4S1 
Somes    r.    British    Empire    Ship- 
ping Co.         376,387,388,410 
V.  Sugrue  307 
r.  White  213 
Souder,  The  391a 
Soule  r.  Soule  253 
Souten  V.  Rowan  371 
Southampton,  Jkc.  Co.  r.  Clarke     32(» 
Southampton  Dock  Co.  r.  Richards  493 
Southard   r.   Railway   Pass.  As.s. 

Co.  556 

V.  Steele  188 

South  Bay  Co.  r.  Gray  490 


Ixxx 


TABLE    OF    CASES. 


SECTION 
Soutkbridge     Savings     Bank     v. 

Exeter  Machine  Works  124a 

Southern  R.  v.  Lewis  325 

Southwark,  The  328a 

Southwortli  r.  Morgan  299a 

V.  Parker  163 

v.  Smith  163,  165 

Sowden  v.  Craig  418 
Spain  V.  Hamilton                77,  266,  285 

V.  Taleott  271 
Spalding  v.  Columbia  Theatre  Co.  126a 

f.  Mure  211 

V.  New  York  354 

Spangenberg  r.  Western  Co.  502 

Sparhawk  i\  Wills  256 

Sparks  v.  Spaulding  Co.  371a 

Sparrow  V.  Pond  105 

Spaulding  v.  Adams  386 

V.  Andrews  448 

V.  Barnes  439 

V.  Warner  166a 

Speakman  i".  Speakman  146 

Spear  r.  Pratt  448 

V.  Rockland  Co.  508,  510 

Spears  v.  Hartly  376,  382 

Speer  v.  Bishop  193 

v.  Skinner  422 

Spencer's  Case  106 

Spencer   v.  Billing  179 

■V.  Brower  253 

V.  Sloan  397 

Spering's  Appeal  226 

Sperry  Co.  v.  Webber  76 

Spiker  t\  Nydegger  77 

Spitler  V.  James  459 

Spofford  v.  State  Loan  Co.  271 

Spooner  v.  Holmes  477,  478 

V.  Roberts  255 

Sprague  v.  Cochew  Mfg.  Co.  499 

I'.  Has^enwinkle  371 

Spratt  V.  Hobhouse  351 

Spray,  The  328 

Spring,  The  328 

Spring  V.  Fisk  434 

V.  South  Carolina  Ins.  Co. 

382,  385,  386 

Springer  f.  Mfg.  Co.  426 

Springfield  v.  Drake  75 

V.  Schweitzer  20 

Sproul  V.  Sloan  398a 

Squier  v.  Mayer  119, 122 

Squire  V.  Portland  126a,  217 

St.  Albans  Bank  v.  Wood  281 

St.  Clair  v.  United  States  306 

St.  Germaine  f.  Brunswick  520 
St.  John  V.   Am.   Mut.   Life  Ins. 

Co.  77, 547 


St,  John  V.  Dann 

V.  Erie  R. 

r.  Homans 
St.  Lawrence,  The 
St.  Losky  f.  Davidson 
St.  Louis  r.  Johnston 


SECTION 
148 

508.  510 
466 
392 
408 
466 


St.  Louis  Co.  r.  Christopher  414 
St.   Louis   Mut.   Life   Ins.   Co.    v. 

Graves  551 

V.  Kennedv  552 

St.  Paul  R.  V.  Robbins  493 

Staats  V.  Bristow  189 

Stace's  Case  485 

Stafford  r.  Bacon  366 

Stainback  V.  Rae  328 

Stainbank  v.  Fernley  506 

Stall  V.  Wilbur  166 

Starabaugh  v.  Yates  103 

Stamey  V.  Assxir.  Co.  548 

Stamps  V.  Gilman  430 

Stanard  v.  Orleans  Co.  387 

Standard  Co.  v.  Iron  Co.  520 
Standard  Fashion  Co.  v.  Grant  299a 
Standard  Sanitary  Co.  i\  United 

States  534a 

Standeu  v.  Christmas  34 

Stanley  r.  Gaylord  423 

V.  Westrop  267 

Stansfield  r.  Portsmouth  127 

V.  Portsmouth  Mayor  122 

Stanton  v.  Eager  471 

Stanwood  V.  Suydam  194 

Star  of  Hope,  The  313,331,332 

Stark  V.  Sperry  271 

Starke  v.  Inman  289 

Starkweather  r.  Gleason  491 

i\  Jenner  166 

Starr  r.  Church  426 

Starwich  v.  Cut  Glass  Co.  27a 

State  r.  Adams  242 

i\  Baltimore   &    Ohio   R.    R. 

Co.  256 

V.  Bank  of  Maryland  237 

V.  Benham  427 

V.  Bick  241 

V.  Burns  190 
V.  Commercial  Bank           237,  243 

l\  Coramissionei's  231 

V.  Creamery  Co.  241a 

V.  Doe  50 

V.  Franklin  Bank  495 

V.  Griffith  289 

n  Hill  50 

v.  House  50 

V.  Howard  241a 

V.  111.  Cent.  Ry.  217 

V.  Jackson  176 


TABLE    OF    CASES. 


Ixxxi 


SECTION 

Stat«  V.  Johnson  357 

V.  Linde  50 

r.  Ljthus  50 

V.  Mayea  262 

V.  McMaster  559o 

V.  Milwaukee  R.  243 

V.  Morristown  Association       481 
V.  Murphy  50 

V.  Nashville  University  237 

V.  N.  Y.  Ins.  Co.  '  241o 

v.  Oberlin  Association  232 

V.  Pawtueket   Corporation        243 
V.  Plaisted  431 

V.  Pottmeyer  56 

V.  Saline  County  Court  477 

V.  Shaw  '  50 

V.  Sherm'an  289 

V.  Tappan  287 

V.  Tasker  421,428 

V.  Tennessee  Coal  Co.  296 

V.  Wapello  477 

State  Bank  v.  Fearing  457 

V.  Keely  459 

r.  King  299a 

V.  State  241,243 

State  Savings  Bank  v.  Kercheval 

113,124 

Steagall  Cheairs  Co.  v.  Bethune 


Co. 


Co. 


Steamboat  Virginia  v.  Kraft 
Steamboat  Waverly  v.  Clements 
Steamship  Co.  v.  Cochran 

V.  Joliffe 
Steel  Co.  V.  United  States 
Stearns  v.  Mar&h 
Stebbins   r.   Phopnix   Ins 
Stedman   *'.   Feidler 
Steele  i\   Benham 

V.  Mart 
Stein  r.   Hermann 

i\  Whitman 
Steinart  r.  DeuS'ter 
Steiner  v.  Faulk 
Stein -Gray   Drug  Co.   v. 

Steinman  v.  Midland  Loan  Co 
Stephens,  Ex  parte 
Stephens  v.  Harris 

r.  Northern  Pac.  Ry. 
Stephenson  V.  Dowson 

V.  Price 
SterlinfT  Ex  parte 
Sterling  r.  Gogebic  Co. 
Stern  f.  Metropolitan  Ins.  Co. 
Stetson  V.  Eastman 
Steuart  v.  Gladstone 
Stevens  v.  Beals 


389 
379 
391 
214 
316 

370a. 
397 
495 
208, 214 
427 
27 
424 

477o 
428 
191 
Michel- 

299a 


288 
127 
361 
82 
562 
387 
383 
271 
5.59a 
161 
185 
456 


SECTION 

Stevens  v.  Bell 

407,408,410 

V.  Boston  &  Wor.  R. 

381 

V.  Bowers 

77 

V.  Davison 

228 

V.  McCormick 

166a 

V.  Stewart 

87 

V.  Warren 

546,  547 

Stevenson  r.  Boyd 

165 

i\  Maxwell 

253 

Steward  v.  Blakeway 

186 

Stewart  v.  Ball 

51 

V.  Beale 

425 

y.  Doughty 

105 

V.  Fireman's  Ins.  Co. 

500 

V.  Forbes 

185 

V.  Kirkland 

78 

v.  Lansing 

477 

V.  Petree 

269 

V.  Piatt 

425, 426 

V.  Simon 

462 

V.  Smith 

427 

V.  Sonneborn 

180 

V.  Stewart 

166 

Stickney  v.  Allen 

385 

Stief  i\  Hart 

405 

Stiles  V.  Farrar 

76.77 

Stillman  r.  Harvey 

189 

Stimson  c.  Green 

258 

Stirling  v.  Phosphate  Co. 

212,313 

V.  Watson  Co. 

508 

Stiritz  V.  Mining  Co. 

23 

Stix  V.  Sadler 

428 

Stockham  v.  Munson 

281 

Stockland  v.  Rus.sell  Co. 

533 

Stocks  V.  Dobbins 

78 

i\  Dobson 

547 

Stockton  r.  Guthrie 

259 

Stockwell  V.  Campbell 

113 

Stoddard  r.  Kimball 

459 

V.  Sagal 

254 

Stoeckle  v.  Rosenheim 

387 

Stokes  r.  Frazier 

410 

Stokoe  r.  Upton 

113. 127 

Stone  V.  Brown 

406 

V.  Casualty  Co. 

556 

V.  Livingston 

121 

V.  Locke 

263 

V.  Marvel 

418 

V.  Old  Colony  R. 

548 

V.  Postal  Co. 

290ffl 

V.  Sargent 

547 

V.  Wire  Co. 

167a 

Stonobroker  v.  Littleton 

254 

Storaudt  r.  Vogel  Co. 

426 

Storm  V.  Stirling 

445 

Story  r.  Flournoy 

386 

Ixxxii 


Stout  V.  Stevenson 

V.  Stoppel 
Stowe  V.  Flagge 
Stowell  r.  Drake 
Strain  v.  Gardner 
Strang  v.  Osborne 
Strange  v.  Graham 
Strather  v.  The  Hamburg 
Strattoii  V.  Savings  Bank 
Straus  V.  American  Publishers      534a 

Strauss  v.  Crawford  165 

Streat  V.  Wolf  167a 

Strelly  V.  Winston  208 

Streep  f.  Simpson  425 

Street  ?'.  Thompson  259 

Strickland  v.  Parker  113,116 

Strode  V.  Gilpin  191 

Strong  i\  Brooklyn  R.  493 

Stuart  Re  63 

Stuart  V.  Bute  125 

Stubbs  f.  Parsons  31 

Studebaker  Co.  v.  Dodds  170 

Stukeley  r.  Butler  100,  101 

Stults  V.  Silva  446 

Stumph  V.  Bauer  185 

Sturges  V.  Stetson  485 

Stuyvesant  r.  Davis  39 

Sudbury  V.  Jones  113 

Suffolk  Co.  V.  Hayden  523,  525 

Sullivan  v.  Finn  366 

V.  Maroney  547 
Sumner  v.  People  266 
Sumpter  v.  Tucker  77 
Sun  Ins.  Co.  v.  Kountz  179 
Sunbeam.,  The  214,  320 
Sunbolf  V.  Alford  379 
Supervisors  v.  Schenck  477 
Supremie  Council  r.  Garrigus  556 
Susquehannah  Bridge  Co.  v.  Gen- 
eral Ins.  Co.  233 
Sussex  Bank  v.  Baldwin  451 
Sutton  V.  Cole  222 
Suj'dam  v.  Moore  242 

V.  Owen  194 
Swain  V.  Frazier  366 
Swamscot    Machine    Co.    v.    Par- 
tridge 254 
Swan  V.  Bournes  379 

V.  Steele  174,  179 

Swan  Re  141, 149 

Swartwout  V.  EJvans  156,  163 

V.  Payne  268 

Swartzbaugh  v.  People  50 

Swasey  v.  U.  C.  R.  395 

Sweeney  V.  Cloutman  315 

Sweet  V.  Spenee  271 

Sweetser  v.  Jones  113 


TABLE    OF    CASES. 

SECTION 

SECTION 

81 

Sweetzer  r.  Mead 

89,418 

126. 129 

Swetland  v.  Swetland 

445 

219 

Swift  V.  Hall 

425 

164 

i\  Thompson 

113,121 

28 

r.  Tyson 

395, 458 

204 

Swing  r.  Richardson  Co. 

170 

194 

Switz  r.  Leacli 

403,  405 

79 

SAvord  r.  Low 

116 

82 

Sykes  r.  Beadon 

170 

rs      534a 

Svmonds  r.  Harris 

165 

Symons  v.  Barrels  of  Cement  313 

Svmmierg  v.  Carroll  558 

Syracuse,  The  328 

T. 

Taber  r.  Hamlin  417,437 

Tabor  r.  HoflFman  64 

Tadman  r.  D'Epineuil  421 

Taffe  t.  Warwick  121 

Taft  V.  Bowker  400 

r.  Hartford.  &c.  R.  R.  Co.  510 

V.  Ward  202 

Taggard  i\  Loring  55 

Talbert  v.  Hamlin  191 

Talbot  r.  Commonwealth  Bank  451 

v.  Whipple  121 

Tallman  v.  Barnes  166 

t\  Hoey  77.80 

V.  Truesdell  271 

Tulmadge  r.  New  York  Bank  411a 

Talman  r.  Smith  439 

Taltv  i".  Freedraan's  Savings  Co. 

.395,  404.  407 

Taney  ?\  Penn.  National  Bank  399 

Tanner    v.    Byne  361 

Tapley  r.  Butterfield  189 

Tapscott  f.  Newcombe  148 

Tarbell  v.  Page  511 

V.  West  189 

Tarleton  v.  Emmons  274 

Tarpley  v.  Wilson  257 

Tate  V.  Bait.  &  0.  R.  520 

r.  Hilbert  468 

V.  Wellings  273 

Tatlock  v.  Harris  193 

Tattersall  r.  Groote  170 

Tatum  V.  Bank  459 

Tayleur  v.  Wildin  40 

Tavloe  v.  Sandiford  371 

Taylor  v.  .^tna  Life  Ins.  Co.  550,  555 

V.  Bank  of  Alexandria  368 

V.  Brigham  213 

V.  Bullen  309 

V.  Castle  204 

V.  Cheever  438 

V.  Chester  398 


tablp:  of  cases. 


SECTION 

Taylor  c.  Collins  113 
r.  Co.  Com'rs  371 
r.  Collins  117 
r.  Coryell  188 
V.  Exporting  Co.  232 
r.  Fried  172 
V.  Griswold  509 
V.  Laird  315 
V.  Lewis  382 
V.  Martindale  542 
V.  Phila.  R.  238,239 
V.  Shum  34,35 
V.  Snyder  451,45.5 
V.  Swafford  82 
V.  Thomas  280 
V.  Town  send  121 
V.  Wilson  351 
V.  Wing  25S 
Teager  v.  Bowie  96 
Telegraph  Co.  v.  Davenport  502 
Telfair  v.  Howe  233 
Tempest  v.  Kilner  62 
r.  Rawling  32 
Templeman  v.  Biddlc  108 
Templeton  v.  Bockler  1 
Tenney  v.  Foote  190 
Terre  Haute  R.  R.  Co.  r.  Earp       490 
Terrett  v.  Taylor  243 
Terry  v.  Life  Ins.  Co.  551 
V.  Little  514 
Terry  Re  200 
Texas  t\  White  477,478 
Thacher  v.  Dartmouth  Bridge  Co.     240 
Thacke   i\   Hernsheim  167a 
Thames  Iron  Work.s  Co.  Re  387 
Thayer  v.  Dwiglit  400 
r.  Lyman  70 
Thellusson  i".  Woodford  147 
Theobald  r.  Railway  Ass.  Co.  556 
Thiclman  (".  Carr  113 
Third  Nat.  Bank  r.  Bank  of  Com- 
merce 414, 425 
V.  Boyd  397 
Thomas  r.  Castle  138 
V.  Dakin  216 
V.  Murray  274 
V.  Springer  27a 
v.  Van   Kaptr  32 
r.  West  Jersey   R.  237 
Thomasnea    r.    Carpenter  370a 
Tliomaston  Bank  r.  Stimpson         233 
Thomip.son  r.  Alger  504 
r.  Dolliver  400.416 
r.  Dominv  471 
r.  Erie  R.  82.510 
r.  Gimbel   Bros.  82 
r.  Hermann  313 


SECTIOX 

Thompson  r.  Hubbard  540 

r.   Ins.  Co.  553 

r.  Koch  275 

1-.  Nesbit  266 

V.  Pacific  R.  219 

V.  Patrick  401.402 

V.  Phillips  543a 

V.  Prettyman  284,286 

V.  Schreiber  540 

v.  Sloan  445 

V.  Tompkins  79 

r.  VanVechten    422.424.426,440 
r.  Ware  282 

V.  Williamson  185 

Thompson-Starrett    Co.     r.    Ellis 

Co.  5090 

Thomson  v.   British  Bank  470 

v.  Davenport  212 

V.  Ivee  County  70,85,476,477 

Thorington  i\  Smitli  346 

Thorndike  r.  De  WoU  206 

Thorne  v.  First  National  Bank  399 
Thornhill  r.  Bank  of  Louisiana  244 
Thornton  v.  Cochran  434 

Thorp  V.  Hammond  323,  328 

Thorpe  r.  Hughes  517 

r.  Rutland,  &v.   R.   R.   Co.       219 
Thorsen  v.  Martin  307 

Threfall  V.  Borwiek  381 

Thresher  r.  Ea>t  l^ndon  W.  ^\'.  127 
Thurber   r.    Jewett  437 

V.  Sloop  Fannie  305 

Thnrsby  v.  Plant  34 

Thurston   v.   McLeelan  82 

Thwing  V.  Wasliingtoa  Ins.  Co.  320 
Tibbetts  v.  Home  124.  124a 

Ticonic  Bank   r.  Johnson  267 

Ticonic  Water  Power  r.  Lang  490 
Tidball    v.    Sehmeltz  279 

Tidd  V.  Rines  186 

Tiedenian  v.  Knox  471 

Tierinan  r.  .Tack^on  75,  77 

Tiffany  v.  Warren  422,429 

Tifft  V.  Barton  422 

i:  Horton  116,  124 

Tillicr  r.   Whitehead  188 

Tillman   r.   Bungenstock  100 

V.  De    Lacv"  124a 

Tillotson  r.  Tillotson  194 

Tillson   r.  United   States  262 

Tilton.  The  307 

Tim»>erlake  r.  First  Nat.  Bank  272 
Tindal   r.  Taylor  319.471 

Tindall  r.  Wasson  419 

Tinney  r.  Stebbint  160 

TipiH'ts  r.   Walker  482,483 

Tipjiiiig  r.  Tipping  95 


Ixxxiv 


TABLE    OF    CASES. 


SECTION 

Tisdale  v.  Harris  503 

Tiaon  V.  Taniehill  113 

Titanic,  The  320,  328a 

Title  Guarantee  Co.  r.  Haven  462 
Title  Guarantee  Co.  r.  Witmire    299a 

V.  State  82 

Title  Trust  Co.  v.  Wheatfield  275,  285 

Titus  V.  Cairo  R.  227 

Titus  v.  Mabee  113,421 

Toledo  Co.  V.  Computing  Co.  520 

Toleman  V.  Portbury  39 

Toll  V.  Hiller  263 

Tolman  v.   Hanrahan  188 

Tom  V.  Goodrich  188,211 

Tooker  V.  Sugar  Co.  494 

Toomey  V.  Casey  38 

Tome  V.  Dubois  330 

Tomkins  v.  Ashby  445 

V.  Hill  284 

Tompkins  v.   Saltmarsh  401 

Topi  iff  V.  Topi  iff  525 

Topping  v.   Paddock  191 

Torrey  v.  Burnett  127 

V.  Cement   Co.  222 

Towle  V.  Kettell  325 

Towne  v.  Bowers  106 

V.  -Fiske  113,  123 

Townsend  v.  Riley  264 

Townslay  V.  Sunrall  448 

Townsley  v.  Niagara  Ins.  Co.  227 

Tracy  v.  TufHy  197 

Trademark  Cases  541 

Transfer,  The  214 

Trappes  V.   Harter  126 

Trask  v.  Jacksonville  R.  478 
Travelers'  Ins.  Co.  v  McConkey        556 

Travis  v.  Bishop  426 

Treadwell  v.  Davis  400,  403 

Treat  v.  Cooper  446 

V.  Gilmore  422 

Trebilcock  V.  Wilson  345,  347 

Tregear  v.  Water  Co.  68 

Tregonwell  V.  Sydenham  146 

Trent  Co.  V.  Wheelwriglit  491 
Trenton   Mut.   Life,   &c.    Ins.   Co. 

V.  Johnson  546 

Trevor  r.  Whitworth  232 

Tribblo  v.  Anderson  289 

Tribune,  The  311 

Trice  v.  Turrentine  257 

Tripp  V.  Curtenius  473 

V.  Hasceig  100.  103 

V.  Jordan  547 

Triumph   Co.   r.   Patterson  126a 

Trocon  r.   Scott,  R.  387 

Trogdon    v.   Murphy  138 

Trott  f.  Irish  424 


SECTIOX 

Troubadour,  The  441 

Trow   f.   Moody  82 

Troy  V.  Sargent  547 

Troy  City  Bank  v.  Lanman  451 

Troy  R.  R.  Co.  v.  Newton  490 

Trull  V.  Fuller  113,114 

Trustees  v.  Peaslee  235 

Trustees  of  Free  Schools  r.  Flint    511 

Tucker  v.  Alexandroff  302 

V.  Bryan  390 

V.  Spalding  520,  534 

V.  Taylor  385,386 

V.  Wilamouicz  279 

V.  Wilson  407 

Tufts  V.  Shepherd  275 

Tulare  Irr.  District  v.  Shepard     220a 

Tupeker  r.   Deaner  53 

Turain  r.  Gibson  363 

Turgrimson  r.  Piano  Co.  271 

Turner  v.   Bissell  178 

V.  Cameron  113 

V.  Keller  457 

V.  Killian  427 

V.  Richardson  35 

V.  Sawyer  166 

V.  Smart  189 

V.  Wardle  361 

Turneys  r.   Hunt  267 

Turnp"ike  Co.  r.  State  243 

V.  Vanderbilt  213 

Turquand  v.  Marshall  226 

Turrill   v.  Michigan,  &c.  R.  R.       526 

Turton  f.  Benson  81 

Tuthill  r.  Davis  267 

Tuttle  V.  Buck  307 

V.  Cooper  180 

V.  Robinson  119 

Tuscaloosa  Ass'n  r.  Green  244 

Two  Ellens,  The  391a 

Tyler  v.   Boston  526 

Tyson  f.  Blake  140 

Tyson  r.  Bryan  173a 

V.  Jackson  74 

V.  Post  116 

u. 

Uhl  f.  Bingaman  193 

V.  Harvey  193 

Ulery  v.  Jones  50 

Ulster  Brick  Co.  v.  Murtha  Co.     326 

Uncas  Nat.  Bank  v.  Rich  236 

Union.  Bank  r.  Coster  473 

V.  Hvde  453,455 

V.  Laird  410,495 

V.  Magruder  455 

V.  Oceana  Bank  466 


TABLE    OF    CASES. 


Ixxxv 


SECTION 

Union  Bank  v.  Ridgely  224,  228 

V.  Willis  164 

Union  Bank  of  Tennessee  V.  State     482 
Union  Canal  Co.  r.  Young  246 

Union  Institution  v.  Boston 

255,257,259 
Union  Land  Co.  V.  Gwynn  191 

Union  Locks  Co.  v.  Towne  490 

Union  Nat.  Bank  r.  Underbill         188 
Union  Trust  Co.  r.  McGinty  443a,  459 
V.  Monticello  Co.  477 

17.  Oliver  499 

V.  Rigdon  407,408,409 

V.  Taintor  510 

United  Ins  Co.   i\  Seott  212 

United   Merchants   Co.   v.  Hippo- 
drome 27a 
United  Shoe  Mach.  Co.  /;.  Ramlose   82 
United  States  v.  Addison                   241 
V.  Amistad                                    329 
V.  Bank  of  Metropolis               449 
V.  Berdan   Mfg.   Co.  532 
V.  Bostwick                                   366 
V.  Curtis                                        258 
V.  Gesellschat                              214 
V.  Gratiot  28 
V.  Hamburg-American  Co.        320 
V.  Hool                                 397,410 
V.  Howell                                         348 
V.  Kirkpatrick                             371 
V.  Marigold                                   348 
V.  Mora                                          361 
V.  New  Orleans  R.  R.                386 
V.  Shea                                         325 
V.  Smith                                         333 
V.  Winslow                                  534a 
United  States  Bank  v.  Binney         179 
V.  Chapin                                      256 
United     States     Exch.     Bank     r. 

Zimmerman  191 

United     States     Express    Co.     v. 

Meinto  403 

Universal  Co.  r.  Copperman  536 

University  Club  v.  Deakin  30 

University   of   Maryland   v.    Wil- 
liams 242 
Upjohn  i\  Ewing  365 
Upton  V.  Lord  Ferrers  95 
V.  Tribilcock                         485,515 
V.  Wallace  81 
Urquhart  r.  M'lver                            385 
Us'her  v.  Tucker  Co.                          467 
Ute  Indians  v.  U.  S.                           263 
Utica  Ins.  Co.  r.  Tillman                269 
Utlev  V.  Union  Tool  Co.                   220 
Utilities  Com.  t\  Tel.  Ass'n            217 


V. 

SECTION 

Vail  r.  Hamilton 
V.  Heustis 
V.  Van   Doren 
V.  Weaver 

232,  486.  509 
275 
274 
113 

Valdes  v.  Altapacia 
Valentine  r.  Wood 

126a 
42b 

Valton    r.    National    Loan    Fund 

Ass.   Society  546,  547,  548 

Van  Blarconr  v.  Broadway  Bank 

403,410 

Van  Brunt  r.  Mather  188 

Vanderburgh  v.  Hull  178 

Vandergrift  v.  Forman  16 
Van  der  Velde  V.  Wilson  271,285,287 

Vander  Weyden  V.  Coors  425 

Vanderzee  r.  Willis  407 

Vandike   v.  Rosskam  198 

Van  Doren  v.  Olden  143 

Van  Duzer  v.  Howe  269 

Vane   V.  Newcombe  380 

Van  Evera  v.  Davis  419 

Van  Gunder  V.  Coal  &  Iron  Co.  166 

Van  Heusen  v.  Radcliff  419 

Van  Huson  V.  Kanouse  263 

Van  Ingen  v.  Whitman  198 

Van  Keuren  v.  Central  R.  113 

Van  Ness  f.   Layne  526 

Van  Ness  v.  Pacard  121 

Van  Rensselaer  V.  Jewett  259 

V.  Platner  35 

V.  Read  34 

Vansands  V.  Middlesex  Co.  Bank  501 

Van  Scotor  v.  Lefforts  189 

Van  Schoonhoven   v.   Curley  79 

Vanseat  v.  Roberts  233 

Van  Vechten  v.  Pruyn  453 

V.  Van  Vechten  146 

Van  Wyck  t\  Watters  271 

Varley  Co.  Re  387 

Varney  v.  Curtis  403 

Vass  r.  Wales  30 

Vastine  r.  \\  ilding  473 

Vaughan,  The  471 

v.  Davies  383 

r.  Howe  253 

V.  Thompson  431 

Vaughen   i\  Haldcman  122 

Vaughn    r.   Bell  425 

Vaux  V.  Shelfer  382 
Veazie  /".  SonuTbv  305,  309,  425.  44 1 
Veazie  Bank  r.  Paulk                 279,  283 

Vedder    l\    Fellows  228 

Veiths  r.  Hagge  253 

Vela-*quez,  The  328 
Vermilye  V.  Adams'  ElxpresS  Co. 

476,  478 


Ixxxvi 


TABLE    OF    CASES. 


SECTION 
Vermont    Ci-ntral    R.    K.    Co.    v. 

CI  ayes  489 

Vernan  v.  Smith  30 

Very  v.  Levy  365,366 

Vesta,  The  316 

Vicars  r.  .?3tna  Ins.  Co.  551 

Victoria  Mining  Co.  r.  Rich  166 

Vidal  V.  Girard  235 

V.  Mayor,    &c.    of    Philadel- 

piiia  235 

Vincennes  University  v.  Indiana     219 
Vincent  t\   Chapman  511 

Vine,  The  329 

Vineland  Co.  v.  ChandU-r  486 

Vinton's  Appeal  143,  143a 

Virgil,  The  328 

Virginia  Co.  r.  Fi&her  170 

Virginia  Ehrman,  The  328 

Vivienne,  The  214 

Vogt  V.  Cunningham  109 

Volunteer,  The  391a 

Von  Hemert  v.  Porter  263 

Voorhies  v.  Attee  455 

Voorhis  v.  Childs  194 

V.  Langsdorf  421 

Vose  V.  Eagle  Life  Ins.  Co.       548,  549 
V.  Singer  162, 166 

Vroom  V.  Ditma-s  281 

Vrooman  v.  Phelps  361 

w. 

Wabash,  etc.,  Ry.  v.  Illinois  241a 

Wade  V.  Bessey  74 

V.  Johnson  113 

V.  Withington  462 

Wadesboro  Cotton  Mills  v.  Burns  255 

Wadham  V.  Postmaster-Greneral  32 

Wadleigh  v.  Janvrin         114,115,116 

Wad.sworth  V.  Allcott  106 

i\  Pacific  Ina.  Co.  531 

Wagner   v.  Buttles  173a 

Wagner  r.  Cleveland  R.  113 

V.  Simmon.s  188 

V.  Watts  419 

Wagstaff  V.  Smith  259 

Waite  V.    Windham,   &c.    Mining 

Co.  223,  224.  226,  271 

Wakefield  v.  Fargo  514 

i\  Spoon  254 

Walburu  v.  Ingilby  202 

Walcott  V.  Keith  400 

Waldo  Bank  v.  Lumbert  188 

Wales  V.  Webb  267 

Walker  v.  Brooks  76 

V.  Brown  395 

r.  Flour  Mills  121 


SECTION 

Walker  c.  Hirsch  173 

V.  Mobile  R.  R.  Co.  490 

V.  Schindel  124o,  129 

V.  Sherman  117,121,123 

V.  Stetson  449,453 

r.  Stone  437,439,440 

V.  Taylor  217 

V.  Tillis  127 

V.  Vaughn  421 

V.  Wait  170 

Wall  V.  Hinds  113,  116,  121,  122 

Wallace  r.  Fitzsimanonw  194 

V.  Loomis  218 

V.  McConnell  451 

Wallace  v.  Wallace  177 

V.  Woodgate  380 

Wallen  r.  Rossman  427 

i\  St.   Louis   R.  59 

Waller  v.  Bovi'ling  165 

V.  Long  267 

V.  Tate  79 

Walley  v.  Montgomery  321,471 

Wallingford  v.  Burr  185 

Wallingsford  f.  Allen  139 

Wallis  V.  Mease  50 

Walnisley  r.  Milne      113,  115,  117,  124 

Walsh  r.  Lennon 

i\  Whitcomb 

Walter  r.  Froutz 

v.  James 

V.  Steinkopf 

Walton  i\  Mitchell 

V.  Tresten 
Walworth  v.  Harris 

Bank  v.  Trust  Co. 
Wansbrough  i'.  Ma  ton 
Warasie  r.  Radford 
Ward  V.  Allen 
V.  Brigham 
V.  Craig 
V.  Duncomibe 
V.  Griswoldville  Manuf. 


V.  Morrison 

V.  Smith 

i\  State 

i:.  Thompson 
Wardell  v.  Railroad 
Ware  v.  Thompson 
Wai-field  (-.  Booth 
Waring  v.   Clark 

V.  Henry 
Warner  v.  Abbey 

V.  Beers 

V.  Kenning 

V.  Sohn 

V.  Wilson 


253. 


188 

73 
271 
371 
535 

50 
188 
299 
227 
122 
275 
448 
172 
383 

78 
Co. 
512,517 

78 
,351,370 

50 
209 
225 
268, 285 
185 
328 
253 

28 

218 

116. 124o 

100 

81 


TABLK    OF    CASES. 


Ixxxvii 


SECTION 

Warrant  Finance  Co.'s  Case  244 
Warren  r.  Batcheldor  7") 
V.  Coal  Co.  165 
V.  Copeliu  78 
V.  First  Nat.  Bank  77 
V.  Oilman  45.1 
V.  Leland                                   53,  101 
V.  Pine  509a 
V.  Queen  508 
r.  Skinner  360 
V.  State  50 
Warren  Co.   r.  Marey  477 
Warrick  v.  Farlev  49 
Wasgatt  V.  Fir-st'Xat.  Bank     82,465 
Wa-*h   r.  Noel  257 
Washband  i\  Wasliband  256 
Washburn   v.  Franklin  504 
v.  Green  494 
r.  Pond  407 
V.  Sproat  113 
Washington   and   fJregory,  Tlie  328 
Washington  Bank  r.  Central  Bank  227 
Washington,  &c.   Bank  r.    Farm- 
ers' Bank  369 
Washington  Ins.  Co.  r.  Maple  Co.  271 
Water  Comm'rs  v.  Manchester  222 
Waterman  r.  ^lackenzie  528 
Water  Power  Co.  v.  Brown  409 
Watertown  Co.  v.  Davis  123 
Water  Witch,  The  471 
Waterfall  r.  Penistone  124 
\Vaters  i\  Barton  298 
r.  Quimbv  513 
Watherell  v.  Howells  100 
Watkins  r.  Fames  508 
Watkin.s  Medical  Co.  r.  Hamm  371 
i\  Richmond  College  371 
Watriss  r.  Cambridge  Bank       122,  127 
Watson  r.  Duke  of  Wellington  389 
Watson  V.  Hamilton  173o 
r.  James  418 
V.  Mainwaring  549 
V.  McManus  259 
Watt   r.   Hoch  253 
Wattenbarger  r.  Hall  100 
Waugh    V.   Carver                172,176,178 
V.  Denham  381 
r.  Waugli  106 
Waverley,  The  329 
Way  r.  Davidson  400 
V.  Fraser  27fl 
Wayne  Co.  Savings  Bank  r.  Low  288 
Weatherly  r.   Smith  271 
Weaver  r.  Beard  81 
Webb   i\  Plniiuner  32 
r.  Steele  72 
c.  Stone                                   419.422 


SECTIOX 

Webber  r.  Quaw  75 

Webber  i\  Virginia  518 

Web.-ter  r.  Boddington  146 

V.  Life  A.s.surance  Society  253 

V.  Nichols                            "  32 
i\  Seekamp                            212,213 

V.  Susquehanna  Co.  222 

V.  Upton  499 

Weed   V.    Adams  387 

V.  Carpenter  456 

r.  Jewett  77 

r.  Standlev  425 
Weeks  i\  Goode                           385,386 

\V'e€ms  V.  Weenis  560 

U'eeton   r.  Woodcock  127 

Weiland   r.   Sell  173a 

Weinstein  r.  Welden  170 

Weiss  r.  Weiss  165 

Weisser  r.  Mail  and  325 
Welch   V.  Mandevilb-                72,  73,  76 

V.  Sage  476 
V.  Sockett     161,1 63,  424,  425,  430 

v.  Wad.* worth  289 

V.  Whittemore  427 

Welchi  V.  Johnson  38 

Weld  )\  Cutler  428 

V.  Oliver  207 

Weldon    r.   Gould  382 

Welles  r.  Cowles  482 

Welleslej'  Steamship  r.  Hooper  326 

Wells  V.  Archer  547 

V.  Evans  188 

v.  Heath  146 

r.  March  187 

V.  Robinsoit  284 

r.  Wells  401 

Wells  Fargo  Co.  r.  Jcrsev  Citv  2 

Wells'  Estat(>                       "          "  481 

Welsh  r.   Ebersole  81 

V.  St.   Paul    R.  477 

Welts  V.  Conn.  M.  L.   Ins.  Co.  5.50 

Wendlebone   r.   Paries  279 

Wentworth  r.   Day  381 

Wentworth   r.  Manhattan   Co.  255 

\Venz  r.  Pastcne  27o 

Wertz  r.  Barnard  4.34 

Westall   r.  Wood  389 

Wescott  ''.   Delano  101 

West  r.  Blakeway  122 

r.  Moore  106 

West  Chester  R.  r.  Jackson  483 

West  Chicago  Works  r.  Slu'cr  259 
West   End   Tru.st   Co.    r.   Wether- 
ell                                                259.263 

West  River  Bank   r.  Taylor  4.54 

Westwtt   r.  Gunn  426 

r.   I'otter  75 


Ixxxviii 


TABLE    OF    CASES. 


SECTION 

Western  Co.  v.  Larne  531 

Western  N.  0.  R.  f.  Deal  113 

Western   Ry.    V.   Fo^sher        370o,  371a 

Western-  Union  Co.  v.  Young         299a 

Western  U.  T.  Co.  r.  Frear  241a 

Western  Union  Tel.  Co.  v.  Lights    281 

V.  State  262 

Westgate  v.  Wixon  113,  123 

Westminster,  The  330 

Weston  f).  Penniman  305 

V.  Wiley  369 

West  Pub.  Co.  Re  536 

West  River  Bridge  Co.  v.  Dix         238 

Wessels  V.  Weiss  178 

Wetherbee  V.  Martin  242 

Wetherell  i\  Spencer  425 

Wetmore  t\  Neuberger  79 

Wetter  i\  Hardesty  266,  281 

Wheatley  v.  Waldo  284 

Wheaton    v.   Peters  535,536,538 

V.  Pike  263 

Wheeler  r.  Bedell  113,114,124 

V.  Conn.   Life  Ins.   Co.  553 

v.  Field  451 

V.  Nichols  429,430 

V.  Solimer  296 

V.  Sumner  305 

Wheelwright  v.  Depeys'ter  211 

Whelden  f.  Wilson  421 

Whilden  v.  Merchants'  Bank  448 

Whipple  V.  Parker  172,  202 

Whisler  v.  Roberts  427 

Whitaker  v.  Brown  188 

V.  Hartford  R.  256 

V.  Sumner  400,403 

Whitcher  v.  Dexter  369 

White  V.  Bender  536 

i\  Bldg.  Ass'n  426 

V.  Brooklyn  77 

v.  Brooks      156,  161,  163,  164,  166 

i\  Dwyer  271 

V.  Eiseman  196,  198 

V.  Friedlander  275 

V.  litis  263 

V.  Jordan  366 

V.  Miller  258 

V.  Morton  163 

r.  Osborn  207 

V.  Stoddard  455 

V.  Storey  113 

V.  Thomas  Tire  Co.  509a 

V.  Walker  259 

v.  White  146,  148 

White's  Bank  v.  Smith  305,  306 

White  Coal  Co.  r.  Crescent  Coal 

Co.  370a 

Whitecross  Wire  Co.  v.  Savill         333 


SECTION 

White  Mountain  Bankf.  West  431,  437 
White  Mountain  R.  v.  Eastman 

490,491 

Whiteside  v.  Clasis  Club  27a 

White-Smith  Co.  r.  Goff  537 
Wihite   Water   Canal   Co.   r.   Val- 

lette  236, 271 

Whitehead  r.  Lassiter  148 

\\Tiitehonse  v.  Halstead  325 

Whitely  V.  Allen  455 

Whitin  V.  Paul  401,402 

Whiting  V.  Brastow  121,  128 

V.  Eichelberger  417 

Whiting   V.    Plumas   Co.  366 

Whitley  V.  Bradley  173a 

Whitman  r.  Bartlett  167a 

Whitman  i\  Cox  511 

Whitmarsh  v.  Cutting  106 

Whitney  V.  Farrar  438 

V.  Lowell  427 

V.  Tibbits  399 

V.  Wyman  387 

Whittaker   v.  Johnson  80 

Whitten  v.  Harden  275 

Whittenton  Mills  v.  Upton  171 

Whittle  V.   Skinner  79 

WTiitwell   V.  Brigham  411 

V.  Warner  224,511,515 

Wickes  Bros.  V.  Hill  124a 

Wiekliffe  V.  Eve  194 

Wiggin  V.  Swett  542 

Wiggin.s  Ferry  Co.  v.  R.  121 

Wiggins  v.  McDonald  77 

Wigglesworth  r.  Dallison  108 

Wilamette  Co.  v.  Bank  237 

Wilberding  V.  Miller  143 

Wilcocks,  Ex  parte  223 

Wilcox  V.  Fairhaven  Bank  397,  410 

V.  Murtha  255 

V.  Wilcox  186 

Wilcox  Re  146,  193a 

Wild   17.  Davenport  194 

V.  Passamaquoddy  Bank  227 

Wilday  V.   Sandys  143 

Wilde  V.  Jenkins  243 

Wilder   v.   Millard  370a 

Wilder  Co.  v.  Refining  Co.  222 

Wildes  V.  Savage  448 

Wildman  v.  Wildman  68 

Wiles  l\  Robinson  367 

Wilgus  v.  Gettings  113 

Wilhelmi  i\  Leonard  428 

Wilkins   r.   Carmiehael  383 

V.  Gillis  455 

Wilkinson  r.  Bvers  366 

i\  Charlesworth  60,483 

V.  Johnson  449 


TABLE    OF    CASES. 


Ixxxix 


Willans  v.  Ayers 
Willard  r.  Rice 

V.  Willard 

V.  Wright 
Willes  V.  Green 
Willet  V.  Chambers 
Willett  i:  Earle 
Willetts  v.  Paine 
Willey  v.   Warden 
William  r.  Wilder 
Williams  Re 
Williams,    The 
Williams  v.  Allsup 


SECTION 

443, 44G 

431 

166a 

191 

172 

172, 188 
360 
466 
366 
279 
4&1 
391a 
431 


r.  Bank  of  United  States        455 

l\  Benedict  393 

V.  Brassell  163,  165 

V.  Chetham  417 

V.  Chester  R.  R.  Co.  226 

V.  Colonial   Bank  299 

V.  Gillies  188 

V.  Gragg  226 

v.  Hatch  437 

V.  Hensman  160 

V.  Ireland  207,214 

V.  Jackman  307 

r.  Kimball   Co.  100,421 

r.  McCormaek  458 

V.  Milton  173o 

r.  New  York   Ins.   Co.  545 

V.  Phelps  366 

V.  Reynolds  275 

V.  Savage    Man.    Co.  486 

V.  State  253 

V.  Suffolk  Ins.  Co.  332 

V.  Uzzeel  370a 

i\  Weekley  458 

V.  Williams  52,  146,  147 

V.  Windley  311 

V.  Young  426 
Williamsburg  Knitting  Mill   Re  126a 

Williamson  r.  Culpepper  17 

t\  Hine  214 

V.  Johnson  179 

V.  Jones  53 

V.  NeAV  Jersey  R.  113,116 

V.  Steele          '  419 

I'.  Williamson  144 

Williamsport  Co.  r.  Bait.  &  Ohio 

R.  82 

Williard  r.  Pinard  253 

Willings  r.   Bliglit  209 

Will  ink  r.  Morris  Canal  Co.           236 

Willis  V.  Green  164 

v.  Sharp  194 

r.   WhavTie  165 
Williston  r.  Michigan,  &c.  R.  R.  Co.  510 

Wills  V.  Sears  321 


SECTION 

Wilson  r.  Bank  of  Victoria  332 

V.  Borstal  315 

V.  Brannan  437 

r.  Central  Bridge  Co.  505 

r.  Cobb  258 

V.  Colorado  Co.  486,517 

t\  Dean  269 

V.  Edmonds  178 

r.  Gray  436 

V.  Guyton  378,  381 

V.  Heather  384 

V.  Kirby  274 

t\  Lady  Dunsany  358 

t'.  Little  395,399,417,498 

V.  London,  &c.  Navigation  Co.   320 

V.  Milligan  426 

V.  Rousseau  528,  529 

V.  Seybold  82 

i\  Shearer  363 

V.  Shrader  82 

r.  Simpson  530 

V.  Weston  417 

r.  Whitehead  178 

r.  Wilson  146 

Wilson  Co.  V.  Nashville  Bank         477 

Wil  thank's  Appeal  143 

Wiltshear  r.  Cottrell  112,  114 

Wimans  V.  Denmead  532 

Winch  V.  Mut.  Ben.  Ice  Co.  257 

Winchester  v.  Ball  434,437 

V.  Building   Association  255 

Winder  r.  Caldwell  389 

Windham  Bank  v.  Norton  455 

Wind.sor  Co.  v.  Schenk  491 

V.  Thompson  82,471 

Windus  i\  Lord  Tredegar  553 

Winfield  V.  Hudson  76 

Wing  r.   Antlionv  529 

V.  Gray         '  113 

V.  Harvey  553 

Winlock  V.  Munday  467 

Winn  V.   Ingilby  119 

Winner  v.  Penniman  165 

Winship  v.  Bank  of  U.  S. 

176,  177.  188.  189 

Winslow  r.  Bromich  113 

V.  Dundom  82 
Winslow  V.  ISIerchants'  Ins.  Co. 

114,115,124 

Winsor,  Ex  pnrfr  516 
Winter  V.  Belmont  Mining  Co.        499 

V.  Landpliere  419 

Wintermute  r.  Post  440 

Wirt  r.  Stubblefield  283 

Wise  V.  Allis  534 

Wiswell   r.  Baxter  259 

Wittkowski  r.  Smith  451 


xc 


TABLE    OF    CASES. 


SECTION 

Witzt'll   r.   Berman  529 

VVolcott  i\  Hamilton  51 

Wolf  r.  Hermann  Sav.  Bank  126a 

Wolf   l\   Suimners  379 

Wolfe  V.  Childs  165 

V.  Tyler  76 

Wolf  Co.'  r.  Sav.  Bank  126a 

Wolford  r.  Baxter  124 

Wollaston  v.  Hakewill  35 

Wolveridg«  r.   Steward  34 

Womack  r.  Douglas  165 

W^ood  f.  Bell  307 

p.  Braddick  193 

V.  Corl  452 

V.  Donovan  79 

r.  Dudley  434 

r.  Dummer  512 

V.  Gavnon  125 

r.  Hewett  113.  117 

r.  Matthews  417 

r.  Pennell  179 

V.  Pha?nix  Mut.  Life  Ins.  Co.  547 

V.  Price  455 

V.  Scoles  183 

r.  Sloman  199 

r.  Steele  462 

V.  Stockwell  425,441 

V.  Underbill  526 

r.  Whelen  123,124 

Woo<lbum  r.  Woodburn  367 

Woodfin    V.    Asheville    Mut.  Ins. 

Co.  555 

Woodford  o.  DoAVTier  193 

Woodham  v.  First  Nat.  Bank         124 

Woodland,  The  313,391,391a 

WoodlawTi  Ass'n  v.  Anderson  222 

Woodman    v.    Chesley        416.417,427 

V.  Inhabitants  of  Somerset        357 

V.  Pease  113 

W'OodruiT  r.  King  188 

i\  Merchants'  Bank  465 

V.  Phillips  425 

V.  Trapnell  349 

V.  Wicker  386 

Woods  V.  Bank  165 

V.  Lawrence  Countv  477 

V.  Rus.sell                  "  307 

V.  Wilder  171 

Woods  Co.  r.  Valley  Iron  Works    520 

Woodward  v.  Exposition  R.  56,  395 

V.  R.  113 

Woodworth  v.  Bank  of  America      451 

Woody  V.  Wagner  100 

Woolley  V.  Alexander  284,  285 

V.  Fry  434 

Woorall  r.  Gheen  462 

Wooster   r.   Sherwood  426 


SECTION" 

Wooten  r.  Howard  63 
Worcester  f.  Norwich,  &c.   R.         237 

V.  Western   R.  R.   Co.  231 
Worcester    Color    Co.    r.    Woods 

Sons  Co.  371a 

Word    V.   Morgan  407 

Worden    r.    Dodge  446 

Wordsworth  v.  Wood  157 

Work  V.  Leathers  324 

Worley  v.  Tobacco  Co.  523,  528 

Worrall  v.  Munn  188 

Worth,  Ex  parte  508 

r.  Gilling  50 
Worthington  v.  Charter  Oak  Ins. 

Co.  553 

Worthington,  Re  75,  76 

Wright  v.  Bundy  279 

V.  Eaves  263 

V.  Ellison  389 

V.  Harned  52 

V.  Hunter  212 

t\  Independence  460 

t'.  Lawton  36!) 

V.  MacDonnell  122 

V.  Marwood  333 

V.  Merchants'  Co.  486 

V.  Pearson  50 

V.  Ross  417,  437 

V.  Searles  163 

r.  Tacoma  254 

V.  Tetlow  427 

r.  Wright  77,  383 
Wright    Co.     r.     Herring-Curtiss 

Co.  533 

Wulfe  i\  Am.  Pack.  Co.  49 

Wyatt  r.  State  Board  61 

WyckofF  V.  Anthony  411c 

r.  Runyon  461 
Wyer  v.  Dorchester,  Ac.  Bank          351 

Wylder  v.  Crane  437 

Wynch,  Ex  parte  148 


Xenos  V.  Wickham 


552 


Yale  r.  Seeley 

53 

Yarbrough  r.  Pugh 

188 

Yates  r.  Aston 

368 

r.  Donaldson 

365, 

368 

Yatesville    Banking 

Co. 

r. 

Na- 

tional  Bank 

4«'J 

Yeager  i\  Farwell 

4.55, 

459 

Yeatman   v.  Savings 

Ins 

titut 

ion 
406, 

4-i') 

TABLE    OF    CASES. 


XCl 


Yenni  v.  MeNamee 
Yeomen  of  America  r.  Rott 
Yoakum  /\  Davis 
York  R.  r.  Winaiis 
York  Railway  Co.  c.  HudsoTi 
Yorke  v.  Grenaugh 
Yorkshire  Banking  Co.  v.  Beat; 
Young  America,  The 
Young,  Ex  parte 
Young  V.  Baxter 

r.  Clarendon 

n.  Dake 

r.  Grote 

r.  Hayes 

r.  Hill 

V.  Hudson 

V.  Jones 

V.  Kimball 

V.  Miller 


SECTIO.V 

SECTION 

399 

Young  r.  Moeller 

325 

548 

r.  Power 

366 

1(55 

V.  Telegraph  Co. 

299a 

237 

Youngberg  i\  Brick  Co. 

82 

225 

Yungbluth  Re 

82 

381 

■on 

179 
392 

z. 

209 

,214 

Zabriskie   ;-.  Cleveland   R.   R.  Co, 

113 

,126 

220 

1,  220 

477 

r.  Sullivan 

3S 

25 

Zealand,  The 

330 

470 

Zeller  r.  Adam.s 

124 

446 

Zinunerle  r.  Childers 

414 

263 

Zimmerman  r.  Harding 

170 

81 

Zimpleman  v.  Veeder 

409 

366 

Zemon  v.  Trim 

179 

387 

Zenatello  r.  Hammerstein 

299a 

275 

Zulueta  He 

500 

THE    LAW 

OF 

PERSONAL    PROPERTY 


PART  I 


INTRODUCTORY 

§  1,  General  Division  of  the  Subject. 

It  will  be  convenient,  for  the  due  treatment  of  our  present 
comprehensive  subject,  to  consider  it  under  these  three  consecutive 
heads:  I.  Nattjke  and  General  Incidents  of  Personal 
Property;  II.  Leading  Classes  of  Personal  Property; 
III.  Title  to  Personal  Property.  The  first  two  heads 
receive  consideration  in  the  present  volume.  The  third  head  is 
reserved  for  a  second  and  still  later  volumes ;  the  development  of 
the  law  of  Title  to  Personal  Property  leading  us  to  an  extended 
investigation  of  such  important  topics  of  jurisprudence  as  Original 
Acquisition,  Gift,  Sale,  and  Bailment ;  not  to  add  others  which 
elementarv   writers    have    seen    fit    to    include    under    the    same 


general  head. 


1.  The  present  author,  havinj?  been  Volume  II.  of  Personal  Properti/  (or. 

frradnally  led  on  to  investigate  the  law  as  he  would  prefer  to  call  it.  Oifis  anrl 

of  personal  property,  after  the  present  Sales),  omhracinp  the  topics  of  Orig- 

vohime  was  issued  in   1873,  has  pre-  inal  Acquisition.  Cift,  and  Sale.      (2) 

pared  and  published  three  other  vol-  fiaihnrnts.    including    Carriers,    Jvn- 

umes.  which   finally  conclude  his  la-  krpcrs,  and  Pledge.     (3)   The  Law  of 

bors  on  this  extensive  subject.      (1)  Executors  and  Administrators.    These 


PART  II 

NATUKE  AND  GENERAL  INCIDENTS  OF  PEESONAL 

PROPERTY 


CHAPTER  I 


PERSONAL    PROPERTY    IN    GENERAL 


§  2.  Personal  Property  at  the  Common  Law  Defined. 

The  term  Personal  Property  —  using  the  word  "  property  " 
with  reference  to  the  thing  owned,  and  not  the  right  of  owner- 
ship —  embraces  at  the  common  law  all  those  things  in  which  one 
may  have  a  right  and  interest  to  the  exclusion  of  others,  with  the 
exception  of  what  we  commonly  designate  in  these  days  as  real 
property  or  real  estate.^ 


volumes  develop  the  idea  of  Title; 
i.  e.,  how  personal  property  of  various 
kinds  may  be  acquired,  enjoyed,  and 
transferred. 

For  the  latest  edition  of  these  vol- 
umes (and  also  of  "Domestic  Rela- 
tions") the  present  publishers  should 
be  consulted.      (1917.) 

Municipal  statutes  for  the  general 
welfare  may  affect  one's  ownership  of 
property.  Ladow  v.  Oklahoma  Gas  & 
Electric  Co.,  28  Okla.  15,  119  P.  250. 

An  "  equitable  title  "  to  property  is 
the  right  one  has  to  have  the  legal 
title  transferred  to  him.  Joy  v.  Mid- 
land State  Bank  of  Omaha,  28  S.  D. 
262,  133  N.  W.  276. 

Possession  is  prima  facie  evidence 
of  title  to  things  personal;  but  this 
-prima  fade  evidence  may  be  overcome 
by  due  proof  to  the  contrary.  So,  too, 
title  in  things  personal  passes  usually 
by  delivery  of   possession.      But   the 


mere  possession  of  a  non-negotiable 
chose  may  be  contradicted  as  to  title 
by  the  expression  of  the  ins-trument 
itself.  See  In  re  Perry,  114  N.  Y.  S. 
246,  129  App.  Div.  587,  149  N.  W.  621 
(Iowa).  The  ownership  of  property 
once  established  is  presumed  to  so 
continue  until  a  change  is  aflSrm- 
atively  shown.  O'Malley  v.  Heman 
Const.  Co.,  255  Mo.  386,  164  S.  W. 
565;  4  Chamberlayne  Evid.,  §§ 
1192,  2747.  And  so  presumably  when 
things  severed  from  the  freehold  are 
converted  into  chattels.  Pearce  v.  Al- 
drich  Mining  Co.,  184  Ala.  610,  64  So. 
321,  144  Pac.  405;  Templeton  v. 
Bockler,  73  Or.  494.  See  further 
Harris  v.  Johnson,  75  Wash.  291,  134 
Pac.  1048;  Linick  v.  A.  J.  Nutting  & 
Co.,  140  App.  Div.  265,  125  N.  Y.  S. 
93,  4  Chamberlayne  §§  2175,  2276. 

1.  An    extensive    use    of    the    term 
"  property "    is    presumed    where    the 


CHAP.    I.]  PERSONAL    PROPEKTY    IX    GEXERAL.  §    4 

§  3.  Mobility  the  Leading  Essential  Quality  of  Personal  Prop- 
erty. 

The  leading  essential  quality  of  personal  property,  in  all  sys- 
tems of  jurisprudence, —  that  which  serves  more  nearly  than  any- 
thing else  to  mark  the  meaning  and  to  distinguish  personal  from 
real  property, —  is  its  mobility.  Things  real,  like  lands,  trees, 
and  houses,  have  a  fixed  locality ;  they  are  immovable,  so  to  speak. 
But  things  personal,  such  as  money,  jewelry,  clothing,  household 
furniture,  boats,  and  carriages,  are  said  to  follow  the  person  of 
the  owner,  wherever  he  goes ;  they  need  not  be  enjoyed  in  any 
particular  place ;  and  hence  they  are  movable.  This  fundamental 
division  of  property  into  immovables  and  movables  is  the  primary 
and  most  obvious  one ;  and  to  each  class  we  find  that  a  separate 
set  of  legal  principles  has  been  universally  applied.  The  popular 
application  of  the  terms  "  real  "  and  "  personal,"  in  the  English 
tongue,  is  to  the  same  effect.^ 

§  4.  Division  of  Things  into  Movables  and  Immovables ;  Changes 
from  the  One  Kind  to  the  Other  by  Severance  or  Incor- 
poration with  Soil. 
And  here  we  may  observe  how  frequently  things  which  were 
originally  immovable  become,  through  the  operations  of  nature, 
or  by  the  art  of  man,  movable,  so  as  to  change  from  real  to  per- 
sonal property;   and,  on  the  other  hand,  how  things  once  movable, 
or  personal  property,  acquire  the  characteristics  and  become  sub- 
ject to  the  law  of  real  property.     Thus,  a  tree  is  real  property  so 
long  as  it  stands  in  its  native  soil;    but  cut  that  tree  down  and 
make  a  pile  of  wood,  and  you  may  subject  it  to  the  laws  of  personal 
property;    use  that  wood  in  making  a  chair  or  a  table,  or  deposit 
it  in  your  neighbor's  cellar  for  fuel,   and   it  is  unquestionably 

word   is  used  in  a  State  or  Federal  2.  See    Bouvier's   Diet.      "  Personal 

Constitution.     Wells  Fargo  Company  Chattels;"     Webster's-     Diet.     "  Per- 

V.  Jersey  City,  207  F.  871  (N.  J.  D.  C.  sonal;"    Worcester's    Diet,    do.;     1 

1913).      Or,    perhaps,    in    some    local  Domat  Civil  I^w,  prel.  book,  tit.   3; 

statute.    See  People  v.  Downs,  136  N  2  Ehvell's  Bl.  Com.  384-3&8 ;  §  53  post. 
Y.  S.  440. 


§  4  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  II. 

personal  property.  A  mineral  or  metal  in  the  earth  is  real  prop- 
erty ;  but  dig  out  the  precious  substance,  and  you  have  an  article 
of  merchandise,  which  is  personal  property.  There  is  the  orchard 
with  its  hanging  fruit ;  and  here  is  the  gathered  fruit  ready  for 
sale  in  the  market.  The  act  of  complete  severance,  then,  is 
commonly  what  changes  property  from  real  to  personal,  from 
immovable  to  movable;  although  the  thing  itself  which  we  carry 
from  place  to  place  may  not  be  the  result  of  a  mere  severance,  like 
fruits,  vegetables,  hevni  trees,  and  coal,  but  the  result  of  a  sever- 
ance followed  by  other  acts  of  workmanship,  as  in  the  case  of 
money  wrought  up  from  gold  and  silver  ore,  furniture  from  trees, 
and  necklaces  from  precious  stones  once  imbedded  in  the  ground.^ 

Personal  property  may  be  changed  into  real  property,  likewise ; 
as  in  the  very  common  instance  where  one  takes  building  stone, 
bricks,  and  mortar, —  all  personal  property, —  and  fashions  them 
into  a  house,  which  becomes,  as  it  were,  incorporated  with  the  soil, 
and  is  subject  to  the  rules  which  regulate  real  property.  And  yet, 
once  more,  that  same  house  may,  in  the  lapse  of  time,  be  pulled 
down ;  and  the  building  materials  may  then  be  sold,  as  such,  and 
acquire  again  the  characteristics  of  personal  property,  whatever 
the  article  be  styled  in  its  various  modifications. 

Therefore,  a  thing  ma/'be  first  real,  then  personal,  then  real 
again,  then  personal  again;  and  indeed  the  changes  may  go  on, 
indefinitely,  so  long  as  the  thing  itself  lasts.  N^or  is  its  identity 
necessarily  lost  in  this  process,  nor  need  a  great  variety  of  names 
be  applied  to  an  original  substance  undergoing  the  transmutation ; 
since  a  growing  tree  might  first  be  taken  from  a  nursery;  next, 
pass  for  sale  in  the  market  as  personal  property;    and,  lastly,  be 

3.  Soil  rightfully  or  wrongfully  re-  But  the  felonious  taking  of  personal 

moved   from  land   becomes  on   sever-  property  does  not  change  one's  title ; 

ance  personal  property.     Anderson  v.  and  the  true  owner  may  follow  up  to 

Todesca,    214   Mass.    102,    100  N.   E.  recover  the  property  or  otherwise  pur- 

10'68'.    And  so  is  it  with  severed  fruit  sue  remedies  given  by  the  law. 
or  vegetables,  whether  stolen  or  right- 
fully taken. 


CHAP.    I.]  PERSONAL    PROPEETY    IN    GENERAL.  §    6 

transplanted  and  grow  up  in  a  new  soil,  where  the  law  would 
regard  the  tree  as  part  of  the  soil  itself.'* 

§  5.  Things  Movable  Are  Animate  or  Inanimate. 

Things  movable  may  be  further  separated  into  things  animate, 
and  things  inanimate;  that  is,  into  such  things,  the  subject  of 
ownership,  as  can  move  themselves,  namely,  animals ;  and  those 
things  which  are  inanimate  and  movable  only  through  the  appli- 
cation of  force  from  without.  Human  beings,  happily,  cannot  at 
this  day  be  the  subject  of  property  at  all,  by  the  English  or 
American  law;  but  where  slavery  once  existed  man  was  classed 
with  things  personal ;  and  all  the  lower  animals,  so  far  as  they 
are  owned,  are  subject  to  the  law  of  personal,  and  not  real,  prop- 
erty, since  they  are  to  be  deemed  movables. 

§  6.  Duration  of  Enjoyment  Considered;    Peculiar  Distinction 
at  Common  Law  between  Freehold  and  Chattel. 

If,  then,  we  were  permitted  to  treat  these  elementary  divisions 
of  things  real  and  things  personal  as  corresponding  in  meaning 
with  the  civil  law  terms,  things  immovable  and  things  movable, 
our  definition  of  personal  property  would  be  an  easy  one.  But, 
at  the  common  law  of  England,  we  find  another  element  introduced 
for  our  consideration,  as  concerns  things  real;  namely,  duration 
of  the  time  of  enjoyment.  The  feudal  system,  which  prevailed  in 
the  early  days  of  English  law,  ascribed  to  the  possession  of  landed 
estates  an  especial  importance.  During  the  Middle  Ages  trade 
and  commerce  were  neglected ;    Jews  became  the  capitalists,  and 

4.  The    change    of    a    chattel    into  Barger  v.  Barringer,   151  N.  C.  433, 

realty  or  of  real  property  into  a  chat-  66  S.  E.  43?,  25  L.  R.  A.  N.  S.  8-31. 

tel  involves  a  mixed  question  of  law  See  further  as  to  "property,"  Hol- 

and  fact.     Ochs  v.  Tilton,  184  Ind.  81,  combe  v.  City  R.,  80  N.  J.  Eq.  122.  82 

103  N.  E.  837.  Atl.   618;   Jones  v.   Leslie,   61   Wash. 

As  to  all  property,  real  or  personal,  107,  112  Pac.  81,  48  L.  R.  A.  N.  S. 

the  general  maxim  is  that  one  must  893 ;  as  to  labor  or  the  right  to  labor, 

80  use    it  as  not  to   injure   another.  Monarch   Laundry  Co.  v.   Westbrook, 

lOD  Va.  382,  63  S.  E.  1070. 


§  6  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  II. 

capitalists  were  the  prej  of  the  barons ;  it  was  the  ancestral  acres 
alone  which  the  ambitious  and  aspiring  learned  to  regard  with 
favor.  Men  fight  and  struggle  for  that  which  will  best  ensure 
them  influence  and  social  position;  so,  until  a  comparatively  late 
period,  the  Anglo-Saxon  found  his  worldly  wishes  for  property 
and  rank  gratified  chiefly,  if  not  altogether,  in  the  possession  of 
real  estate  of  a  freehold  character,  with  a  tenantry  beneath  him, 
and  hereditary  honors  to  receive  and  transmit.  Such,  indeed, 
must  be  the  natural  bias  of  a  rude  and  uncultivated,  though  vigor- 
ous race ;  for  agriculture  is  the  primitive  employment  of  mankind, 
while  the  jurisprudence  of  movable  property  can  only  be  perfected 
where  commerce,  manufactuers,  and  the  liberal  arts  flourish. 

To  be  a  freeholder,  then,  was  to  be  a  man  of  property  indeed; 
and  a  freehold  might  be  either  one  of  inheritance,  or  for  life  only. 
But  every  estate  in  lands  and  tenements  which  fell  short  of  a  life 
interest  was  without  dignity,  and  could  not  be  deemed  a  freehold 
at  all.  Herein  consisted  the  dignity  of  a  freehold ;  that  it  should 
last  for  an  indeterminate  period  of  some  sort.  Any  landed  inter- 
est, expressed  to  be  for  a  positive  length  of  time,  though  it  were 
for  a  thousand  years,  and  logically  more  than  a  life  interest,  fell 
short  of  the  rank  of  real  estate ;  not  being  a  fee,  it  did  not  attend 
the  inheritance,  nor  could  it  be  classed  with  lands  and  tenements  at 
all.  What  kind  of  property,  then,  was  such  an  estate  in  lands? 
Not,  in  all  respects,  movable  property;  and  yet  so  little  concern 
had  the  common  law  for  interests  less  than  freehold,  that  it  stopped 
with  denying  them  the  rank  of  immovable  property.  One  general 
designation  sufficed  for  such  inferior  interests  and  for  movables 
proper  alike ;  whether  leases  for  years,  or  money,  farm  stock,  and 
furniture,  all  were  comprehended  under  the  name  of  chattels.  As 
Blackstone  gives  the  rule,  whatever  wanted  either  of  two  qualities, 
duration  as  to  time,  or  immobility  with  regard  to  place,  could  not 
be,  according  to  English  law  and  the  Norman  custom,  a  real 
estate;   consequently,  it  must  be  personal  estate,  or  a  chattel.^ 

5.2    Bl.    Com.    386;     1    Co.    Inst.  118  b;  2  Kent  Com.  341.  342. 

6 


CHAP.    I.]  PERSONAL    PROPERTY    IX    GENERAL.  §    8 

§  7.  Personal  Property  or  Chattels  in  Our  Law  the  Residuum  of 
the  Freehold. 

It  is  obvious,  therefore,  that  the  word  "'  chattels,''  at  the  common 
law,  was  never  applied,  in  a  strict  sense,  to  things  personal ;  that 
it  did  not  serve  to  mark  an  exact  contrast;  that  it  had  rather  a 
negative  than  a  positive  signification.  Instead  of  movables  and 
immovables,  we  have  freeholds  and  chattels.  Instead  of  a  prop- 
erty system  which  should  display  two  distinct  classes  of  equal 
importance,  we  find  in  the  common  law  a  sort  of  one-sided  scheme. 
The  jurisprudence  of  lands  and  tenements,  artificial  to  the  last 
degree,  was  the  pride  of  the  early  English  lawyer;  for  chattel 
learning  he  cherished  little  else  than  a  profound  contempt.  Yet 
the  last  three  centuries  have  wrought  an  entire  change ;  and  with 
the  revival  of  trade  and  commerce  came  new  species  of  personal 
property,  such  as  bills  and  notes,  and  bonds  and  other  securities 
for  debt,  to  which  are  more  lately  added  shares  in  stock  companies, 
insurance  policies,  patent-rights,  and  the  like;  all  of  these  attest- 
ing the  development  of  new  sources  of  wealth,  and  the  re-establish- 
ment of  personal  property  —  a  jurisprudence  once  nearly  buried 
in  the  rubbish  of  the  great  Roman  Empire  —  as  the  co-equal  of 
real  property,  if  not  indeed  its  superior,  in  legal  importance. 

We  may  do  well,  then,  to  avoid  attempting  a  positive  and  exact 
definition  of  the  term  "  personal  property ;  "  contenting  ourselves 
with  reminding  the  reader  that  what  is  now  known  as  personal 
property  was,  at  the  common  law,  but  the  residuum  of  the  free- 
hold ;  and  that  such  is  the  state  of  the  law  to-day,  save  where  local 
statutes  have  made  it  otherwise. 

§  8.  What  is  a  Chattel  at  the  Common  Law, 

Since  "  chattels  "  is  the  term  usually  employed  at  the  common 
law  to  denote  personal  property  in  general,  let  us  examine  its 
meaning  for  a  moment.  It  follows,  from  what  has  been  already 
observed,  that  every  species  of  property,  movable  or  immovable, 
which  is  less  than  a  freehold,  must  be  a  chattel.  The  origin  of 
the  term  "  chattel "  is  somewhat  obscure.  Coke  says  it  is  a 
French  word,  and  signifies  goods,  "  which  by  a  word  of  art  we 

7 


^  U  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  II. 

call  catalla."  ^  And  Blackstone  observes :  "  The  appellation  is  in 
truth  derived  from  the  technical  Latin  word  catalla,  which  pri- 
marily signified  only  beasts  of  husbandry,  or  (as  we  still  call 
them)  cattle^  but  in  its  secondary  sense  was  applied  to  all  movables 
in  general."  ^  This  derivation,  if  correct,  serves  to  mark  the  sim- 
plicity of  life  in  the  early  days  of  our  law,  when  live  stock  could 
suffice  as  the  representative  of  personal  wealth.  But  some  allege 
that  the  word  ''  chattel ''  is  contracted  from  capitalia,  capital,  from 
caput,  "  a  word  used  in  the  Middle  Ages  for  all  goods,  movable 
and  immovable ;  "  while  others  suggest  that  it  possibly  originated 
in  a  root  signifying  to  get  or  possess,  whence  sprung  also  the 
Italian  word  catarre.^  Words  are,  after  all.  but  the  tools  of  the 
wise,  fashioned  after  the  common  understanding  of  the  day;  and 
the  symbols  of  etymology,  though  furnishing  valuable  aid  in  his- 
torical researches,  may  prove  a  blind  guide  to  those  who  seek  some 
lasting  plan  of  consistent  classification.  Our  English  ancestors 
appear  to  have  followed  the  ISTorman  law  in  opposing  the  idea  of 
chattel  to  that  of  feud  or  freehold.^ 

§  9.  Chattels  Real  and  Chattels  Personal. 

In  accordance  with  the  foregoing  distinctions,  there  are  two 
leading  classes  of  chattels  set  forth  by  the  common-law  writers : 
namely,  chattels  real  and  chattels  personal.  Chattels  real  are 
interests  less  than  freehold,  which  are  annexed  to  or  concern  real 
estate ;  such  as  a  lease  of  land  for  a  certain  number  of  years. 
Chattels  personal  are,  properly  and  strictly  speaking,  things  mov- 
able, which  may  be  carried  about  by  the  o\vner,  and  which  accom- 
pany him  at  law  wherever  he  may  go.  Animals,  household  goods, 
stock  in  trade,  money  and  jewels,  are  chattels  personal.  So,  also, 
are  bills  and  notes,  certificates  of  the  public  debt,  corporation 
shares,  legacies,  loans  on  collateral  security,  and,  indeed,  debts, 
demands,  and  claims  generally.^  These  subjects  will  be  considered 
at  length  in  succeeding  chapters. 

6.  1  Co.  Inst.  118  b.  8.  See  Webster's  Diet.  "  Cattle." 

7.  2    Ewll's    Bl.    Com.    385.       See  9.  2  Ewell'?  Bl.  Com.  385,  386. 
Bomier's   Diet.   "  Chattel."     Century  1.  See  1  Co.  Inst.  118  ;  2  Ewell's  Bl. 
Diet.  lb.                                                       § 


CHAP.    1.]  PERSONAL,    PEOPERTY    IN    GENERAJL.  §11 

§  10.  Fixtures,  Heirlooms,  and  Emblements. 

But  there  is  a  border  line  which  runs  between  real  and  personal 
property,  freeholds  and  chattels,  things  immovable  and  things 
movable,  which,  as  we  approach  it,  cannot  always  be  easily  dis- 
tinguished. Thus,  a  house  firmly  imbedded  in  the  ground  becomes 
part  of  the  soil,  and  passes  for  immovable  or  real  property.  This 
is  law.  But  a  wooden  shed  might  be  built,  which  not  only  could 
be  taken  away  in  point  of  fact  by  its  owner,  but  which  he  actually 
intended  should  be  taken  away  and  moved  from  place  to  place. 
Now,  would  the  latter  be  personal  property,  or  would  it  be  real 
estate;  part  of  the  freehold  or  a  mere  chattel;  a  thing  movable, 
or  a  thing  immovable  ?  Nay,  there  are  instances  which  some 
of  our  city  readers  may  recall,  where  a  large  building  of  several 
stories  has  been  lifted  from  its  foundation  and  safely  transported 
to  an  adjoining  lot  of  ground ;  so  wonderful  are  the  appliances  of 
mechanical  art  in  these  days.  Whether  things  of  a  personal  nature 
attached  to  the  soil  are  legally  chattels  or  not,  must  often  therefore 
depend  upon  circumstances ;  and  various  important  questions  are 
raised  in  the  courts,  which  we  shall  consider  at  length  hereafter, 
under  the  head  of  "  Fixtures."  ^ 

So,  too,  there  are  other  chattels  which  the  law  permits  to  go 
with  the  freehold  in  case  of  the  owner's  death  as  heirlooms, 
instead  of  following  the  usual  rule  of  distribution;  this,  partly 
from  the  consideration  of  inherent  qualities,  partly  because  of 
custom,  and  partly  no  doubt  for  mere  convenience'  sake  or  general 
policy.  These,  as  well  as  the  right  to  take  away  ripe  crops,  in 
certain  contingencies,  as  emblements,  require  special  treatment, 
likewise ;   and  they  will  constitute  the  subject  of  a  special  chapter.^ 

§  11.     Choses  in  Possession  and  Choses  in  Action. 

There  are  other  terms  of  familiar  use  in  the  law  of  personal 
property.  Thus,  chose  is  a  well-known  French  word  signifying 
"  thing,"   which  was   imported   into  Great  Britain  by  the   Nor- 

Com.  386,  387  :  2  Kont  Com.  340-342 ;  2.   Sw  post,  c.  6. 

Wms.  Pers.  Prop.  Int.  Ch.  3.  See  post,  c.  5. 

9 


§11  THE    LAW    OF    PERSONAL    PROPERTY.  [PART    II. 

mans,  as  a  term  to  be  applied  with  especial,  if  not  exclusive, 
reference  to  personal  property.  This  word  appears  constantly 
in  those  bungling  and  barbarous  phrases,  choses  in  possession  and 
choses  in  oxtion;  or,  to  use  the  vernacular  and  better  words,  things 
in  possession,  and  things  in  action. 

The  distinction  which  the  law  means  to  make  by  the  use  of 
these  phrases  seems  to  be  more  generally  recognized  than  under- 
stood. The  elementary  writers  tell  us  that  choses  in  possession 
are  personal  things  of  which  one  has  possession;  and  that  choses 
in  action  are  personal  things  of  which  the  owner  has  not  the  pos- 
session, but  merely  a  right  of  action  for  their  possession.  Or,  to 
use  the  words  of  Blackstone,  "  Property  in  chattels  personal  may 
be  either  in  posession,  which  is  where  a  man  hath  not  the  right 
to  enjoy,  but  hath  the  actual  enjoyment  of  the  thing;  or  else  it 
is  in  action,  where  a  man  hath  only  a  bare  right,  without  any  occu- 
pation or  enjoyment."  '*  If,  then,  my  coat  be  stolen,  and  I  seek 
to  recover  it  from  the  thief,  is  it  not  my  chose  in  action?  No,  is 
the  answer :  the  coat  is  a  chose  in  possession,  whether  you  possess 
it  or  not.  Or,  if  I  own  bank-stock,  and  draw  regular  dividends, 
is  not  the  stock  a  chose  in  possession,  since  I  occupy  and  enjoy  it 
to  the  fullest  extent  ?  'No,  is  the  reply  once  more ;  for  this  is 
never  any  thing  more  than  a  chose  in  action.  These  terms,  then, 
are  certainly  calculated  to  mislead ;  they  do  not  intend  just  what 
they  appear  to  express ;  and  whoever  reads  Blackstone's  chapter 
on  "  Property  in  Things  Personal,"  ^  should  perceive  that  he  con- 
founds two  senses  of  the  word  "  property,"  the  one  signifying  the 
thing  possessed,  the  other  the  right  of  possessing. 

This  classification  of  property  into  choses  or  things  in  posses- 
sion, and  choses  or  things  in  action,  is,  in  truth,  a  classification 
according  to  inherent  qualities,  and  not  with  regard  to  the  meas- 
ure of  the  right  of  enjoyment  at  all.  It  is,  as  we  are  fully  con- 
vinced, but  a  sort  of  modification  of  the  more  expanded  idea  of 
things  corporeal  and  incorporeal;  and  this  mode  of  classification 

4.  2  Bl.  Com.  389,  3ff7.     See  Bouv.  5.  2  Bl.  Com.  c.  25. 

Diet.  "Chose;  "  1  Chitty  Pract.  99. 

10 


CHAP.    I.]  PERSONAL    PROPERTY    IN    GENERAL,.  §11 

results  from  the  attempt  to  discriminate  between  objects  of  the 
sense  and  what  are  mere  rights.  ISTow,  this  grand  division  of 
property  into  things  corporeal  and  things  incorporeal  is  a  perfectly 
natural  and  obvious  one;  we  readily  understand  that  while  some 
things  are  objects  of  the  sense,  and  capable  of  being  seen  and 
touched,  others  have  but  a  legal  or  ideal  existence.  Spain,  Hol- 
land, Scotland,  and  certain  other  European  countries  whose  juris- 
prudence is  based  upon  the  civil  law,  have  recognized  such  an  ele- 
mentary division  quite  distinctly;  and  the  same  is  true  of  Louisi- 
ana, and  perhaps  other  American  States.^  Lands  and  houses, 
under  this  system,  are  to  be  regarded  as  corporeal  species  of  prop- 
erty, for  they  may  be  seen  or  touched;  so  are  cattle,  jewels,  and 
household  furniture.  But  a  right  of  way  in  lands  is  incorporeal ; 
so  is  the  right  to  recover  an  unpaid  debt.  The  civil  law,  in  the 
time  of  Justinian,  classified  into  immovables  and  movables,  which 
together  constituted  corporeal  property,  and  to  these  added  incor- 
poreal property  or  rights.^  The  old  common  law  applied  no  such 
system  of  classification,  in  so  many  words,  to  personal  property; 
and  yet  the  distinction  of  corporeal  and  incorporeal  was  employed 
with  reference  to  things  real  from  the  earliest  period.  Thus,  the 
elementary  writers  laid  it  down  that  commons,  ways,  and  fran- 
chises —  all  rights  appertaining  to  real  estate  —  were  incorporeal 
hereditaments,  because  they  were  rights  existing  only  in  the 
mind,  whatever  might  be  said  of  their  effects  or  profits ;  while,  on 
the  other  hand,  land  and  water  were  corporeal  hereditaments, 
because  they  could  be  seen  and  handled  by  the  body.^  More  than 
this :  the  very  word  "  hereditament,"  though  practically  restricted 
at  the  English  law  in  its  application,  has  a  theoretical  significance, 
ample  enough,  apparently,  to  justify  its  extension  to  our  present 
subject;  for,  to  use  Coke's  own  language,  it  includes  not  only 
lands  and  tenements,  but  whatsoever  may  be  inherited,  be  it  cor- 
poreal or  incorporeal,  real,  personal,  or  mixed.     And  Blackstone 

6.  See  2  Burge  Col.  and  For.  Laws,  7.  Colquhoun    Rom.    Civil    Law,    § 

3.  932;  1  Dom.  Civil  Law.  §  1.30. 

8.  2  Bl.  Com.  18-21;  Co.  Lit.  19.  20. 

11 


§  12  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

defines  the  incorporeal  hereditament  as  "  a  right  issuing  out  of 
a  thing  corporate  {whether  real  or  personal),  or  concerning,  or 
annexed  to,  or  exercisable  within,  the  same ;  "  and  one  of  the 
examples  given  is  that  of  an  office  relating  to  jewels.  This  shows 
that  the  idea  was  entertained  of  incorporeal  rights  annexed  to 
corporeal  chattels,  as  well  as  of  those  rights  which  savored  only 
of  real  estate.^ 

§  12.  The  Same  Subject:  Better  Classification  would  be  into 
Corporeal  and  Incorporeal  Chattels. 
Whether  the  better  plan  is  not  to  put  corporeal  immovables  and 
movables  bj  themselves,  and  then  to  add  incorporeal  rights  as 
another  and  distinct  class  of  property,  following  the  Roman  rule 
of  the  time  of  Justinian,  we  need  not  now  discuss.  Suffice  it  to 
say,  that  the  apportionment  of  rights  between  the  two  great  sys- 
tems of  property,  real  and  personal,  is  a  feature  too  deeply  woven 
into  the  texture  of  our  law  to  be  separated  without  damaging  the 
whole  fabric.  To  take,  then,  the  hint  thrown  out  in  the  defini- 
tions of  Coke  and  Blackstone,  we  might  say,  that  rights  issuing 
out  of  lands,  such  as  a  right  of  way,  and  privilege  of  fishing  or 
pasture,  should  be  referred  to  the  topic  of  real  property,  while 
rights  issuing  out  of  or  reducible  to  the  personal  corporeal  thing 
we  call  money,  such  as  debts,  demands,  and  claims  arising  from 
contracts  or  a  wrong,  or  issuing  out  of,  or  concerning,  or  annexed 
to  any  other  personal  corporeal  thing,  should  be  referred  to  the 
topic  of  personal  property;  or,  to  be  more  logical  (since  a  house- 
rent  might,  perhaps,  be  referred  to  both  topics  on  such  a  principle 
of  classification),  that  under  the  latter  head  are  to  be  included  all 
such  rights  or  incorporeal  hereditaments  as  are  not  specially 
annexed  to  lands  or  immovable  property,  and  do  not  issue  out 
of  or  immediately  concern  the  same.  Then,  whether  the  student 
were  analyzing  the  law  of  real  or  of  personal  property,  he  would 
find  this  leading  distinction  before  him,  of  things  which  can  he 
seen  or  touched  and  things  which  are  not  the  objects  of  the  bodily 

».  See  2  Bl.  Com.  20. 

12 


CHAP.    I.]  PERSOXAL    PROPERTY    IX    GENERAL.  §    12 

senses.  The  one  great  property  system  would  correspond  with  the 
other,  and  both  would  conform  to  universal  law.  He  would  see 
why  we  separate  a  debt  from  an  animal  in  classification ;  why,  too, 
a  different  principle  applies  to  general  balances  due  from  our 
banker  and  to  a  sealed  bag  of  money  left  in  his  custody  on  special 
deposit.  Proceeding  a  step  further,  he  would  learn  that  bills  and 
notes,  certificates  of  stock,  registered  securities,  and  the  like  spe- 
cies of  personal  property,  so  common  in  these  days,  are  but  the 
evidence  of  incorporeal  rights,  and  not,  in  strictness,  corporeal 
property, —  a  truth  not,  perhaps,  self-evident,  yet  capable  of  dem- 
onstration, and  upon  which  are  founded  some  of  the  most  import- 
ant general  doctrines  of  the  law  touching  things  personal.  A 
better  style,  therefore,  than  choses  or  things  in  action  would  be 
rights  in  action. 

If  this  plan  of  classification,  into  things  corporeal  and  things 
incorporeal,  be  so  desirable,  some  one  may  ask,  why  was  it  not 
originally  applied,  at  the  common  law,  as  well  to  personal  as  to 
real  property  ?  We  reply :  because,  in  all  probability,  of  the  com- 
parative unimportance  of  the  topic  of  personal  property  in  the 
days  of  Blackstone  and  his  predecessors.  It  is  not  to  be  supposed 
that  the  early  teachers  of  the  common  law,  many  of  them  wise 
and  learned  for  their  age,  were  without  ideas  on  such  subjects. 
Yet  while  they  gradually  worked  out  a  real-estate  system  of  juris- 
prudence, refining  upon  subtile  refinements,  they  did  not  treat  the 
subject  of  chattels  as  it  deserved.  In  the  first  place,  they  took 
no  pains  to  set  off  the  two  systems  of  property,  real  and  personal, 
side  by  side,  and  to  see  how  far  their  principles  could  be  har- 
monized. In  the  second  place,  they  had  got  hold  of  this  distinc- 
tion between  choses  in  possession  and  choses  in  action,  which 
answered  their  purpose  sufficiently  for  the  time  being;  although, 
while  not  seemingly  aware  of  it,  they  meant  about  the  same  as 
to  distinguish  between  corporeal  things  personal  and  incorporeal 
things  personal.  The  choses  in  possession  consisted  of  things 
which  could  be  seen  and  touched,  like  animals,  corn,  and  jewels. 
The  choses  in  action  were,  as  we  understand  it,  mere  rights ;  and 
as  the  enforcement  of  these  rights  is  by  suit  or  action,  we  may 

13 


§  14  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

suppose  that  while  simple  debts  or  claims  for  damages  constituted 
almost  the  only  incorporeal  personal  rights  in  the  community,  the 
term  cliose  in  action  fitted. 

§  13.     The  Same  Subject;  Rights  of  Dominion  Affected  by  Title. 

Upon  the  one  or  the  other  method  of  distinction  rests  much  of 
the  law  of  personal  property  in  force  at  the  present  day  in  Eng- 
land and  America,  as  we  shall  have  occasion  to  notice  in  the 
course  of  this  treatise.  And  the  reader  should  always  keep  in 
mind  that  the  ownership  of  property  —  that  is,  the  exclusive  right 
to  possess,  enjoy,  and  dispose  of  a  certain  thing  —  or  its  dominion, 
may  be  very  greatly  affected  by  its  situation  in  the  hands  of  par- 
ties, whatever  may  be  its  inherent  qualities.  One  may  be  the 
buyer,  another  the  seller,  with  reference  to  the  same  thing;  one 
the  assignor,  another  the  assignee ;  one  may  bequeath,  another  may 
inherit;  and  so  on.  Such  questions  properly  come  up  in  consid- 
ering the  subject  of  title  to  property;  and  the  rules  of  title  will 
be  found  to  differ  according  to  the  inherent  attributes  of  the  prop- 
erty; whether  it  be  an  immovable  or  a  movable,  whether  it  be  a 
thing  corporeal  or  a  thing  incorporeal. 

§  14.     The   Same   Subject;    How   Things    Incorporeal    Become 
Corporeal,  etc. 

Another  truth  should  be  borne  in  mind  by  the  reader,  to  come 
more  closely  to  the  subject  we  are  now  considering;  namely,  that 
the  thing  incorporeal,  or  the  money  right,  or  chose  in  action,  may 
be  converted  into  a  thing  corporeal,  or  a  cliose  in  possession,  and 
thus  become  in  fact  that  latter,  or  be  extinguished  altogether. 
Thus,  a  legacy,  which  is  an  incorporeal  right,  may  be  paid  up; 
and  in  this  case  there  is  no  longer  the  legacy,  as  such,  but  there 
is  money  or  the  other  specific  personal  property  in  its  place.  And 
so  with  any  kind  of  a  debt.  The  reduction  into  possession,  as 
it  is  called,  of  the  wife's  choses,  is  an  important  element  for  con- 
sideration at  the  common  law,  in  determining  the  rights  which  the 

14 


CHAP.    I.]  PEKSONAl.    PROPERTY    IN    OENERAL.  §    15 

husband  acquires  by  marriage  in  his  wife's  personal  property.^ 
And  yet,  in  order  to  change  a  thing  incorporeal  into  a  thing 
corporeal,  an  action  may  or  may  not  be  brought,  according  to 
circumstances.  What  we  call  the  personal  property  of  one  may 
be  what  another  owes. 

§  15.     The  Same  Subject;  General  Conclusion  as  to  Corporeal 
and  Incorporeal  Personal  Property. 

With  the  growth  of  modern  stocks,  bonds,  and  negotiable  instru- 
ments, has  come  a  disposition  to  find  some  broader  basis  to  rest  a 
system  of  property  classification  upon;  and  this  we  conceive  can 
best  be  found  in  the  simple,  natural,  and  comprehensive  divisions 
which  the  Roman  law  preserved:  first,  of  things  immovable  and 
movable,  next  of  things  corporeal  and  incorporeal.  And  towards 
these  divisions  there  seems  to  be  a  decided  tendency  in  our  law 
at  the  present  day.  Burge,  who,  in  his  extensive  work  on  Colonial 
and  Foreign  Laws,  handles  the  civil  and  common  law  systems 
together,  making  one  mode  of  classification  serve  for  both,  divides 
property  into  real  and  personal,  or  immovable  and  movable  prop- 
erty, and  treats  first  of  real  and  personal  corporeal  property,  next 
of  real  and  personal  incorporeal  property.^  Our  own  great  jurist, 
Kent,  has  avoided,  in  his  Commentaries,  the  logical  confusion 
manifested  by  Blackstone  in  respect  of  the  meaning  of  the  word 
"  property."  He  considers  the  topic  of  absolute  and  qualified 
property  (that  is,  ownership)  by  itself,  and  apart  from  that  of 
things  in  possession  and  things  in  action.  And  upon  the  distinc- 
tion of  choses  he  does  not  strongly  attempt  to  found  a  difference; 
on  the  contrary,  one  may  see  that,  while  he  refrained  from  dis- 
puting the  older  authorities,  there  lurked  in  the  author's  mind  the 
idea  of  a  better  classification  into  corporeal  and  incorporeal 
things.^     Moreover,    he    defines    things    in    action    as    "  personal 

1.  See  Schouler  Dom.  Rel.  3d  ed.,  §  earily  the  same  thinji:  as  the  conver- 

84.     Tho   writer   is   not  to  be   under-  sion  or  extinjruishmont  above  stated, 
stood  aa  meaning:  to  assert  that  the  2.  2  Burge  Col.  and  For.  Law,  6-46. 

technical  "reduction  into  possession"  3.  2  Kent  Com.  340.  347,  351.     Cf. 

of  the  wife's  choses  in  action  is  neces-  340,    note,    probably    written    by    the 

15 


§  15  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  II. 

rights  not  reduced  to  possession,  but  recoverable  bj  suit  at  law."  * 
And  he  confidently  asserts  that  the  civil  law  was  much  more 
natural  and  much  less  complicated  in  the  discrimination  of  things 
than  the  common  law ;  dividing  them,  as  it  did,  "  into  the  obvious 
and  universal  distinction  of  things  movable  and  immovable,  or 
things  tangible  and  intangible."  ^  And,  finally,  our  latest  writer, 
Mr.  Williams, —  the  only  person  of  repute  who  has  hitherto  under- 
taken to  prepare  an  elementary  work  on  Personal  Property,  — 
stumbles  over  this  ancient  classification  of  choses  in  possession 
and  choses  in  action,  and  defines  choses  in  possession  as  movable, 
tangible  things  only.^ 

We  intend,  therefore,  in  the  present  treatise,  to  contribute,  as 
far  as  possible,  to  logical  precision,  by  substituting  the  distinc- 
tion of  corporeal  and  incorporeal  things  personal  for  that  of 
choses  in  possession  and  choses  in  action;  believing,  as  we  do,  that 
w©  shall  thereby  do  something  towards  reconciling  and  harmoniz- 
ing the  two  grand  divisions  of  wealth  known  to  the  English  and 
American  law;  and,  furthermore,  aid  in  bringing  the  civil  and 
common  law  systems  of  property  into  something  like  unity.  We 
shall  not,  like  Mr.  Williams,  sacrifice  consistency  to  custom,  by 
compromising  upon  a  method  of  classification,  which  recognizes 
one  division  consisting  of  choses  in  possession,  a  second  of  choses 
in  action,  and  a  third  of  incorporeal  personal  property ;"  ^  for 
this,  in  the  end,  must  bring  only  confusion.  But  we  shall,  so  far 
as  may  be,  use  the  new  terms  as  synonymous  with  the  old;  and 
bring  out  such  points  of  difference,  if  any,  as  may  be  suggested 
by  a  careful  comparison  of  things  corporeal  and  incorporeal  with 
things  in  possession  and  things  in  action.^ 

Chancellor  himself,  to  the  effect  that  7.  See  Wms.  Pers.  Prop.,  17th  ed. 

personal   property    may    include    not  (1913)   Table  of  Contents;  and  cf.  ib. 

only  everything  tangible,   but   things  pp.  28,  312. 

"  quasi-tangible,  as  choses  in  action."  8.  Instead  of  "  corporeal  "  and  "in- 

4.  2  Kent  Com.  351.  corporeal,"  the  terms  "tangible"  and 

5.  Ib.  347.  "  intangible "     are     often     popularly 

6.  Wms.  Pers.  Prop.  17  Eng.  ed.  28.  applied  at  this  day.  "Incorporeal 
Sec  also  the  definition  of  "  Incorporeal  property"  is  logically  both  invisible 
Property  "  in  Bouvier's  Diet.  and  intangible.     (1917.) 

16 


CHAP.    I.]  PERSONAL    PROPERTY    I?f    GENERAL.  §    16 

§  16.  Meaning  of  the  Terms  "  Goods,"  "  Effects,"  "  Things,"  etc. 
There  are  some  other  technical  words,  besides  "  chattels  "  and 
"  clioses"  which  the  common  law  has  employed  with  reference  to 
personal  property  from  a  very  early  period.  Thus,  "  goods  "  is 
a  favorite  word,  which  is  used  either  conjointly  with  other  words, 
or  by  itself.  The  phrase  "  goods  and  chattels  "  is  often  found  in 
deeds  and  wills;  conveyancers  favor  it  strongly;  and,  certainly, 
when  placed  in  contrast  with  the  seemingly  corresponding  phrase 
"  lands  and  tenements,"  it  has  a  pleasant  jingling  sound.  This 
phrase  plainly  includes  chattels  real,  and  inanimate  objects, — 
as  indeed  does  the  single  word  "  chattels ;  "  and  it  is  well  settled 
that,  if  unrestrained,  the  term  "  goods  and  chattels  "  will  pass  all 
personal  property  under  a  will.^  This,  we  suppose,  is  chiefly 
attributable  to  the  force  of  the  comprehensive  word  "  chattels." 
As  to  the  term  "  goods,"  standing  by  itself,  the  general  impression 
is,  that  it  has  a  more  confined  operation  in  modern  times  than 
chattels ;  that  while  for  most  purposes  it  includes  money,  furniture, 
valuable  securities,  and  other  mere  personal  chattels,  and  is  a 
word  of  large  general  signification,  it  neither  embraces  chattels 
real,  such  as  a  lease  for  years  of  house  or  land,  nor,  perhaps,  ani- 
mals,—  which  the  word  "chattels  "  certainly  would  include.^  In 
a  more  limited  sense  the  word  "  goods  "  is  popularly  applied  to 
articles  of  merchandise.^  The  civil-law  term  bona,  which  corre- 
sponds with  goods,  included  all  chattels,  personal  and  real  alike; 
and  therefore  a  general  bequest  of  all  one's  goods  will  pass  a 
leasehold  interest  because  the  civil  law  guides  in  the  construction 
of  bequests  of  personalty;  while  an  assignment,  which  must  be 
construed  according  to  the  rules  of  the  common  law,  will  not,  as 
Sugden  thinks,  pass  a  leasehold  estate.^    The  corresponding  French 

9.  Bovvlin  v.  Furman,  34  Mo.  39.  See  Kendall,  4  Russ.  Ch.  370.     See  Bald- 

12  Co.  1;  1  Atk.  182;  Govver  v.  Gower,  win  v.  Williams,  3  Met.  367. 

Arobl.  612;  ^Yms.  Ex'rs,  10th  Eng.  ed.  2.  2  Bl.  Com.  389,  Sharswood's  n.  : 

D27;     Bouvier's     Diet.     "Goods     and  Worcester's  Diet.  "  Goods." 

Chattels;  "  Co.  Lit.  118  b.  3.  2  Sugd.  Vend.,  9th  ed.  201.    See 

1.  Bouvier's      Diet.      "Goods;  "24  Edvv.  VI;  Cro.  Eliz.  386;  1  P.  Wma. 

Sugd.  Vend.   9th  ed.   201;   Kendall   v.  267. 

2  17 


§16  THE    LAW    OF    PERSONAL    PROPERTY.  [PART    II. 

term  biens  is  said  to  include  property  of  every  description,  except 
estates  of  freehold  and  inheritance.'*  Coke  must  have  thought 
that  the  word  "  goods  "  had  an  equally  sweeping  force,  for  he 
says :  "  Goods,  biens,  bona,  includes  all  chattels,  as  well  real  as 
personal ; '"  and  he  further  adds :  "  Now  goods,  or  chattels,  are 
either  personal  or  real."  ^  And  others  have  treated  the  two  words 
"  goods  "  and  "  chattels  "  as  synonymous.^ 

"  Effects  "  is  another  word  which  is  often  found  in  the  law  of 
chattels.  This  word  is  equivalent  to  property  or  worldly  sub- 
stance, and,  when  used  with  the  words  "  real  and  personal,"  it 
embraces  the  whole  of  a  testator's  real  and  personal  estate ;  indeed, 
the  word  "  effects  "  alone,  in  a  will,  may  carry  the  whole  of  one's 
personal  property ;  though  not  the  real  estate,  except  in  connection 
with  the  word  "  real."  It  would  thus  appear  that  the  word 
"  effects  "  denotes  property  in  a  more  extensive  sense  than  the 
word  "  goods."  '' 

But  while,  under  favorable  circumstances,  the  word  "  chattels," 
or  the  word  "  effects,"  or  even  the  word  "  goods,"  may  carry  the 
entire  personal  property  of  a  testator,  it  should  be  remembered 
that,  where  general  terms  are  associated  with  others  less  compre- 
hensive, in  wills,  they  are  sometimes  restrained  in  judicial  con- 
struction to  articles  ejusdem  generis.^  And  since  the  fundamental 
rule  applied  to  the  interpretation  of  last  wills  and  testaments  is 
to  make  the  testator's  intention  the  pole-star,  we  may  sometimes 
expecte  to  find  such  sweeping  words  as  "  estate,"  or  "  property," 
restrained,  so  as  to  apply  only  to  personal  property,  in  like  man- 
ner, and  not  to  lands  and  tenements.^ 

4.  Bouv.  Diet.  "Biens."  83   Penn.   St.   126;   Planters'  Bank  v. 

5.  Co.  Lit.  118  b.  Sharp,    6   How.    (U.    S.)    301;    In'  re 

6.  See  Wms.  Pers.  Prop.  17th  Eng.  Miner,  146  N.  Y.  121,  40  N.  E.  788; 
ed.  1;  Webster's  Diet.  "Goods;"  Wor-  Price's  Appeal,  169  Pa.  St.  294,  32 
caster's  Diet.  "  Goods."  Atl.   45.5.     But   the  words   "  personal 

7.  See  Bouvier's  Diet.  "  Eflfects;  "  2  effects  "  may  be  more  limited  in  scope. 
Bl.  Com.  384,  Sharswood's  n.;  Jack-  Lippincott's  Estate,  173  Pa.  St.  368, 
sonv.  Hogan,  3  Bro.  P.  C.  388;  Camp-  34  Atl   58. 

bell  V.  Pres«ott,  15  Ves.   507;    Cowp.  8.  In   re   Gibbons,   224   Pa.    St.    37, 

299;    Vandergrift   &   Forman's   App.,      73  Atl.  183. 

9.  See  Jarm.  Wills,  3d  Eng.  ed.  715 

18 


CHAP.    I.]  PERSONAL    PROPERTY    IN    GENERAL.  §    17 

The  reader  may  have  already  perceived  that  we  make  frequent 
use  of  the  word  "  things,"  in  treating  of  our  present  subject.  By 
this  word  "  things  "  is  understood  every  object,  except  man,  which 
may  become  an  active  subject  of  right;  in  which  sense  it  is 
opposed,  in  the  language  of  the  law,  to  the  word  "  persons."  ^ 
It  may  therefore  be  considered  as  nearly  or  quite  synonymous,  at 
our  later  law,  with  the  word  "property;  "  besides  being  often  a 
more  convenient  word  to  apply  in  legal  analysis  than  the  latter, 
since  its  singular  and  plural  forms  are  readily  distinguished  in 
composition,  and  since  there  are  no  such  variations  in  its  technical 
meaning  as  would  be  likely  to  produce  confusion  in  the  mind  of 
the  student. 

§  17.     Application  of  "  Estate  "  to  Things  Real,  and  "  Property  " 
to  Things  Personal. 

An  important  distinction  which  is  observable  between  the  two 
great  systems  of  property  known  to  the  common  law  remains  for 
our  present  notice ;  and  it  is  a  distinction  which  should  be  steadily 
kept  in  view  by  all  who  seek  to  understand  the  exact  meaning  of 
legal  terms  in  their  investigation  of  the  law  relating  to  things  real 
and  personal.  From  the  very  nature  of  the  feudal  system,  it  was 
impossible  that  one  should  be,  wherever  that  system  continued  in 
force,  the  absolute  owner  of  lands  and  tenements.  These  were, 
on  the  contrary,  the  subject  of  tenure;  that  is,  they  were  held, 
under  a  lord  paramount,  and  not  owned.  The  sovereign,  or  chief, 
divided  the  lands  among  his  immediate  followers,  exacting  a 
recompense,  in  the  nature  of  military  service,  or  supplies,  as  the 
case  might  be;  they,  in  turn,  subdivided  among  their  followers, 
and  upon  similar  conditions.  This  feudal  system  moulded  the 
English  law  of  realty ;  and  though  the  military  tenures  were  abol- 
ished at  the  restoration  of  King  Charles,  and  most  of  the  absurd 
exactions  of  chivalry  —  which,  as  may  well  be  supposed,  had  come 
down   to   mere   pecuniary   assessments  —  were   thus    done    away 

et  seq.;   I    Schouler,   Wills,   Ex'ra  4  1.  See  Bouv.  Diet.  "Things."     And 

Adm'rs,  §§  504-512.  see  Rapalje's  Law  Diet. 

L  19 


§  17  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  IL 

with,  yet  names  remained,  and  the  ancient  theory  was  in  many 
respects  unchanged.^  Hence  is  it  that  the  elementary  writers 
still  tell  us  that  there  is  no  such  thing  as  property  in  realty  at 
the  common  law;  that  of  things  real  there  can  be  nothing  held 
and  enjoyed  save  an  estate;  which  estate  may  be  for  life,  in  tail, 
or  in  fee-simple,  according  to  circumstances,  but  in  any  event 
is  an  estate  and  no  more."'  Yet,  as  they  say  further,  the  primary 
rule  concerning  things  personal  has  always  been  precisely  opposite. 
These  are  the  subject  of  actual  ownership,  and  are  not  held  for 
any  estate ;  one  has  them  as  one's  own  property.  However  fanci- 
ful the  distinction  may  now  appear,  especially  to  us  of  America, 
who  never  doubt  that  a  deed  of  land,  to  one  and  his  heirs  forever, 
practically  conveys  the  land,  as  so  much  property,  to  the  grantee, 
we  must  nevertheless  accept  the  theory;  and  thus  we  shall  per- 
ceive why  the  expression  "  real  estate  "  is  so  commonly  used  in 
the  English  tongue,  and  among  unprofessional  men,  rather  than 
"real  property;"  though  one  finds  the  latter  term  quite  con- 
venient when  he  desires,  as  the  writer  in  the  present  chapter,  to 
contrast  things  real  with  things  personal.  We  would  use  the 
words  "  personal  property  "  in  speaking  of  goods  and  chattels,  on 
the  other  hand,  more  commonly  than  the  words  "  personal  estate," 
for  a  corresponding  reason;  though,  in  a  last  will  and  testament, 
where  dispositions  under  the  two  great  classes  of  property  have  to 
be  constantly  brought  together,  the  phrase  "  personal  estate  "  is 
not  unfrequently  used  as  usually  in  administration.  So,  too,  if 
we  take  up  some  old  writer, —  Coke,  for  instance, —  we  find  him 
defining  the  word  "  estate  "  as  an  inheritance,  a  freehold,  term 
for  years,  or  the  like,  in  lands  or  tenements,  without  referring  to 
chattels."^ 

But  we  must  not  be  tied  down  too  closely  to  words  in  their 
ancient  significance ;  suffice  it  that  we  hold  to  the  correct  modern 
idea.  The  word  "  estate  "  is  doubtless  used  in  a  broad  sense,  in 
these  days,  to  denote  both  things  real  and  things  personal;  and 

2.  See  2  Ewell's  Bl.  Com.,  cs.  5,  6.  4.  1  Co.  Lit.  487. 

«.  Wms.  Real  Prop.   17th  Eng.  ed. 
13. 

20 


CHAP.    I.]  PERSONAL    PROPERTY    IN    GENERAL.  §     19 

the  same  may  be  said  of  the  word  "  property."  Consulting  our 
own  convenience  in  a  reasonable  degree,  we  shall  use  the  words 
somewhat  indiscriminately ;  not  forgetting,  however, —  as  the 
reader  should  not, —  that  the  more  technical  and  limited  applica- 
tion of  the  word  "  estate  "  is  to  things  real,  while  that  of  the  word 
"  property  "  is  to  things  personal ;  for  upon  this  distinction  are 
founded  some  curious  and  interesting  doctrines.^ 

§  18.     Classification  into  Real  or  Personal  Affected  by  Modem 
Legislation. 

It  should  be  further  observed,  however,  at  the  outset,  that  while 
at  the  common  law  one  thing  may  be  real  and  another  personal 
per  se,  the  classification  is  frequently  affected,  in  this  day,  by  stat- 
utes. Thus,  in  Massachusetts,  a  term  of  years,  so  long  as  fifty 
years  or  more  remain,  is  made  subject  to  the  incidents  of  freehold 
estate,  by  legislative  authority.^  So,  on  the  other  hand,  stock  in 
canal,  railway,  and  land  companies,  which  the  law  was  formerly 
disposed  to  treat  as  real  estate,  are  usually  in  this  country  made 
personal  property  by  positive  enactment  to  that  effect;  and  such 
is  the  tendency  likewise  of  the  late  English  legislation.^ 

§  19.  Chattels  Real,  Chattels  Personal,  and  Chattels  of  a  Mixed 
Description,  to  be  Considered  in  Order. 
In  the  next  and  succeeding  chapters  we  shall  develope  more 
fully  the  nature  and  leading  incidents  of  Personal  Property; 
using  the  comprehensive  term  "  chattel,"  which  is  still  indispensa- 
ble to  our  jurisprudence.     This  will  lead  us  to  the  consideration, 

5.  See  Bouv.  Diet.  "Estate;  "  Wms.  Whether  shares  of  stock  in  a  Real 
Pers.  Prop.  17th  Eng.  ed.  5,  6.  Estate     Trust    of    our     presiMit    day 

6.  Mass.  Rev.  Laws,  c.  129,  §  1.  See  (familiar  in  large  cities)  are  to  be 
also  Merrill  v.  Hodgkins,  134  N.  Y.  regarded  as  real  or  personal  property 
S.  166.  is  likely  to  be  found  defined  by  local 

7.  See  Wms.  Pers.  Prop.  17th  Eng.  statute.  A  fundamental  agreement 
ed.  338;  2  P.  Wms.  127;  chapter  on  among  corporations  on  this  point  is 
"Stocks  and  Shares,"  Part  Til,  c.  9,  ineffective  as  against  the  declared  law 
post.  of    the    state.      Gill    v.    Bartlett,    224 

Fed.  927,  140  C.  C.  A.  400. 

21 


§  19  THE  LAW  OF  PERSONAL  PROPEETY.      [PAET  II. 

first,  of  chattels  real;  next,  of  chattels  personal;  and  afterwards 
of  chattels  which  descend  to  the  heir,  emblements  and  fixtures. 
Enough,  we  trust,  has  already  been  said,  to  place  our  leading 
definitions  clearly  before  the  reader's  mind,  and  enable  him  to 
follow  our  method  of  treatment  understandingly. 


22 


CHAPTER    II. 


CHATTELS    REAL. 


§  20.     Chattels  Real  Defined. 

Chattels  real,  says  Sir  Edward  Coke,  are  such  as  concern  or 
savor  of  the  realty.^  And  Blackstone  characterizes  this  species 
of  property  as  being  "  of  a  mongrel,  amphibious  nature."  ^  In 
other  words,  chattels  real  are  interests  which  are  annexed  to  or 
concern  real  estate,  yet  are  themselves  to  be  regarded  as  personal 
property.  A  chattel  real  —  or  perhaps,  to  speak  with  strictness, 
the  realty  with  which  it  is  concerned  —  is  an  immovable  and  can- 
not be  carried  from  place  to  place;  but  the  length  of  time  for 
which  it  may  be  enjoyed  is  limited  and  definite.  Such  an  estate 
is  less  than  a  freehold,  and  therefore  it  cannot  be  real  estate; 
so  it  must  be,  according  to  the  logic  of  the  common  law,  a  chattel, 
and  hence  subject  to  the  rules  which  relate  to  personal  property.^ 

§  21.  Term  of  Years  the  only  Important  Chattel  Real ;  Attendant 
Terms  and  Leases  Distinguished. 
In  former  times,  as  one  may  perceive  by  referring  to  Coke  and 
Blackstone,  there  were  several  species  of  property  enumerated 
under  the  head  of  Chattels  Real;  but  of  these  the  only  kind  of 
present  consequence,  and  that  which  has  always  been  most  readily 
taken  by  way  of  illustration,  is  the  term  of  years;  a  topic  fully 
discussed  in  works  on  the  relation  of  landlord  and  tenant,  and 
appertaining  to  the  tenancy  of  lands.  To  an  English  student  this 
topic  is  found  to  branch  off  naturally  into  two  divisions :  the  first 

1.  1  Inst.  118  c.  is  a  chattel  real  and  cannot  pass  by 

2.  2  Bl.  Com.  387,  388.  parol.      McCullouph    v.    Randall,    158 

3.  See  supra,  §  7.  And  see  Prich-  S.  W.  219  (Tex.  Civ.  App.).  As  to  a 
ard  V.  Prichard,  L.  R.  11  Eq.  232.  ground  lease  for  a  long  term,  see 
See  Eidmon  v.  Baldwin,  206  Fed.  428,  O'Brien  v.  Illinois  Surety  Co.,  203 
124  C.  C.  A.  310;  Springfield  v.  Fi-d.  436.  121  C.  C.  A.  546;  McCam- 
Schweitzer,  246  Mo.  122,  151  S.  W.  mon  v.  Cooper,  69  Ohio  St.  366.  See 
128.    A  land  certificate  after  location  Ewell's  Elementary  Law. 

23 


§  22  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  II. 

embracing  all  contracts  for  the  possession  and  profits  of  land  for 
some  determinate  period,  yielding  the  recompense  of  rent ;  the 
second  consistsing  of  those  terms  which  are  created  by  marriage 
settlements,  wills,  deeds  of  trust,  and  the  like, —  these  last  usually 
reserving  no  rent,  but  serving  as  a  security  for  the  payment  of 
money  borrowed  by  some  one  who  has  the  freehold.'^  Terms  of 
years,  in  the  first  sense,  rarely  last  longer  than  a  hundred  years, 
and  are  generally  of  much  shorter  duration.  But  in  the  second 
sense  a  term  of  years  is  not  unfrequently  made  out  for  a  thousand 
years. 

In  the  United  States,  we  have  abolished  the  doctrine  of  primo- 
geniture, and  our  public  policy  sets  strongly  against  fettering  the 
free  transmission  of  property;  so  we  know  and  care  very  little 
about  the  terms  of  years  which  serve  as  security  for  borrowed 
money.  But  contracts  for  the  possession  and  profits  of  land  for  a 
specified  term  of  years  —  which  we  generally  designate  by  the 
word  "  lease  "  —  constantly  occupy  the  attention  of  American 
courts;  and  they  constitute  a  very  important  and  frequently  a 
very  valuable  species  of  personal  property.  And  to  chattels  real 
of  this  description  we  may  well  devote  our  first  and  fullest  atten- 
tion in  the  present  chapter. 

§  22.     Leases  in  General;  Their  History,  etc. 

The  student  who  has  made  himself  familiar  with  the  law  of  real 
property  hardly  needs  to  be  reminded  that  the  word  "  lease  "  is 
used  to  denote  that  species  of  contract  by  which  the  term  in  ques- 
tion is  created ;  that  the  person  who  grants  the  lease  is  the  lessor, 
while  he  to  whom  the  lease  is  granted  is  the  lessee;  and  that  the 
compensation  or  consideration  of  the  lease  is  usually  styled  the 
rent.^ 

Leases  are  to  be  found  among  all  civilized  nations ;  and,  indeed, 
contracts  of  this  character  must  be  indispensable  among  man- 
kind, so  long  as  one  is  the  legal  owner  of  lands  which  another 

4.  See  Wms.  Real  Prop.  17th  Eng.  5.  See  Bouv.  Diet.  "  Lease,"  "  Land- 

ed. 557;  4  Kent  Com.  85  et  seq.  lord    and    Tenant:  "    1    Washb.    Real 

Prop.  3d  ed.  292-297. 

24 


CHAP,    ll]  CHATTELS    ILEAL,  §    22 

may  wish  to  occupy  for  valuable  purposes.  But  the  length  of  the 
lease  is  made  subject,  in  dilferent  countries  and  under  different 
circumstances,  to  great  variation.  Leases  among  the  ancient 
Romans  were  usually  made  of  short  duration,  as  the  quinquen- 
nium, or  term  for  five  years ;  and  Chancellor  Kent  says  that  such 
has  been  the  policy  and  practice  of  several  modem  nations,  as 
France,  Switzerland,  and  China.^  In  England,  leases  have  usually 
been  from  year  to  year,  and  the  farmers  who  till  the  ground  hold 
by  a  very  precarious  tenure ;  but  we  apprehend  that  more  extensive 
terms  are  created  in  the  populous  districts  where  trade  and  com- 
merce centre.''  In  the  United  States,  agricultural  leases  are  not 
very  common.  The  farmer  is  usually  proprietor  of  the  acres 
which  he  cultivates;  and  rarely  would  one  of  that  class  of  men 
be  tempted  to  take  a  lease  at  all.  For  in  all  of  the  States,  one 
of  small  means  may  purchase  the  land  he  needs  on  making  partial 
pajTuents ;  mortgaging  back  the  premises,  if  need  be,  to  secure 
the  balance  of  the  purchase-money.  Or  the  farmer  may  go  to  the 
far  west  and  earn  a  free  homestead  on  the  public  domain,  render- 
ing no  other  recompense  than  his  labor  in  improving  it.  But 
mechanics,  men  of  mercantile  and  professional  pursuits,  and  others 
who  swarm  in  to  the  cities,  very  commonly  take  lands  on  lease, 
either  to  occupy  as  homes,  or  for  warehouses  and  stores,  and  for 
business  purposes  generally;  capitalists  being  the  usual  landlords. 
Here  we  find  that  leases  are,  on  the  whole,  rather  short ;  a  neces- 
sary consequence  of  the  rapid  fluctuations  to  which  real  estate 
is  subject  in  new  centres  of  trade,  the  frequency  with  which  prop- 
erty changes  hands  under  our  system  of  laws,  and  that  flexibility  of 
purpose  and  pursuit  which  strongly  characterizes  American  society. 
It  may  be  said  that  leases  in  this  country  average  about  five  years, 
being  frequently  for  a  much  shorter  period,  and  rarely  extending 
beyond  ten  years.  In  some  States,  leases  for  a  gi'eater  period 
than  fifteen  or  twenty  years,  under  certain  qualifications,  are  even 
prohibited  by  law;  this,  apparently,  because  of  the  injustice  likely 

6.  4  Kent  Com.  94,  and  authoiitie:^         7.  See  2   Ewell's  Bl.   Com.   142,  n.; 
cited.  VVms.  Real  Prop.  17tli  ed.  557. 

25 


§  23  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  II. 

to  be  done  to  personal  representatives  of  the  lessor  rather  than  to 
the  lessee,  or  those  who  succeed  to  his  rights ;  ^  and  also  because 
of  the  general  impolicy  so  considered  of  fettering  real  estate. 
Covenants  for  renewal,  of  which  we  shall  presently  speak,  are 
frequently  found  convenient  where  one  wants  the  opportunity  of 
prolonging  his  lease  without  being  bound  too  closely  to  a  contract 
which  might  not  prove  beneficial  to  him.  And  it  is  only  testa- 
mentary trustees,  or  others  holding  lands  in  a  fiduciary  capacity, 
who,  in  this  country,  will  be  strongly  tempted  to  let  property  on 
long  leases;  and  that,  only  because  of  the  restrictions  upon  sales, 
exchanges,  and  improvements  to  which  the  law  may  have  subjected 
them;  and  because  transfers  of  such  real  estate  are  impeded  in 
any  ease ;  or  in  order  to  escape  petty  annoyances  in  the  manage- 
ment of  estates  for  the  sole  benefit  of  others,  to  which  they  do  not 
feel  prepared  to  submit.  It  is  true  that  the  policy  of  short  leases, 
as  Chancellor  Kent  shows  us,  has  been  condemned  by  Gibbon 
and  other  distinguished  writers  as  discouraging  agricultural  enter* 
prise  and  costly  improvements;  but  an  objection  of  that  sort  seems 
hardly  tenable,  in  the  case  of  a  people  like  ours,  whose  lands,  and 
especially  farming  lands,  are  thrown  freely  upon  the  market  for 
purchase  and  sale,  so  that  he  who  begins  life  a  tenant  may  hope 
to  die  a  freeholder.^ 

§  23.     When  a  Lease  Begins. 

Leases  for  years  may  be  made  out  so  as  to  take  effect  at  some 
future  period ;  and  this  for  the  technical  reason  that  they  are 
mere  chattels,  and  require  no  livery  of  seisin.  Thus  a  lease  may 
be  made  for  ten  years  from  next  Christmas.^  The  lease  itself, 
however,  in  such  a  case,  does  not  confer  a  complete  tenancy.  It 
only  gives  the  lessee,  as  against  his  lessor,  a  right  to  enter  upon 

8.  See  4  Kent  Com.  93,  and  notes.  note,  and  other  writers  cited,  4  Kent 
We  have  seen  that  various  statutes  Com.  94,  n.  Evidence  of  execution  of 
in  this  country  give  to  leases  of  a  leases,  see  Chamberlayne  Evid.,  §  3513. 
considerable  duration  the  essential  1.  1  Prest.  Estates,  204-206 ;  4  Kent 
characteristics  of  a  freehold.  Supra,  Com.  94;  Wms.  Real  Prop.  17th  ed. 
§  18.  563;    2    Bl.    Com.    143;    Eastman    v. 

9.  See  Gibbon's  Hist.,  vol.  viii.  86,  Perkins,  111  Mass.  30. 

26 


CHAP.    II.]  CHATTELS    KEAL.  §    24 

the  premises,  which  right  is  called  his  interest  in  the  term,  or 
irderesse  termini;  and  it  is  not  until  the  lessee  has  actually 
entered,  that  the  estate  becomes  fully  vested  in  him,  and  he  is 
possessed  in  a  just  sense  of  the  term  of  years.^  To  this  rule  an 
exception  is  found  in  cases  where  the  lease  is  made  by  bargain  and 
sale,  or  by  any  other  conveyance  operating  through  the  force  of 
the  Statute  of  Uses ;  for  here  the  lessee  will  have  the  whole  term 
vested  in  him  at  once,  just  as  though  he  had  actually  entered.  In 
the  former  case,  there  was  a  common-law  lease,  which  required 
entry  to  give  it  effect;  in  the  latter,  the  valuable  consideration 
operates  by  way  of  bargain  and  sale,  and  raises  a  use  to  the  lessee 
which  the  statute  executes.^ 

§  24.     Term  of  a  Lease. 

Leases  for  years  are  necessarily  for  a  certain  determinate 
period  of  time;  and  the  fact  that  interests  of  this  sort  must 
expire  at  a  specified  date  suggests  the  legal  designation  "  term," 
or  boundary.  Every  estate,  indeed,  which  possesses  this  quality, 
by  whatever  words  created,  is,  as  Blackstone  observes,  an  estate 
for  years.  We  may  know  that  it  is  such  an  estate  because  it  lasta 
for  a  certain  prescribed  period,  and  no  longer.  Yet  there  is  a 
well-known  legal  maxim,  that  whatever  can  be  construed  into 
certainty  is  itself  certain.  Hence  it  follows  that  I  may  make  a 
good  lease  for  years  by  designating  the  term  to  be  for  so  many 
years  as  A.  B.  shall  name;    since  the  moment  A.  B.  has  named 

2.  Co.  Lit.  46;  2  Ewell's  BI.  Com.  As  to  a  leaso  which  was  not  to  be 
1  M  and  n.  delivered  until  submitted  to  and  ap- 

3.  lb.;  Wms.  Real  Prop.  17th  ed.  proved  by  a  certain  third  person,  see 
563,  564 ;  2  Mod.  249.  By  this  later  Stiritz  v.  Mining  Co.,  257  111.  543,  100 
invention    of    an    executory    bargain  N.  E.  968. 

which  becomes  self-executintj  we  find  A  lessee  not  signing  the  lease,  etc., 

that  freeholds,  as  well  as  leaseholds,  may  be  estopped  to  deny  defects  by 

can   be   treated  to  commence   in    the  sucli  acts  as  taking  full  possession  or 

future.       Tiedeman     Real     Property,  assigning  over.    Chicago  Title  &  Trust 

§  175.     See  Maltbie  v.  Olds,  88  Conn.  Co.   v.   Kemler   Lumber   Co.,    1.51    111. 

633,  82  Atl.  403  (entry  on  leased  land  App.  579;  And  see  Chandler  v.  Hart, 

not  necessary),  161  Cal.  405^  119  Pac.  516. 

27 


§  25  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

the  number,  though  not  before,  the  lease  is  reduced  to  a  certainty.* 
But  I  cannot  make  a  good  lease  to  last  while  gold  remains  above 
par;  for  this  would  be  to  prescribe  a  date  which  one  cannot 
reduce  to  certainty;  and,  of  course,  to  lease  for  a  human  life 
would  be  attempting  to  create  a  freehold.  But  I  may  make  a 
lease  for  so  many  years, —  ten,  for  instance, —  provided  another 
shall  so  long  live ;  for  here  there  is  a  certain  period  fixed,  beyond 
which  the  term  cannot  last,  though  it  may  end  sooner.^  Statutes 
in  some  States  have  limited  the  time  for  which  a  lease  may  be 
made.^*  Leases  like  the  foregoing  are  not  likely  to  be  made  fre- 
quently at  the  present  day ;  but  the  illustrations  will  aid  in  fixing 
important  principles  in  the  reader's  mind.  And  it  may  be  noted, 
in  passing,  that  the  word  "  term  "  does  not  signify  the  time  speci- 
fied in  the  lease  merely,  but  the  estate  and  interest  that  actually 
passes  by  the  lease ;  so  that,  if  a  lease  for  five  years  were  cancelled 
and  surrendered  at  the  end  of  two  years,  it  might  be  said  that  the 
term  expired  before  the  tirae.^ 

§  25.     Term?  of  Lease  as  Affected  by  Statute  of  Frauds ;  Writ- 
ten Lease  Required,  etc. 

The  Statute  of  Frauds,  29  Car.  II.,  c.  3  (whose  provisions,  not 
without  local  modifications,  have  been  generally  adopted  as  part 
of  the  jurisprudence  of  this  country),  affects  the  law  of  leases 
very  considerably.  It  declares,  substantially,  that  leases,  estates, 
or  terms  of  years,  or  any  uncertain  interests  in  lands,  made  or 
created  by  livery  only,  or  by  parol,  and  not  put  in  writing  and 
signed  by  the  party  making  the  same,  or  his  agent,  shall  have  the 
force  and  effect  of  leases  or  estates  at  will  only;  an  exception 
being  made  in  favor  of  leases  not  exceeding  the  term  of  three 

4.  2  &veirs  BI.  Com.  143  and  n. ;  5a.  See  Clark  v.  Barnes,  76  N.  Y. 
Co.  Lit.  46.  See  Buseh-Everett  Co.  v.  301,  32  Am.  Rep.  306.  A  lease  in  ex- 
Vi\-ian  Oil  Co.,  128  La.  88i6,  55  So.  cess  of  the  statutory  period  is  void  for 
564  (lease  while  a  stated  condition  the  excess  only.  Robertson  v.  Hayes, 
continues)  ;  Janes  v.  Paddell,  122  N".  83  Ala.  290. 

Y.  S.  760,  67  Misc.  Rep.  420.  6.  Co.  Lit.  45;   2   Swell's  Bl.  Com. 

5.  Co.    Lit.    45,    46;    3    Ewell's    Bl.       144. 
Com.  143  and  n. 

28 


CHAP.    II.]  CHATTELS    REAL.  §    25 

years,  where  the  rent  reserved  shall  amount  to  two-thirds,  at 
least,  of  the  full  improved  value  of  the  land.  And,  further,  that 
no  lease  or  estate,  either  of  freehold  or  term  of  years,  shall  be 
assigned,  granted,  or  surrendered,  unless  in  writing.^  In  most 
parts  of  this  country  the  statute  exception  in  favor  of  parol  leases 
is  for  a  less  period  than  three  years ;  one  calendar  year  being 
the  limit  prescribed  in  New  York  and  some  other  States,  while 
in  others  a  parol  lease  is  deemed  a  tenancy  from  year  to  year,  or 
from  term  to  term,  or,  as  local  statutes  may  expressly  provide,  an 
estate  at  will  only.^ 

So,  too,  the  Statute  of  Frauds  provides  that  every  agreement 
not  in  writing  and  signed  by  the  party  to  be  charged  therewith, 
or  his  authorized  agent,  is  void,  which  by  its  t^rms  is  not  to  be 
performed  within  one  year  from  the  making  thereof.  Tinder  this 
clause,  which  many  of  our  States  adopt,  it  is  held  that  a  verbal 
agreement  to  lease  must  commence  from  the  making  of  the  agree- 
ment, and  not  from  a  future  day;  though,  in  ISTew  York,  where 
the  language  of  the  statute  is  somewhat  different,  a  parol  lease 
for  one  year,  to  commence  in  fuiuro,  has  been  upheld.^ 

What  was  the  object  of  the  Statute  of  Frauds  in  thus  changing 

7.  29  Car.  II.,  c.  3,  §§  1,  2.  only,  while  in  Illinois,  Iowa  and  most 

8.  The  English  statute,  a&  re-en-  of  the  southwestern  States  parol 
acted  in  New  York,  requires  the  agent  leases  for  a  year  are  valid;  and  those 
who  signs  to  be  "  authorized  by  writ-  in  excess  of  that  period  may  prevail 
ing;  "  but  in  some  of  our  States  against  the  grantor,  though  not 
these  words  are  omitted.  See  Story  against  third  parties.  See  Browne, 
Agency,  §  50.  In  other  respecta  the  Stat.  Pr.,  Appendix;  Taylor's  Land- 
New  York  statute  differs  from  the  lord  and  Tenant,  9th  ed..  §§  28,  29; 
English;  particularly  in  authorizing  4  Kent  Com.  95,  and  notes;  Nesham 
parol  leases  for  one  year  only,  instead  v.  Selby,  L.  R.  7  Ch.  406 ;  1  Stimson 
of  three;  being  followed  in  this  re-  Am.  Stat.  Law,  §  2002.  The  latest 
spect  by  California,  Illinois,  Virginia,  code  in  each  State  should  be  eon- 
Wisconsin,    and    many    other    States.  suited  on  such  a  point. 

New    Jersey,     Maryland    and    North  9.  Smith    Landl.    and    Ten.    62-65; 

Carolina    follow   the    English    statute  Taylor  ib.,  §  30;   Rawlins  v.  Turner, 

in    respect    to    time,    though    adding  1  Ld.  Ra^^n.  736;  Becar  v.  Flues.  64 

nothing  as  to  the  reservation  of  rent.  N.  Y.   518;   Young  v.   Dake.   5   N.  Y. 

In   Massachusetts  all  estates  and   in-  463.    See  Delano  v.  Montague.  6  Cush. 

terests  in  land  created  without  writ-  42:  Kelly  v.  Terrell,  26  Ga.  551. 
ing  are  declared  to  be  estates  at  will 

29 


§    25  THE    LAW    OF    PEKSONAL    PEOPERTY.  [cHAP.  II. 

the  common  law?  A  tenant  for  years,  at  the  common  law,  was, 
as  we  have  seen,  one  who  held  for  a  certain  term ;  and,  notwith- 
standing the  technical  expression,  this  term  might  be  for  less  than 
a  year,  as  for  a  half-year,  quarter,  or  month,  or  even  a  few  days, 
provided  only  it  were  for  a  time  certain.  But  a  tenant  at  will, 
on  the  other  hand,  held  for  an  uncertain  period ;  his  lease  lasting 
while  his  landlord  and  himself  jointly  willed  it  so,  and  no  longer.^ 
While  the  latter  tenancy  often  arose  by  implication,  it  might  also 
be  determined  by  an  act  inconsistent  with  the  further  duration 
of  the  estate,  whether  such  act  were  performed  by  the  landlord 
or  by  the  tenant.^  Tenancies  at  will  were  therefore  found  to  be  a 
very  inconvenient  species  of  estate,  and  the  courts  would  not  favor 
them,  inasmuch  as  they  were  too  precarious,  each  party  being  at 
the  mercy  of  the  other;  and  so  the  judges  seized  upon  every 
favorable  opportunity  of  construing  such  an  estate  into  a  tenancy 
for  years;  or,  at  least,  of  ruling  that  the  parties  had  manifested 
their  intention  to  continue  the  tenancy  until  a  reasonable  notice  to 
determine  it  should  be  given  by  one  or  the  other.  The  circum- 
stance that  a  yearly  rent  was  paid  afforded  the  presumption  that 
the  parties  had  intended  to  create  a  yearly  tenancy  rather  than 
one  strictly  at  will ;  and  accordingly  it  became  settled  law,  that, 
if  a  party  entered  into  or  remained  in  possession  under  circum- 
stances which  would  constitute  him  a  tenant  at  will,  the  payment 
or  settlement  in  account  of  a  yearly  rent  rendered  him  a  tenant 
from  year  to  year,  and  entitled  him  to  a  regular  and  formal  notice 
to  quit.^  IN^ow,  a  tenancy  by  express  agreement  may  be  either  by 
word  of  mouth,  by  simple  writing,  or  by  deed;  and  so  with  any 
other  contract.  The  great  object  of  the  Statute  of  Frauds  was 
to  discriminate  in  favor  of  contracts  in  writing, —  or,  to  use  a 
common  expression,  to  make  men  put  their  bargains  into  black 
and  white, —  so  as  to  furnish  plain  evidence  of  the  mutual  intent 
of  parties  in  their  agreements ;    and  the  policy  of  this  statute  is 

1.  2  Ewell's  Bl.  Com.  140;  Bac.  Abr.      Doe  v.  Turner,  7  M.  &  W.  226:   Doe 
Leases,  I.;  Smith  Landl.  and  Ten.  14,      v.  Price,  8  Bing.  356. 

15;  Taylor  ib.,  §§  54-58.  3.  Smith    Land!,    and    Ten.    20-22: 

2.  Smith  Landi.   and   Ten.    16,   17 ;       Doe  v.  Watts,  7  T.  R.  85. 

30 


CHAP.    II.]  CHATTELS    REAL.  §    26 

directed  to  such  agreements  as  involve  large  sums,  or  are  neces- 
sarily complicated  in  terms,  or  concern  others  besides  the  original 
parties,  or  run  for  a  long  period.  As  to  tenancies,  its  design 
was,  in  the  first  place,  to  get  rid  of  the  prevailing  perplexity  and 
confusion,  where  lands  were  let  out  for  a  long  time,  and  involved 
large  pecuniary  sums,  by  requiring  such  leases  to  be  in  writing. 
With  short  terms  it  did  not  greatly  interfere,  but  left  them  pretty 
much  as  before. 

§  26.     The  Same  Subject;  Whether  a  Seal  is  Essential;  Effect 
of  Term  not  w^ithin  Statute. 

It  should  be  added,  that  while  the  statute  of  Charles  the  Second 
sanctions  leases  without  seal  as  well  as  by  deed,  if  only  the  agree- 
ment bo  in  writing,  a  later  English  statute,  passed  in  the  reign 
of  Victoria,  requires  leases  to  be  under  seal,  except  in  tenancies 
where  no  writing  at  all  is  needed."^  And  it  is  likely  that  some 
of  our  own  American  local  statutes  are  expressed  in  language 
which  should  be  construed  to  the  same  effect. 

We  may  observe,  further,  that  terms  which  are  without  the 
Statute  of  Frauds  are  not  made  void  thereby,  but  are  allowed  to 
operate  simply  as  estates  at  will;  for  which  reason  the  rule  of 
construction  has  been  established  that,  like  other  estates  at  will, 
they  are  capable  of  being  turned  into  tenancies  from  year  to  year, 
by  the  payment  of  rent  or  other  circumstances  indicating  the 
intention  of  the  parties  that  they  shall  be  so  considered.^  But  in 
this  country,  and  at  the  present  day,  rents  are  usually  payable 
quarterly  or  monthly,  in  which  case  an  estate  at  will  would  be 
terminable  at  an  interval  comparatively  short. 

4.  8  &  9  Vict.,  c.  106,  §  103;  Doe  v.  utes  require  acknowled£rmont.     Ameri- 
Moffatt,  15  Q.  B.  257.  can    Savinfjs    Bank    &    Trust    Co.    v. 

5.  Smith    Landl.    and    Ten.    22,    65,  Mafridgo,    CO    Wa.sli.    180,    110    Pac. 
66;   Lee  v.  Smith,  9   Ex.  662;   Taylor  1015. 

Landl.  and  Ten.,  9th  ed.,   §§   56,   58;  See,  as   to  leases  under  seal,   Mor- 

Lord   Bolton   v.    Tomlin,    5    A.    &   E.  rill  v.  Daggett,  157  111.  240,  41  N.  E. 

856.      See    Coffman    v.    Sammons,    84  639. 
e.  E.  1061    (lO'lS).     Some  local   stat- 

31 


§    27  THE    LAW    OF    PERSONAL    PROPERTY.  [CHAP.  II. 

§  27.     Form  of  Lease. 

"No  particular  form  of  words  is  necessary  to  constitute  a  lease. 
Coke  says  that  the  word  dedi  is  sufficient.^  The  old  form  of 
words  is  "  demise,  grant,  lease,  and  to  farm  let ;  "  but  any  lan- 
guage is  sufficient  which  shows  that  the  one  intends  to  dispossess 
himself  of  the  premises,  and  the  other  to  enter  under  him  for  a 
determinate  time.  On  the  other  hand,  even  though  the  most 
proper  technical  words  should  be  employed,  yet  if  the  intention 
to  be  gathered  from  the  instrument  on  the  whole  were  that  of  a 
preliminary  arrangement  for  some  future  lease,  such  an  instru- 
ment would  be  treated  in  the  courts,  not  as  a  lease,  but  as  an 
agreement  for  a  lease.''  A  decision  by  Lord  Kenyon  illustrates 
the  latter  principle ;  where  formal  words  of  demise  were  followed 
by  the  expression,  "I  engage  to  give  him  a  lease,"  and  the  lan- 
guage otherwise  indicated  that  the  parties  had  contemplated 
executing  another  instrument  at  some  future  time.^  If  it  is  a 
present  lease,  on  the  other  hand,  as  the  instrument  purports,  parol 
evidence  cannot  be  admitted  to  change  its  force  and  effect.^  The 
lines  of  demarcation  often  run  together,  so  as  to  make  it  difficult 
to  determine  whether  an  instrument  belongs  to  the  one  class  or 
the  other;  and  judicial  instruction  may  vary  according  to  the 
special  circumstances;  but  the  principles  are  well  established. 
The  term  "  grant  "  includes  "  demise,"  or  "  lease."  ^ 

Some  portions  of  leases,  as  they  are  ordinarily  set  forth,  are 
essential,  others  are  not.  The  date  of  a  lease  is  no  part  of  its 
substance;  and  not  only  are  omissions  frequently  supplied,  but 
the  time  of  delivery  may  be  shown  to  be,  as  indeed  it  frequently 
is,  different  from  that  stated  in  the  instrument.-     So,  too,   the 

6.  Co.  Lit.  301  b.  cases  cited ;   Kidd  v.  Boone,  L.  R.   12 

7.  Bac.     Abr.     Leases,     K;      Smith       Eq.  S9. 

Landl.   and  Ten.    68,   69;    Taylor   ib.,  9.  Kline  v.  McLain,  33  W.  Va.  32, 

§   159,  and  cases  cited;   Bright.  Fed.  10  S.  E.  17;  Shaw  v.  Farns-worth,  108 

Dig.,  "Landlord  and  Tenant,"   544.  Mass.     357;     Tiedeman     Real    Prop., 

8.  Roe  V.   Ashburner,   5   T.  R.   163.  §  179. 

See  Smith  Landl.  and  Ten.  70  et  seq.;  1.  Darby  v.  Callaghan.  16  X.  Y.  71. 

Taylor  ib.,  9th  ed.,  §  37  et  seq.,  and  2.  Taylor  Landl.  and  Ten.,  §   148; 

32 


CHAP.    II.]  CHATTELS    KEAL.  §    27a 

courts  are  liberal,  where  general  errors  of  description  are  to  be 
considered,  in  admitting  explanations;  for  instance,  where  the 
names  of  parties  are  wrongly  spelled  or  there  is  a  misrecital  of 
some  former  instrument.  But  the  omission  of  the  lessee's  name 
in  the  body  of  the  instrument,  or  any  other  material  error,  will 
vitiate  a  lease."'  The  premises  demised  (or  let)  ought  to  be  accu- 
rately described  and  identified;  though  not  always  minutely,  for 
the  law  requires  only  that  the  premises  be  ascertained  with  reason- 
able certainty.'*  And  if  the  tenant  enters  into  possession  he  can- 
not object  to  his  covenant  liability  on  the  ground  of  a  deficiency 
of  description.^ 

§  27a,     Lease  and  Agreement  for  Lease  Distinguished. 

We  are  to  distinguish  between  a  lease  and  an  agreement  for  a 
lease.  A  mere  ofi:"er  to  lease  is  too  imperfect  for  a  mutual  con- 
tract, and  so  is  an  unsigned  lease.^  Yet  an  agreement  or  an 
accepted  proposal  for  a  lease  may  be  so  worded  in  writing  as  to 
really  constitute  a  lease.'^  Any  definite  written  agreement  to  make 
a  lease  upon  fixed  terms  is  binding  even  though  a  formal  lease  has 
not  been  executed,  if  the  minds  of  the  parties  have  mutually  and 
positively  met  therein.^ 

Jackson  v.  Schoonmaker,  2  Johns.  pression)  ;  Schultz  v.  Hastings  Lodge 
230;  Stec4e  v.  Mart,  4  B.  &  C.  272.  No.  50,  I.  0.  O.  F.,  90  Neb.  454,  133 

3.  Taylor  Landl.  and  Ten.,  §§  150-      N.  W.  846. 

152;    Foot   V.    Berkley,    1    Vent.    83;  7.  Korn  v.  Birnn,  140  N.  Y.  S.  987 

Davidson  v.  Cooper,  11  M.  &  W.  794;  (App.  Term,  1913)  ;  Pacific  Improve- 

Chauncey  v.  Arnold,  24  N.  Y.  330.  ment  Co.  v.  Jones,  164  Cal.  260,  128 

4.  Taylor  Landl.  and  Ten.,  §  160;  Pac.  404;  Chandler  v.  Hart,  161  Cal. 
Dingman  v.  Kelly,  7  Ind.  717.  405,  119  Pac.  516  (lease  signed  by  one 

5.  Bulkley  v.  Devine,  127  111.  406,  party  and  ratified  by  acts  of  the 
20  N.  E.  16.  other). 

6.  Adolph  Spear  v.  Empire  Lace  Co.,  Under  some  local  statutes  the  reg- 
8'8  N.  J.  L.  153,  95  Atl.  356;  Ettinger  istry  of  leases  beyond  a  specific  length 
V.  Christian  Schuck  &  Co.,  81  Misc.  of  term  is  requirinl  for  public  infor- 
196,  142  N.  Y.  S.  481;  National  Build-  mation.  City  Bank  of  Bayonne  v. 
ing  Association  v.  Knab,  177  111.  App.  Hocke,  16  App.  Div.  83,  153  N.  Y.  S. 
649;  Herb  v.  Day,  139  N.  Y.  S.  931  731;  Wenz  v.  Pastene,  209  Mass.  359, 
(App.  Term,  1913)  ;  Briggs  v.  Chas<>,  95  N.  E.  793. 

105   Me.  317,  74  Atl.   796    (intent  to  8.  Alexandria  Billiard  Co.  v.  Milo- 

make  a  lease  overrides  technical  ex-      slowsky,    167    Iowa    395,    149    N.    W. 
3  33 


§  28 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  II. 


§  28.     Rent  or  Recompense  under  a  Lease. 

The  periodical  return  which  the  tenant  makes  to  his  landlord, — 
or  the  lessee  to  the  lessor, —  by  way  of  compensation  for  the  use 
of  the  premises,  is  familiarly  known  as  the  rent.  This  compen- 
sation is  not  always  in  money;  for  specific  goods  may  constitute 
a  valuable  consideration  to  support  the  lease  ;^  while,  as  in  the 
analogous  instance  of  a  bailment,  no  consideration  is  requisite  to 
make  a  lease  binding  upon  the  parties  themselves,  if  the  relation 
has  once  taken  effect  and  does  not  remain  executory.^  At  the 
early  common  law  the  tenant  frequently  rendered  military  duties 
by  way  of  recompense,  or  paid  in  military  supplies ;  and  in  agri- 
cultural districts  a  landlord  will  still  take  his  compensation,  not 
unfrequently,   in  crops  or  farm  labor.^     But  it  is  questionable 


504;  Sherry  v.  Proal,  206  N.  Y.  726, 
100  N.  E.  421.  See  Smith  v.  Mitchell, 
168  111.  App.  36  (execution  by  one 
only).  See  further,  Whiteside  v. 
Oasis  Club,  162  Mo.  App.  502,  142 
S.  VV.  752;  United  Merchants  Co.  v. 
Hippodrome,  201  N.  Y.  601,  95  N.  E. 
1140  (contract  for  an  advertising 
sign  on  roof)  ;  Addieg  v.  Tull,  95 
N.  E.  1123  (N.  Y.),  1S7  Fed.  161, 
109  C.  C.  A.  24;  Holliday  v.  Pegram, 
89'  S.  C.  73,  71  S.  E.  367  (mere  nego- 
tiation) ;  Starvvich  v.  Washington  Cut 
Glass  Co.,  64  Wash.  42,  116  Pac.  459; 
American  Tract  Soc.  v.  Jones,  76  Misc. 
Rep.  236,  134  N.  Y.  S.  611  (delivery 
of  key  insufficient)  ;  Murphy  v. 
Sohwaner,  84  Conn.  420,  80  Atl.  295; 
Way  V.  Eraser,  230  Pa.  St.  49,  79  Atl. 
154;  Thomas  v.  Springer,  134  App. 
Div.  940,  982,  119  N.  Y.  S.  460,  463 
(mere  contract  for  gross  theatrical 
receipts)  ;  Greene  v.  Messick  Grocery 
Co.,  153  N.  C.  409,  69  S.  E.  412; 
Brighton  Packing  Co.  v.  Butchers' 
Ass'n,  211  Mass.  308,  97  N.  E.  780 
(terms  modified). 

For  ibreach   of   a  mere   contract   to 
lease   the  expectant  tenant  may   sue 


for  damages.  Schultz  v.  Hastings 
Lodge  No.  50,  I.  O.  0.  F.,  90  Xeb. 
454,  133  N.  W.  846. 

9.  Lilley  v.  Fifty  Associates,  101 
Mass.  432,  where  the  article  specified 
had  passed  out  of  use  and  the  lessee 
was  held  entitled  to  sufiicient  notice 
to  enable  him  to  procure  it. 

1.  See  77  Tex.  505;  Tiedeman  Real 
Prop.,  §  192. 

2.  Smith  Landl.  and  Ten.  88  et  seq.; 
Taylor  Landl.  and  Ten.,  §§  14,  24,  152, 
370;  Fry  v.  Jones,  2  Rawle,  31  (Pa.)  ; 
Jackson  v.  Bro\\'nelI,  1  Johns.  267 
(N.  Y.)  ;  United  States  v.  Gratiot,  14 
Pet.  (U.  S.)  526.  See  Taylor  Landl. 
and  Ten.,  §  24,  and  note  wibh  cita- 
tions, on  the  question  whether  letting 
on  shares  is  or  is  not  equivalent  to  a 
simple  agreement  to  share  crops  as 
tenants  in  common,  rather  than  a 
lease  which  reserves  rent  as  such. 
And  see  Herskell  v.  Bushnell,  37 
Conn.  36;  Strain  v.  Gardner,  61  Wis. 
174;  Warner  v.  Abbey,  112  Mass.  355. 
The  better  modern  opinion  follows  the 
intent  of  the  instrument  or  contract 
as  to  leasing  and  creating  a  tenancy 
or  otherwise. 


34 


CHAP.    II.]  CHATTELS    EEAL.  §    29 

how  far  such  compensation  could  be  deemed  rent  at  all ;  and 
certainly  in  our  country  rent  is  usually,  and  in  these  days  almost 
universally,  made  payable  in  money.  Persons  wishing  to  avoid 
those  fluctuations  in  value  which  occur  through  the  gradual  depre- 
ciation of  the  gold  and  silver  standard  have,  however,  sometimes 
bargained  for  compensation  in  com,  wheat,  or  some  other  such 
staple  produce,  the  practical  effect  being  that  the  lessee  pays  in 
money  according  to  the  market  value  of  such  produce  on  each  rent 
day.  This  mode  of  payment  is  much  to  be  commended  in  long 
leases,  and  has  been  amply  justified  by  the  experience  of  mankind.^ 
Four  points  are  to  be  especially  noted  concerning  rent  at  the 
common  law :  First,  that  it  must  always  be  of  something  issuing 
out  of  the  thing  demised,  and  differing  from  it  in  nature,  and  not 
part  of  the  thing  itself;  which  last  would  be  not  a  reservation, 
but  an  exception.'*  Second,  that  it  must  be  reserved  out  of  some- 
thing to  which  the  lessor  may  resort  for  that  technical  seizure 
which  the  law  calls  a  distress ;  so  that  a  rent  cannot  issue  out  of 
a  right  of  common,  or  out  of  another  rent,  or  in  fact  out  of  almost 
any  incorporeal  hereditament,  however  binding  the  reservation 
may  be  as  a  contract.^  Third,  that  it  must  be  reserved  to  the 
lessor  himself,  and  not  to  a  third  party.^  Fourth,  that  the  reser- 
vation of  rent  in  a  lease  should  be  certain;  by  which  is  meant 
that  at  least  the  rate  can  be  ascertained  and  established.^ 

§  29.     Covenants  of  a  Lease. 

The  covenants  of  a  lease  next  deserve  attention,  and  upon  these 
we  shall  enlarge  somewhat.  When  we  speak  of  a  covenant,  in 
the  strict  legal  sense,  we  refer  to  that  which,  in  an  instrument 

3.  See  3  Kent  Com.  462.  6.  Doe   v.   Lawrence,   4  Taunt.   43 ; 

4.  Co.  Lit.  142  a ;  Doe  v.  Lock,  2  A.  Gates  v.  Frith,  Hob.  130.  But  see 
A  E.  705;  Smith  Landl.  and  Ten.  91.  Jewel's  Case,  5  Co.  3,  as  to  whether 

5.  Smith  Landl.  and  Ten.  91;  5  Co.  it  would  not  bind  as  a  contract  be- 
8;  Bac.  Abr.  Rent,  B.  But  to  this  tween  lessor  and  lessee,  though  bad 
rule  are  some  exceptions.     See  Smith  as  to  the  third  party. 

I-.andl.  and  Ten.  91.     Distress  for  rent  7.  See  Co.  Lit.  142  a;  Maude's  n.  to 

is  disfavored  in  the  United  States  at      Smith  Landl.  and  Ten.  91;   Daniel  V. 
this  day,  Gracie,  6  Q.  B.  145. 

35 


§  30  THE  LAW  OF  PERSO^'AL  PROPERTY.      [PART  II. 

under  seal,  corresponds  to  a  promise  or  agreement  in  parol  under- 
takings. Of  covenants  in  a  lease,  some  run  with  the  land,  while 
others  are  only  binding  upon  the  person.  Some,  again,  are 
implied  as  incidental  to  the  relation  of  landlord  and  tenant,  while 
others,  on  the  contrary,  must  be  the  subject  of  express  contract  in 
order  to  be  effective.  So  covenants  as  affecting  one  another  may 
be  dependent,  or  they  may  be  independent.^ 

The  usual  covenants  to  be  found  in  a  lease  for  any  term  of 
years,  at  the  present  day,  are  these:  First,  on  the  part  of  the 
lessor,  covenants  for  quiet  enjoyment,  against  incumbrances,  for 
further  assurance,  to  repair,  to  renew  the  lease,  and  to  pay  taxes 
and  assessments.  Second,  on  the  part  of  the  lessee,  covenants  to 
repair,  to  pay  rent,  to  pay  taxes  and  assessments,  to  insure,  not 
to  assign,  to  reside  on  the  premises,  to  build  after  a  certain  pat- 
tern, against  carrying  on  certain  trades,  for  particular  modes  of 
cultivation,  to  redeliver  fixtures.^  These  and  similar  covenants 
will  vary  in  different  cases  according  to  the  length  of  the  lease, 
the  nature  and  situation  of  the  property,  and  other  circumstances ; 
nor,  of  course,  are  we  to  expect  that  every  lease  must  be  found  to 
contain  all  of  these  covenants,  or  that  parties,  when  they  see  fit, 
may  not  make  further  covenants  to  suit  themselves. 

§  30.     Covenants  Usual  on  the  Lessor's  Part. 

Let  us  examine  these  different  kinds  of  covenants  in  turn, 
beginning  with  covenants  on  the  part  of  the  lessor. 

The  covenant  for  quiet  enjoyment  is  implied  in  every  lease, 
and  need  not  be  expressed  at  all ;  and  if  it  be  broken  the  landlord 
must  indemnify  the  tenant  against  losses  resulting  from  the 
breach ;  for  the  law  takes  it  for  granted  that  every  lessor  has  both 
the  will  and  the  power  to  keep  his  lessee  in  peaceable  possession 
of  the  premises,  and  the  whole  premises.  Whenever  this  covenant 
is  broken,  the  tenant  is  at  least  absolved  from  paying  rent;    but 

8.  Taylor  Landl.  and  Ten.,  §  244  et  9.  See  Taylor   Landl.   and  Ten,,  §§ 

seq.;    Bouvier's    Diet.     "Covenant;"      219-313,  and  cases  cited. 
8mith  Landl.  and  Ten.  96. 

36 


CHAP.  II.] 


CHATTELS    RBAI.. 


§  30 


if  he  claims  damage  he  should  show  it.^  At  the  same  time,  the 
tenant  must  do  his  part,  and  he  cannot  expect  inednmitj  unless 
he  has  been  actually  or  —  what  will  answer  well  enough  —  con- 
structively driven  from  the  premises.^  The  covenant  here  implied 
is  not  against  any  and  all  extraneous  disturbance  of  the  tenant, 
but  extends  only  to  the  acts  of  the  landlord  or  of  those  who  assert 
a  paramount  title.^ 

The  implied  covenant  against  or  for  keeping  down  incum- 
brances is  for  indemnity  to  the  lessee,  supposing  some  one,  as  a 
prior  mortgagee,  should  take  occasion  to  enforce  his  rights  under 
an  incumbrance,  so  as  to  molest  the  lessee  and  disturb  his  peace- 
able possession."* 

The  covenant  for  further  assurance,  which  is  really  implied 
in  the  covenant  for  quiet  enjoyment,  binds  the  lessor  expressly 
to  perform  and  execute  all  such  further  reasonable  acts  and  writ- 


1.  Larkin  v.  Misland,  100  N.  Y. 
212,  3  N.  E.  79;  Duncklee  v.  Webber, 
151  Mass.  408,  24  N.  E.  1082. 

2.  Holder  v.  Taylor,  Hob.  12 ;  Hart 
V.  Windsor,  12  M.  &  W.  85;  Vernan 
V.  Smith,  15  N.  Y.  332;  Merrill  v. 
Frame,  4  Taunt.  329;  Smith  Landl. 
and  Ten.  206.  As  to  what  will  amount 
to  constructive  eviction,  see  earlier 
and  later  cases  cited  in  Taylor  Landl. 
and  Ten.,  §  308.  And  see  Bennett  v. 
Atherton,  L.  R.  7  Q.  B.  316;  Merry- 
man  V.  Bourne,  9  Wall.  592;  Dunck- 
lee V.  Webber,  151  Mass.  408,  24  N.  E. 
1082. 

There  is  no  implied  covenant  by  the 
landlord  that  the  premises  are  tenant- 
able  when  let  or  that  their  present 
condition'  will  be  bettered  by  him; 
especially  when  the  tenant  inspects; 
unless  there  is  fraudulent  concealment 
by  him  of  hidden  defects.  Russel  v. 
Clark,  173  HI.  App.  461.  But  as  to  con- 
cealment or  mistake  in  a  material  point 
■where  tenant  has  had  no  opportunity 


to  inspect,  cf.  Schale  v.  Butler,  136  N". 
Y.  S.  252.  The  odor  of  dead  rats  in  the 
walls  may  be  so  bad  as  to  constitute 
an  eviction  and  justify  the  tenant  in 
leaving.  Barnard  Realty  Co.  v.  Ban^ 
wirt,  139-  N.  Y.  Supp.  1050.  The  land- 
lord may  be  liable  to  a  guest  in  a 
leased  hotel  for  a  concealed  defect  in 
the  elevator  of  which  the  tenant  knew. 
Colorado  Mtge.  &  Inv.  Co.  v.  Giacom- 
inini,   (Col.),  136  Pac.  1039. 

3.  Tiedeman  Real.  Prop.,  §  187. 
See  Carthy  v.  Blauth,  169  Cal.  713, 
147  Pac.  949 ;  Stewart  v.  Murphy,  95 
Kan.  421,  148  Pac.  609;  Kelly  v.  Mil- 
ler, 249  Pa.  314,  9^4  Atl.  1055;  John- 
son Co.  v.  Berlin  Works,  87  Wash. 
426,  151  Pac.  778  (where  an  adjoin- 
ing o^vner  obstructed  ingress)  ;  Cal- 
lahan V.  Goldman,  2116  Mass.  238,  103 
N.  E.  689. 

4.  See  Taylor  Landl.  and  Ton..  S§ 
318-.322;  4  Kent  Com.  74;  Smith 
Landl.  and  Ten.  208;  Hancock  v. 
Caffyn,  8  Bing.  358. 


37 


§    30  THE    LAW    OF    PERSONAL    PROPERTY.  [CHAP.  II. 

ings  as  may  be  needful  to  complete  the  transfer  of  the  term;    or, 
in  other  words,  to  perfect  the  lessee's  title.^ 

The  covenant  to  repair  can  never  rest  upon  mere  implication; 
for  the  common  law,  with  regard  to  expenses  of  this  sort,  pre- 
sumes so  strongly  against  the  lessee,  that,  even  though  the  premises 
should  be  burnt  to  the  ground,  he  must  continue,  in  the  absence 
of  an  express  covenant  to  the  contrary  in  his  lease,  to  pay  rent, 
and  yet  have  no  power  to  compel  his  lessor  to  rebuild.^  That  is 
to  say,  the  tenant  takes  the  premises  for  better  or  worse,  and  he 
cannot  involve  his  landlord  in  expenses  for  repairs  without  the 
latter's  express  consent/  But  our  written  leases  at  this  day 
generally  provide  for  the  abatement  or  suspension  of  rent  "  in 
case  of  fire  or  other  unavoidable  casualty  "  rendering  the  premises 
unfit  for  use  and  habitation,  according  to  the  nature  and  extent 
of  the  injuries,  and  until  the  premises  shall  have  been  put  in 
proper  condition  once  more,  with  the  further  alternative  of  put- 
ting an  end  to  the  tenancy ;  and  legislation  in  many  of  the  United 
States  has  so  far  altered  the  old  and  harsh  rule  as  to  require  the 
landlord  to  keep  his  premises  in  tenantable  condition,  or  else  lose 
his  tenant,  who,  however,  may  here  in  the  last  emergency  repair 
at  his  landlord's  cost.^  A  landlord  may  expressly  covenant  to 
repair,  in  which  case  the  lessee  should  notify  him  when  the 
covenanted  repairs  become  necessary.^ 

5.  Taylor  Landl.  and  Ten.,  §§  323-  8.  See  Taylor  Landl.  and  Ten., 
326,  and  cases  cited;  Middlemore  v.  §  330;  Myers  v.  Burns,  35  N.  Y.  269; 
Goodale,  Cro.  Car.  503.  Block  v.  Ebner,  54  Ind.  544. 

6.  Taylor  Landl.  and  Ten.,  §§  327-  9.  Taylor,  §  330;  Makin  v.  Wilkin- 
331;  Smith  ib.  199-201;  Miiniford  v.  son,  L.  R.  6  Kx.  25;  Halpin  v.  A.  F. 
Bro^^^l,  6  Cow.  475;  Sheets  v.  Selden,  Ins.  Co.,  120  N.  Y.  71,  23  N.  E.  9'89; 
7  Wall.  416.  Tiedeman,  §  189. 

7.  Afjreements  contemporaneous  Partial  destruction  of  the  building 
with  the  lease,  to  repair  forthwith,  does  not  terminate  the  lease.  Gainer 
should  be  carried  out.  Vass  v.  Wales,  v.  Griffith,  85  S.  E.  713  (W.  Va., 
129  Mass.  38.  Where  one  leases  1915).  The  lease  of  a  building  im- 
rooms  in  a  building,  the  lessor  is  im-  plies  a  lease  of  the  land  under  it. 
pliedly  bound  to  keep  the  rest  of  the  See  further,  Northern  Trust  Co.  v. 
building  repaired  so  as  to  protect  such  Buck,  263  111.  222.  104  N.  E.  1114 
rooms,.      100  111.   214.  (payment  of  inheritance  tax)  ;   Mon- 

38 


CHAP.  II.]  CHATTELS    KEAL.  §    30 

The  covenant  to  renew  (which  is  an  express,  and  not  an  implied 
covenant  where  it  exists  at  all)  secures  to  the  lessee  a  decided 
advantage,  since  it  gives  him  the  option  to  stay  or  to  leave  when 
his  term  expires,  according  to  what  may  then  appear  to  him  the 
more  advantageous,  while  it  binds  the  lessor  to  renew  the  lease 
on  the  terms  stated  if  the  lessee  shall  desire  it.  But  in  order  to 
hold  the  lessor,  this  covenant  should  be  definite  and  precise  in  its 
wording;  nor  are  continued  renewals  much  favored,  since  they 
tend  to  perpetuate  incumbrances  upon  land,  and  are  repugnant 
to  sound  policy.^ 

The  covenant  to  pay  taxes  and  assessments  will  generally  be 
implied  as  against  the  lessor,  where  the  lease  is  silent;  though  it 
is  usual,  and  certainly  preferable,  for  the  mutual  understanding 
of  the  parties  to  be  expressed  on  this  point.  A  tenant,  whose 
lease  does  not  require  him  to  make  such  payments,  may,  if  com- 
pelled by  the  public  authorities,  settle  the  public  dues,  in  order 
to  save  a  tax  sale  of  the  premises,  or  his  eviction,  and  then  set  off 
the  payment  against  his  rent.^ 

Such,  then,  are  the  usual  covenants  on  the  part  of  the  lessor; 
and,  of  these,  the  covenant  for  quiet  enjoyment,  the  covenant  for 
further  assurance,  the  covenant  to  repair,   and  the  covenant  to 

tanus  V.  Buschmeyer,  158  Ky.  53,  164  fraudulently     evaded,     Cliristhilf     v. 

S.  W.  802;  lessor's  sole  right  to  can-  Bollman,  114  Md.  477,  73  Atl.  208'. 

eel  in  case  of  fire,  27  Col.  App.  270,  1.  Taylor  Landl.  and  Ten.,  §§   332- 

14S   Pac.    377;    Weiss   v.   Realty   Co.,  340,    and    cases    cited;     Furnival    V. 

129     Minn.     486,     152     N.     W.     869;  Crew,  3   Atk.   83;   4  Kent  Com.   109, 

Thomas  v.  Lane,  221  Mass.  447,  109  and   cases   cited;    Rutgers   v.   Hunter, 

N.  E.  363 ;  Keegan  v.  Heileman  Brew-  6   Johns.   Ch.   215 ;    Hyde  v.   Skinner, 

ing  Co.,  129  Minnn.  496,  152  N.  W.  2  P.  Wras.  196.     See  Eaton  v.  Lj-on, 

877;   Herald  Square  Co.  v.  Saks,  215  3  Ves.  690;  Bank  v.  Gornto,  161  N.  C. 

N.  Y.  427,  109f  N.  E.   545.     Lease  of  341,  77  S.  E.  222;  Kean  v.  Piano  Co., 

store  whose  windows  projected  beyond  121  Minn.  198,  140  N.  W.  1031   (exer- 

'street   line   and   had    to  be    removed.  cise  of  option    inferred   from  circum- 

Schlau  V.  Enzenbacher,  219  Mass.  474,  stances)  ;   Brunswick  Site  Co.  v.  Ber- 

107  N.  E.  354   (fall  of  ceiling)  ;  Flood  lin  Art  Co.,  154  N.  Y.  S.  1069    (App. 

v.  Brewing  Co.,  158  Wis.  638,  149  N.  Term,  1915). 

W.  492,  L.  R.  A.  1915  F.  1101.  2.  Taylor  Land!,  and  Ten.,  §§  341, 

See,  as  to  lessee's  obligation,  in  taxes  342 ;  Roe  v.  Hayley,  12  East,  469. 

39 


§  31  THE  LAW  OF  PERSONAL  PKOPERTY       [cHAP.  II. 

renew  the  lease,  all  run  with  the  land  and  bind  the  reversion."' 
Other  covenants  of  the  lessor  are  often  inserted,  as  not  to  lease 
to  one  in  a  competing  business,  and  where  such  a  covenant  is 
broken  and  the  tenant  leaves  he  is  not  liable  for  future  rent.'* 

§  31.     Covenants  Usual  on  the  Lessee's  Part. 

Of  the  covenants  on  the  part  of  the  lessee,  some  correspond  to 
those  on  the  lessor's  part  which  have  just  been  noticed. 

The  lessee  may  expressly  covenant  to  keep  the  premises  in 
repair;  and,  whether  he  does  or  not,  the  law  obliges  him  to  so 
use  the  premises  that  no  substantial  injury  shall  be  occasioned, 
unless  the  lessor  has  agreed  for  himself  to  assume  such  responsi- 
bility. While,  however,  the  lessee  is  by  implication  expected  to 
keep  the  leased  premises  wind  and  water  tight,  and  to  put  on  fair 
and  tenantable  repairs,  he  need  not  make  good  the  ordinary 
ravages  of  time;  unless,  indeed,  there  be  an  express  covenant  in 
the  lease,  in  which  case  he  must  conform  to  its  requirements.  It 
is  not  uncommon  to  find  covenants  inserted  in  leases  which  sub- 
stantially put  the  outside  repairs  upon  the  lessor  and  the  inside 
repairs  upon  the  lessee.  Waste  on  a  tenant's  part,  whether  volun- 
tary or  permissive,  cannot,  of  course,  be  tolerated;  and  by  the 
very  acceptance  of  his  lease,  the  lessee  implies  that  he  will  use 
the  premises  with  reasonable  care.  Yet  good  repair  is  a  relative 
term,  and  must  necessarily  vary  with  the  age  of  the  building,  the 
purposes  for  which  it  is  leased  and  occupied,  and  other  similar 
circumstances ;   nor  should  fanciful  damage  be  claimed.^ 

The  covenant  to  pay  rent  is  necessarily  implied  from  the  very 
nature  and  relation  of  a  tenancy  for  years ;  yet  such  a  covenant 
is  almost  invariably  inserted  in  a  lease,  notwithstanding  the  special 

3.  So  does  the  covenant  to  pay  5.  Smith  Landl.  and  Ten.  188-202 ; 
taxes.  2  Paige,  68;  Tiedeman  Real  Viner's  Abr.  Waste;  Hart  v.  Wind- 
Prop.,  §  190.  But  not  any  collateral  sor,  12  M.  &  W.  77 ;  Taylor  Landl.  and 
covenant  which  may  be  pronounced  a  Ten.,  §§  343-368,  and  cases  cited.  See 
personal  obIi<;ation.  Makin  v.  Watkinson,  L.  R.  6  Ex.  25; 

4.  University  Club  v.  Deakin,  (111.),  Ill  Mass.  531. 
106  K  E.  790. 

40 


CHAP.  II.]  CHATTELS    KEAL.  §    32 

reservation  of  rent,  besides,  in  another  part  of  the  instrument. 
Rent  is  a  demand  of  so  very  high  a  nature,  that  nothing  can 
excuse  the  tenant  from  its  periodical  payment,  unless  he  has  been 
legally  compelled  to  vacate  the  premises,  or  the  landlord  has 
accepted  another  person  in  his  stead.  Through  the  unavoidable 
accidents  of  fire,  flood,  and  tempest,  the  premises  may  become 
unfit  for  habitation;  yet,  as  we  have  already  shown,  unless  the 
lessor  has  protected  himself  by  suitable  stipulations  to  the  con- 
trary, or  a  local  statute  changes  the  rule  of  the  common  law,  our 
courts  have  no  choice  but  to  hold  him  to  a  hard  bargain,  and  make 
him  pay  his  rent  all  the  same.^  But  the  implied  covenant  to  pay 
rent  is  distinct  from  that  which  may  have  been  expressly  stipulated 
in  the  lease. 

Of  the  covenant  to  pay  taxes  and  assessments  we  have  already 
spoken,  with  reference  to  the  lessor;  and  it  only  remains  to  add 
that,  theoretically,  the  public  treats  the  tenant  as  the  party  primar- 
ily liable  for  such  assessments,  and  the  tax  or  assessment  itself  as 
a  charge  upon  the  premises  in  the  hands  of  the  occupant,  who  is 
expected,  if  entitled,  to  claim  indemnity  from  his  landlord, 
deducting  the  tax  from  his  rent  bills.  A  special  covenant  in  suit- 
able words  should  be  inserted  in  every  lease,  where  the  mutual 
intention  is  that  the  lessee  shall  pay  both  rent  and  taxes.^ 

§  32.     Covenants    Usual   on   the   Lessee's    Part;    Subject    Con- 
tinued, 

The  covenant  to  insure,   which   is   frequently   to  be   found   in 

e.  Smith  Landl.  and  Ten.  96,  125;  399;   Gabell  v.  Shevell,   5  Taunt.   81; 

Taylor  ib.,  §§  3G9'-394;  Holtzapffel  v.  Stubbs   v.    Parsons,    3    B.   &   A.    516; 

Baker,  18  Ves.  115;  Hallett  v.  Wylie.  Smith   Landl.   and   Ten.   98,   99.      See 

3  Johns.  44 ;  Bclfour  v.  Weston,  1  T.  Hughes  v.  Young,  5  Gill  &  J.  67 ;  Jef- 

R.  310;   Fowler  v.  Bott,  6  Mass.  63.  frey   v.    Neale,    L.    R.    6    C.    P.    240. 

See  Dyer  v.  Wightman,  66  Penn.  St.  Whether   under  such   a   special    cove- 

425;    Neal    v.    Bainbridge,    94    Kan.  nant,  the  lessee  should  be  held  bound 

518,  146  Pac.  1165;   Dagall  v.  Mann,  to  pay  "betterment"  taxes,  so  called, 

89  Conn.  576,  95  Atl.  6    (application  cf.    Love    v.    Howard,    6    R.    I.    116; 

of  rent  payments).  ilayor    Re,    11    Johns.    77;    Pray    v. 

7.  Taylor  Landl.  and  Ten.,  §§  395-  North  Lib.,  31  Penn.  St.  69;  Taylor, 

41 


§    32  THE    LAW    OF    PERSONAL    PROPERTY.  [ciIAP.  II. 

long  leases  involving  large  sums  of  money,  is  one  of  modern 
creation,  and  must  be  express  in  order  to  be  binding.^ 

The  covenant  not  to  assign  or  underlet  is  an  important  one,  and 
especially  favored  by  landlords ;  since  the  tenant  has  a  clear  right 
at  common  law  not  only  to  admit  sub-tenants  but  also  to  transfer 
the  premises  to  others  for  his  term,  as  may  suit  his  o\vn  conven- 
ience, putting  another  in  his  place  while  in  no  wise  relieving  him- 
self of  liability  to  his  landlord.  But  the  owner  of  real  estate  is 
rather  stubborn  in  insisting  upon  the  right  to  choose  his  own 
tenants ;  and  hence  a  well-drawn  lease  in  these  days  will  generally 
be  found  to  contain  an  express  covenant,  upon  the  lessee's  part, 
not  to  assign  or  underlet  the  premises  without  the  previous  written 
consent  of  the  lessor;  a  covenant  which  courts  are  not  disposed 
to  extend  very  far  by  construction,  as  the  cases  will  show.^  Inas- 
much, too,  as  this  covenant  not  to  assign  applies  only  to  voluntary, 
and  not  to  involuntary,  assignments,  it  is  not  unfrequent  for  a 
lessor  to  guard  against  the  lessee's  bankruptcy  or  insolvency,  by 
still  another  special  covenant  that  such  bankruptcy  or  insolvency 
shall  forfeit  the  lease. ^ 

Covenants  to  reside  on  the  premises  are  rarely  met  with ;  nor, 
under  ordinary  circumstances,  would  it  be  reasonable  for  the 
lessor  to  exact  them.^  The  covenant  to  build  after  a  certain 
pattern  applies  usually  to  long  leases  which  contemplate   some 

§  398,  note;   contra,  Simonds  v.  Tur-  lessor's  assent  is  a  "usual  covenant," 

ner,  120  Mass.  188.  see  Hampshire  v.  Wiekens,  7  Ch.   D. 

See  further,  Jesse  French  Piano  Co.  555.      Such    covenant    being    for    the 

V.  Hallberg,  130  Tenn.  650,  172  S.  W.  benefit  of  the  lessor  only,  the  assign- 

298    (covenant  to  pay  attorney's  fee,  ment  without  consent  is  not  void,  but 

etc.).  voidable    only;     nor    is    a    forfeiture 

8.  Taylor  Landl.  and  Ten.,  §§  400,  worked  thereby,  unless  the  lease  so 
401;  Smith  ib.  100;  Thomas  v.  Van  expressly  provides.  Webster  v.  Nich- 
Kapff,  G  Gill  &  J.  372;  Doe  v.  Peck,  ols,  104  111.  160;  Eldredge  v.  Bell,  64 
1  B.  &  Ad.  428.  Iowa,  125. 

9.  Taylor  Landl.  and  Ten.,  §§  402-  1.  Roe  v.  Galliers,  2  T.  R.  133; 
413;  Smith  ib.  115-119;  Church  v.  Doe  v.  Clarke,  8  East,  185;  Taylor 
BrOA\Ti,  15  Ves.  265;  Doe  v.  Carter,  8  Landl.  and  Ten.,  §  409. 

T.  R.  61;  4  Kent  Com.  130.     ^Yhether  2.  See     Taylor     Landl.     and     Ten., 

a  covenant  not  to  assign  without  the      §  414;  Doe  v.  Hawke,  2  East,  481. 

43 


CHAP.  II.]  CHATTELS    REAL.  §    32 

extensive  improvement  bj  the  lessee.''  The  covenant  against  car- 
rying on  a  trade  is  available  for  protecting  the  lessor  against 
certain  trades  peculiarly  offensive,  or  against  business  in  general. 
Contracts  in  restraint  of  trade  are,  as  a  rule,  injurious  to  the 
interests  of  the  public ;  and  we  should  not  expect  to  find  covenants 
in  leases  which  obstruct  the  beneficial  use  of  leased  property  con- 
strued strongly  against  the  lessee;  yet  landlords  may  not  unrea- 
sonably take  precautions  so  as  to  prevent  their  elegant  dwelling- 
houses  from  being  turned  into  workshops,  and  may  insist  upon 
securing  their  real  estate  against  depreciation  in  value  on  their 
tenants'  hands,  through  some  injurious  use  made  of  the  premises 
contrary  to  their  wishes.'* 

The  covenant  for  particular  modes  of  cultivation  is  a  character- 
istic of  agricultural  leases.  Its  object  is  sometimes  to  enforce  the 
customary  mode  as  to  good  husbandry,  and  sometimes  to  prescribe 
a  special  mode,  contrary  to  custom.  The  lessee  of  a  farm  is 
bound,  independently  of  express  covenants,  to  cultivate  the  prem- 
ises in  conformity  with  the  reasonable  and  usual  custom  of  the 
neighborhood.^  The  covenant  to  redeliver  fixtures  in  good  order 
at  the  end  of  the  term  affords  the  lessor  an  ample  remedy  in  case 
of  loss  or  injury  to  such  articles  afiixed  to  the  freehold  —  for 
instance,  furnaces  and  ranges  —  as  the  lessee  may  have  the  right 
to  use  while  his  term  lasts,  but  no  longer.^ 

3.  Taylor  Landl.  and  Ten.,  §  415;  5.  Taylor  Landl.  and  Ten.,  §§  420- 
Mayor  v.  Brooklyn  Fire  Ins.  Co.,  41  423;  Roberts  v.  Barker,  1  Cr.  &  M. 
Barb.  231;  Roper  v.  Williams,  Turn.  808;  Tempest  v.  Rawling,  13  East, 
&  R.  18.  18;   Buck  v.  Pike,  27  Vt.   523;   Webb 

4.  Smith  Landl.  and  Ton.   101;    Si-  v.  Plummer,  2  B.  &  A.  746. 

mona  v.  Farren,  1  Bing.  N.  C.  126;  6.  Hig-gins  v.  Whitney,  24  Wend. 
Doe  V.  Bird,  2  A.  &  E.  161;  Taylor  379;  Perry  v.  Chandler,  2  Cush.  237. 
Landl.  and  Ten.,  §§  416,*418,  and  cases  See  Rice  v.  Silver,  170  Iowa,  255,  152 
cited;  Pierce  v.  Fuller,  8  Mass.  223;  N.  W.  498,  as  to  impossibility  of  per- 
Chappel  V.  Brockway,  21  Wend.  157;  forming  a  provision  of  a  farm  lease; 
Wadham  V.  Postmaster-General,  L.  R.  Hill  v.  White,  150  Pae.  1051  (Okla. 
6  Q.  B.  644  19'15)  ;  In  re  Place,  224  Fed.  778; 
To  cut  a  hole  in  the  party  wall  Owens  v.  Reed,  36  S.  D.  184,  153  N. 
without  permission  is  waste.  Ham-  W.  1093 ;  Lowe  &  Pittard  v.  War- 
burger  V.  Sottegast,  131  S.  W.  639  bington,  144  Ga.  181,  SG  S.  E.  537. 
(Tex.  Civ.  App.  1911). 

43 


§    34  THE    LAW    OF    PEKSOISrAL    PROPERTY.  [CHAP.  II. 

§  33.     Covenants    Usual    on    a    Lessee's    Part;    Subject    Con- 
tinued. 

Such,  then,  are  the  covenants  usual  in  a  lease  on  the  part  of 
the  lessee.  And  it  may  be  added,  that  the  covenants  for  rent,  to 
repair,  to  pay  taxes  and  assessments,  to  reside  on  the  premises, 
and  to  cultivate  in  a  certain  manner,  all  run  with  the  land  and 
bind  the  assignee  as  well  as  the  lessee  himself.'' 

§  34.     Assignment  of  Lease ;  Act  of  Parties. 

That  privity  of  estate  which  exists  between  landlord  and  tenant 
is  not  confined  to  the  original  parties  to  a  lease,  but  extends  to  all 
who  may  acquire  a  subsequent  interest  therein.  A  contract  is  or 
is  not  assignable ;  but  estates  in  land  may  be  assigned.  The  land- 
lord can  make  over  his  reversion,  or  the  tenant  his  term;  and 
assignments  of  this  ^rt,  like  all  other  kinds  of  assignment,  may 
be  brought  about  either  by  act  of  the  parties  or  by  act  of  the  law. 

An  assignment  by  the  landlord  is  necessarily  by  deed,  since  his 
reversion  is  an  incorporeal  hereditament,  and,  as  the  phrase  goes, 
lies  in  grant;  and  in  addition  to  this,  it  was  formerly  requisite, 
in  order  to  make  the  assignment  perfect,  that  the  tenant  should 
have  attorned,  or  in  some  way  recognized  the  assignee  as  his  new 
landlord.  But  this  last  troublesome  formality  was  dispensed  with 
in  England  by  Stat.  4  Anne,  c.  16,  §  9,  which  made  the  landlord's 
assignment  valid  without  any  attornment  on  the  tenant's  part;- 
and  yet  so  far  respected  the  interests  of  the  tenant  as  to  save  him 
from  being  prejudiced  by  the  payment  of  any  rent  to  the  former 
landlord  before  he  had  received  notice  of  the  change.  The  effect 
of  this  statute  (whosQ»  provisions  are  commonly  adopted  in  the 
United  Stat€s)  is  to  require  that  notice  be  given  to  the  tenant 
before  he  can  be  sued  by  the  assignee  of  his  landlord  for  rent 
accruing  subsequent  -to  the  assignment.^     As  to  the  tenant,   he 

7.  As  to  the  distinction  between  169,  96  Atl.  130;  Brown  v.  Linn 
suoh  covenants  and  those  which  Woolen  Co.,  114  Me.  266,  95  Atl.  1037. 
merely  bind  the  person,   see  further,  8.  See  Smith  Landl.  and  Ten.  280, 

Taylor  Landl.  and  Ten.,  §  260  et  seq.      281:  Moss  v.  Gallimore,  Dougl.  279; 
And  see  Johns  v.   Winters,   251   Pa.      Taylor  Landl.   and  Ten.,  §   442;    Co. 

44 


CHAP.  II.]  CHATTELS    REAL.  §    34 

might  formerly  have  assigned  his  interest  by  parol;  but  the 
Statute  of  Frauds  now  requires  all  assignments  of  leases  or  terms 
of  years  to  be  in  writing,  and  to  be  signed  by  the  party  assigning, 
or  by  his  agent  lawfully  authorized  for  that  purpose.^  And  we 
have  just  seen  that  the  lessee  is  frequently  restrained  still  further 
by  a  covenant  not  to  assign  without  his  lessor's  permission.^ 

The  assignee  of  the  lessor  has  a  right  to  sue  the  lessee,  and  vice 
versa  the  assignee  of  the  lessee  can  sue  the  lessor,  upon  covenants 
which  touch  and  concern  the  thing  demised, —  that  is  to  say,  cove- 
nants which  run  with  the  land, —  and  upon  these  alone.  This 
right,  so  far  as  concerns  assigtiees  of  the  lessor,  is  recognized  in  a 
statute  passed  during  the  reign  of  Henry  VIII. ;  which  statute 
applied,  however,  to  leases  by  deed  only.^  As  to  the  lessee  and 
his  assignee,  the  common-law  rule  was,  that  while  the  former 
might  transmit  his  privity  of  estate,  so  that  such  liabilities  would 
run  with  the  land,  he  could  not  transmit  the  privity  of  contract, 
but  would  remain  bound  by  his  own  covenants.^  Nor  could  the 
lessor's  assignee,  at  common  law,  and  independently  of  later  stat- 
utes, sue  or  be  sued  upon  the  covenants  contained  in  his  lease.'* 
Where  a  lease  has  been  assigned,  there  is,  during  the  continuance 
of  the  assignee's  interest,  a  duty  on  his  part  towards  the  lessee  to 
pay  the  rent  and  perform  all  the  covenants ;  but  this  duty  is  corn- 
Lit.   309  b;   Van  Rensselaer  v.   Read,  1.  Supra,  §  32. 

26  N.  Y.  558;  1  Smith  T^ad.  Cas.  5th  2.  See  Smith  Landl.  and  Ten.  284, 

Am.  ed.  SOT;   Cook  v.  Guerra,  L.  R.      and  Maude's  n.;    Taylor   ib.,    §    439; 
7  C.  P.  132.    The  rule  of  Stat.  4  Anne      Standen  v.  Chrismas,  10  Q.  B.  135. 
appears  to  have  been  in  force  previ-  3.  Thursby  v.  Plant,  1  Saund.  240; 

ously  in  some  of  our  States.  Gilbert  Taylor  Landl.  and  Ten.,  §  436  et  seq., 
V.  Bell,  15  Mass.  26 ;  Perrin  v.  Lep-      and  cases  cited. 

per,  34  Mich.  292;  Hansen  v.  Prince,  4.  Co.  Lit.  215  a;  Milnes  v.  Branch, 

45  Mich.  519;  O'Connor  v.  Kelly,  41  5  Maule  &  S.  411.  The  Now  York 
Cal.  432.  Statutes    and    thoso    of    some    other 

9.  Stat.  29  Car.  II.,  c.  3,  §  3.  By  States  now  give  an  assi^ee,  whether 
Stat.  8  &  9  Vict.,  c.  106,  such  assign-  of  the  reversion  or  the  term,  the  ben- 
raents  are  void  at  law  unless  made  by  cfit  of  any  agreement  contained  in  the 
deed.  See  Smith  Landl.  and  Ten.  62,  lease  assigned.  See  Taylor  Landl.  and 
282 ;  Taylor  ib.,  §§  427,  437,  and  cases  Ten..  §  441 :  1  N.  Y.  R.  S.  747,  §§ 
cited.  23-25. 

45 


§  35  THE  LAW  OF  PEESONAL  PKOPEKTY.      [cHAP.  II, 

mensurate  with  his  interest ;  and  he  may  himself  assign  over,  and 
so  avoid  all  liability  for  future  breaches  of  covenant,  even  though 
he  should  assign  over  to  an  insolvent  person.^  Where  a  void 
assignment  is  made,  as  to  a  company  which  does  not  exist,  the 
term  remains  in  the  original  tenant.^ 

§  35.     Assignment  of  Lease;  Operation  of  Law. 

But  a  lease  may  be  assigned  by  operation  of  law ;  as,  for 
instance,  where  the  lessor  or  the  lessee  dies,  or  where  either 
becomes  a  bankrupt. 

Where  a  lessor  dies,  his  personal  representativCnS  more  nearly 
step  into  his  place  as  concerns  his  personal  property,  than  the 
heir  does  as  concerns  his  real  estate ;  for  if  a  man  binds  himself, 
his  executors  are  bound,  though  not  named,  while  this  is  not  so 
strictly  true  as  respects  the  heir.  Subject  to  this  qualification, 
we  are  safe  in  stating  the  general  rule  to  be,  that  the  reversion  of 
the  lessor  is  either  descendible,  and  so  goes  to  the  heir,  who  will 
stand  in  his  ancestor's  stead,  or  it  is  a  chattel  and  passes  to  the 
executor  or  administrator,  who  will  represent  the  deceased  person/ 
But  where  the  lessee  dies,  his  interest  vests  in  his  executors  or 
administrators  alone  by  virtue  of  their  office;    for  the  term  of 

5.  Smith  Landl.  and  Ten.  29'4,  295;  145  Pac.  826    (forfeiture)  ;   Moline  v. 

Taylor  v.  Shum,  1  B.  &  P.  21;  Wol-  Portland   Brewing   Co.,    73    Ore.    532, 

veridge  v.  Steward,  1  Cr.  &  M.  644;  144  Pac.  572;  Devlin  v.  Le  Tourneau, 

Smith  V.  Peat,  9  Ex.  161;  Armstrong  122  Minn.  184,  142  N.  W.   155    (les- 


V.  Wheeler,  9  Cow.  88;  Taylor  Landl 
and  Ten.,  §  449.  See  Moule  v.  Gar 
rett,  L.  R.  5  Ex.  132.  For  assign 
ment  see  Perkins  v.  Kir'by,  35  R.  I 
84,  85  Atl.  648;  Oregon-Wash.  R.  Co 
V.    East   Oregon    Co.,    81    Wash.    617 


sor's  successor  in  title  bound)  ;  Katz 
V.  Miller,  148  Wis.  63,  133  N.  W. 
1091;  Ettlinger  v.  Kruger,  146  App. 
Div.  524,  131  N.  Y.  S.  436;  Cupples 
V.  Level,  54  Wash.  299,  103  Pac.  430 
(no     covenant     against     assigning)  ; 


143    Pac.    154;    McGhee   v.   Cox,    116  Jones  v.  Moncrief-Cook  Co.,  25   Okla. 

Va.    703,    82    S.    E.    701;    Hoover    v.  856,  lO*  Pac.  403. 

Weber,  154  111.  App.  263.     Landlord  6.  Johnson  v.  Northern  Trust  Co., 

may  by  acts  waive  a  formal  consent  to  265  III.  263,  106  N.  E.  814. 

assignment  or  subletting  by  the  lessee.  7.  See  Smith  Landl.  and  Ten.   298, 

Cohen   v.   Todd,    130   Minn.    227,    153  and   Maude's   n. ;    Taylor   Landl.   and 

N.  W.  531,  L.  R,  A.  1915  E.  846.     See  Ten.,    §§    459-463;     Co.    Lit.    209    a; 

further.  Fry  v.  Kilborn,  94  Kan.  52,  Lougher  v.  Williams,  2  Lev.  92. 

46 


CHAP.  II.]  CHATTELS    REAL.  §    35 

years  is  but  a  chattel,  as  we  stated  at  the  outset,  and  the  heirs,  as 
such,  have  no  immediate  concern  in  the  lease.  As  the  personal 
representative  of  the  deceased  lessee,  and  no  more,  the  executor 
or  administrator  may  be  sued  for  accrued  rents  or  for  past  breaches 
of  covenant;  and  yet  the  law  does  not  for  this  make  him  liable 
beyond  the  amount  of  assets  in  his  hands.  But  since  the  personal 
representative  is  regarded  as  a  legal  assignee  of  the  lease  as  well 
as  of  the  term,  he  ought  to  make  inquiry  as  to  its  value  before  he 
assumes  to  act  as  an  out-and-out  lessee ;  since  otherwise  he  might 
find  himself  in  the  unpleasant  predicament  of  being  held  answer- 
able to  the  lessor  for  subsequent  rents  vsdthout  the  corresponding 
means  of  payment.  Like  other  assignees,  the  executor  or  admin- 
istrator may  (unless  restrained  by  the  covenants  contained  in  the 
lease)  assign  over,  and  thus  discharge  himself  from  individual 
liability,  so  far  as  concerns  all  subsequent  rent  and  breaches  of 
covenant ;  ^  or  he  may  surrender  the  lease  if  the  lessor  accepts.^ 
For  breach  of  covenant  by  the  lessor  after  the  lessee's  death  the 
latter's  representative  sues  correspondingly.^ 

With  regard  to  the  assignee  of  a  bankrupt,  the  rule  is  that  he 
may  take  possession  of  the  leased  premises,  as  part  of  the  assigned 
estate,  and  assume  full  control ;  but,  if  he  does  so,  he  is  expected 
to  bear  the  burdens  as  well  as  to  enjoy  the  benefits  of  the  lease. 
Here,  again,  common  prudence  dictates  that  the  legal  representa- 
tive should  make  proper  inquiries  concerning  the  value  of  the  lease 
before  assuming  control ;  or,  having  once  made  himself  personally 
liable,  that  he  should  assign  over  or  surrender  without  delay  when 
he  finds  the  lease  unprofitble.  Demands  under  the  lease  for  rent 
or  otherwise,  which  accrued  prior  to  the  lessee's  banlvruptcv,  and 
remained  unsettled,  would  be  payable  on  the  usual  principles, 
from  the  bankrupt's  estate  in  the  hands  of  the  assignee.^     As  rent 

8.  Ren  Smith   Landl.   and  Ton.   299-  Van    Rensselaer   v.   Platner,    2    Johns. 

301;   Taylor   ib.,   §§   459-461;    Schoul.  Cas.  17. 

Ex'rs  &  Adm'rs,  §§  223,  353;  Taylor  9.  Deane    v.    Caldwell,    127    :Ma83. 

V.  Shiim,  1  B.  A  P.  21;  Wollaston  v.  242. 

Hakewill,    3   M.   &   Gr.    297;    Quain's  1.  Smith  v.  Dodds,  45  Tnd.  432. 

Appeal,   22   Penn.   St.   510.     But   see  2.  Smith  Landl.  and  Ten.  302-306; 

47 


§  36  THE  LAW  OF  PERSONAL  PROPERTY.      [cHAP.  II. 

not  due  is  not  a  provable  debt  in  bankruptcy,  it  is  not  barred  by 
the  discbarge,  and  therefore  where  a  lessee  under  a  written  lease 
goes  into  bankruptcy  he  still  remains  personally  liable  for  rent 
which  comes  due  after  the  adjudication.^  Bankruptcy  does  not 
affect  the  right  of  the  landlord  to  evict  the  tenant  or  his  trustee 
for  non-payment  of  back  rent,  but  the  landlord  may  waive  this 
right,  as  by  obtaining  from  the  court  an  order  that  the  trustee 
shall  adopt  or  renounce  the  lease."* 

§  36.     Underletting  Distinguished  from  Assignment. 

Akin  to  the  subject  of  the  assignment  of  leases  is  that  of  under- 
letting; and  we  often  find  that  one  and  the  same  covenant  in  a 
lease  provides  against  either  act  on  the  part  of  the  tenant.^  While 
the  assignment  of  a  lease  carries  the  whole  interest  in  the  term, 
an  under-lease  reserves  to  the  lessee  some  portion  still  of  that 
interest,  however  small  it  may  be.  And  the  material  distinction 
between  the  two  is  this :  that  while  a  certain  privity  of  estate 
subsists  between  the  original  lessor  and  the  assignee  of  a  lease, 
so  as  to  render  the  latter  liable  on  some  of  the  covenants  (as  we 
have  already  noticed),  there  is  no  privity  whatever  between  the 
original  lessor  and  an  under-lessee ;  for  which  reason  the  under- 
lessee  cannot  be  sued  by  the  original  lessor  upon  any  covenant 
contained  in  the  lease.^     It  may  be  highly  consistent  with  a  lease 

Taylor  ib.,  §§  456-458,  and  eases  cited;  3.  In  re  Adams,  12  Am.  B.  R.  367, 

Turner   v.    Richardson,   7   East,   335;  130  Fed.  788;  In  re  Roth  and  Appel, 

Copeland  v.  Stephens,  1  B.  &  A.  593;  24  Am.  B.  R.  588,  181  Fed.  667;  In  re 

Morton    v.    Pinckney,    8    Bosw.    135.  Rubel,   21   Am.   B.   R.    566,    166   Fed. 

See  Frazin,  .Be,  29  Am.  B.  R.  212,  174  131;  contra.  In  re  Hayes,  9  Am.  B.  R. 

Fed.  713;   In  re  Benz,  221  Fed.  123.  144,    117   Fed.   879.      See   Collier  on 

Under  the  Federal  Bankruptcy  Law  Bankruptcy  (10th  ed.)   878-. 

of   1898,  §   70,  a  lease  passes  to  the  4,  Durand   v.    Howard   &    Co.,    216 

lessee's  trustee  in  bankruptcy  by  ope-  Fed.   585.     See  §  70  Bankruptcy  Act 

ration  of  law,  subject  to  his  election  as  discussed  in  Collier  on  Bankruptcy, 

to  take  or  reject  it.     Gazley  v.  Wil-  11th  ed. 

Hams,   210  U.   S.   41,   52  L.   Ed.   950,  5.  Supra,  §  32. 

20  Am.  B.  R.  IS.    The  better  practice  6.  Taylor  Landl.   and   Ten.,    §§   16, 

is  for  the  trustee  to  formally  notify  108,    109,    and    cases    cited;    Doe    v. 

the  landlord  of  his  election  as  soon  Bateman,  2  B.  &  A.  168;  Doe  v. 
as  possible. 

48  1 


CHAP.  II.]  CHATTELS    REAL,  §    38 

that  the  lessee  should  have  a  liberal  right  to  underlet,  though  not 
to  assign.^ 

§  37.     Modes  of  Terminating  a  Tenancy. 

The  next  topic  to  be  considered  is  that  of  determining  or  put- 
ting an  end  to  the  tenancy  of  a  term  of  years.  There  are  five 
ways  in  which  a  lease  may  be  terminated :  first,  by  lapse  of  time ; 
second,  by  merger;  third,  by  surrender;  fourth,  by  forfeiture; 
fifth,  by  notice  to  quit.^ 

§  38.  The  Same  Subject;  Lapse  of  Time;  Merger;  Surrender. 
Lapse  of  time  will,  of  course,  put  an  end  to  the  tenancy  of  a 
term  of  years.  For  when  I  take  a  lease  of  premises  for  a  definite 
length  of  time,  or  subject  to  the  happening  of  a  certain  contin- 
gency, the  lease  necessarily  terminates,  on  the  general  principle 
of  a  contract,  when  the  definite  period  has  elapsed  or  the  contin- 
gency has  happened.^  With  the  expiration  of  such  a  lease  the 
tenant's  right  of  occupation  ends,  and  the  landlord  may  resume 
possession  of  the  premises  at  once. 

Merger  likewise  dissolves  the  relation  of  landlord  and  tenant. 
Of  this  quaint  topic  we  need  only  observe  that  the  doctrine  of 
merger  applies  where  two  distinct  estates  meet  in  the  same  person, 
so  that  the  smaller  estate  becomes  merged  or  drowned  in  the 
larger.^     If  I  take  a  lease,  and  then,  before  the  lease  has  expired, 

Byron,    1    C.    B.    623-626;     Davis    v.  does  not  extend  beyond  the  period  of 

Morris,  36  N.  Y.  569.  the  identical  lease.     Pyle  v.  Western 

7.  The     lessor's     consent     to     sub-  Union  Tel.  Co.,  85  Kan.  24,  116  Pac. 

letting  by  his  lessee  may  be  inferred  229. 

from    his   own   acts   and    the   circum-  8.  Smith  Landl.  and  Ten.  215;  Tay- 

stances.     Batley  v.  Dewalt,  56  Wash.  lor  ib..  §  464. 

431,   105   Pac.   1029;    Moline  v.  Port-  9.  Ludford  v.   Barber,   1   T.  R.   86; 

land  Brewing  Co..  73  Ore.  532, 144  Pac.  Ackland  v.   Lutley,   9  Ad.  &   E.   879  ; 

572.  Ellis  V.  Paige,  1  Pick.  43;   Bedford  v. 

A     sublessee     is     chargeable     with  McElherron,   2    S.   &   R.   49;    Jackson 

knowledge  of  the  terms  of  his  lessor's  v.  Parkhur.st,  5  Johns.  128. 

lease.     Doyle  v.  Scott,  134  S.  W.  828  1.  2  Ewell's  Bl.  Com.  177;  Bouvier's 

(Tex.  Civ.  App.,   1911).     A  sublease  Diet.  "Merger." 

.4  49 


§  38  THE  LAW  OF  PERSONAL  PROPERTY.      [cHAP.  II. 

purchase  the  premises  outright,  or  inherit  them,  the  lease  is  at  an 
end ;   and  this  through  the  operation  of  merger. 

But,  again,  a  tenancy  for  years  may  be  determined  by  sur- 
render; that  is  to  say,  I  may  give  up  my  lease  with  the  lessor's 
sufficient  permission.  A  surrender,  or  yielding  up,  may  be  either 
express  or  by  operation  of  lavi.  No  special  form  of  words  is 
requisite  in  order  to  constitute  an  express  surrender,  nor  is  it 
necessary  that  the  lease  should  be  formally  redelivered  and  can- 
celled. Anything  will  suffice  which  evinces  a  mutual  agreement 
and  assent  that  the  premises  be  surrendered,  followed  by  an  actual 
yielding  up  of  possession  to  the  landlord.  Surrender  by  operation 
of  law  takes  place  where  one  does  an  act,  such  as  accepting  a  new 
lease,  which  would  be  inconsistent  with  the  continuance  of  the  old 
term.^  The  Statute  of  Frauds  prohibits  the  surrender  of  terms 
of  years,  or  other  interests  in  lands,  unless  by  deed,  or  note  in 
writing,  or  by  operation  of  law.^  But  much  difficulty  is  experi- 
enced in  laying  down  the  precise  extent  to  which  the  exception 
"  by  operation  of  law  "  may  be  carried."*     Inasmuch  as  the  effect 

2.  Co.  Lit.  337  b;  Schieffelin  v.  Car-  As  to  eviction,  constructive  or  cx- 
penter,  15  Wend.  440;  Challoner  v.  press,  see  Barnard  Realty  Co.  v.  Bon- 
Davies,  1  Ld.  Raym.  402;  Taylor  wit,  16  Misc.  Rep.  464,  135  N.  Y.  S. 
Landl.  and  Ten.,  §  507  et  seq.,  and  700;  Hotel  Marion  Co.  v.  Waters,  77 
cases  cited;   Smith  ib.  223-233.  Ore.  426,  150  Pac.  865;  Kelly  v.  Mil- 

3.  29  Car.  II.,  c.  3,  §  3.  See  supra,  ler,  249  Pa.  314,  94  Atl.  1055.  And 
§  25.  see   Sale  v.   Smith  Co.-,   147  Ky.   146, 

However,    an    agreement    for    cash  143    S.   W.   737 ;    Hollar   v.    Southern 

to  surrender  after  a  year  an  existing  Bell  Tel.  Co.,  155  N.  C.  229,  71  S.  E. 

lease  is  valid  though  by  parol.     Gar-  316. 

rick  Theatre  Co.  v.  Gimbel  Bros.,  158  4.  See  Lyon  v.   Reed,   13   M.   &   W. 

Wis.  649,  149  N.  W.  385.  285,    which    comments    upon    former 

For  lease  and  option   to   renew  or  cases.    And  see  Maude's  note  to  Smith 

purchase,    see    Pope    v     Abbott,    211  Landl.  and  Ten.  228,  where  the  Eng- 

MasS.   582,   98  N.   E.   512;    Compania  lish   cases   are   fully   cited.      For   the 

Mexicana  Cemento  Portland  v.  Waite,  American  decisions,  see  Taylor  Landl. 

196    Fed.    227     (Penn.)  ;    Toomey    v,  and     Ten.,     §§     510-516,     and     notes 

Casey,    72    Ore.    290,    142    Pac.    621;  passim. 

Henry  Phipps  Estates  v.  Tong  Phong,  Right    to    renew    defined.      Leavitt 

214  N.  Y.  308,  108  N.  E.  410;   East-  v.   Maykell,  203   Mass.   506,   89  N.  E. 

man  v.   Dunn,   34  R.   I.  416,   83  Atl.  1056;   Briggs  v.   Chase,  105  Me.   317, 
1057. 

50 


CHAP.  II.] 


CHATTELS    EEAL. 


39 


of  a  surrender  is  to  terminate  the  relation  of  landlord  and  tenant 
completely,  the  legal  consequence  appears  to  be  that  a  lessee  who 
has  underlet  and  afterwards  surrenders  to  the  lessor  loses  there- 
upon all  right  to  hold  the  under-lessee  to  his  covenants,  and  to 
collect  the  rent  that  may  justly  have  accrued;  while  the  lessor, 
on  his  part,  cannot,  by  the  act  of  surrender,  destroy  the  estate 
which  the  , under-lessee  had  already  acquired  in  the  premises. 
This  inequitable  condition  of  things  has  been  remedied  in  England 
and  some  parts  of  the  United  States  by  appropriate  legislation.^ 

§  39.     The  Same  Subject;  Forfeiture. 

Forfeiture  likewise  determines  a  tenancy.  It  is  laid  down  that 
a  tenant  commits  a  forfeiture  if  he  disclaim  and  deny  his  land- 
lord's title;  though  not  where  this  is  by  mere  word  of  mouth.^ 


74  Atl.  7?6;  Callahan  Co.  v.  Michael, 
45  Ind.  App.  215,  90  N.  E.  642. 

Apart  from  local  statute,  where  les- 
see simply  holds  over  after  his  lease 
expires,  lessor  may  treat  him  either 
as  a  trespasser  or  as  continuing  a 
tenant  on  the  same  terms.  The  com- 
mon law  infers  an  intent  to  renew  on 
the  lessee's  part,  or  at  least  to  con- 
tinue as  before.  See  Lawrence  v. 
Goodstein,  91  Misc.  Rep.  19,  154  N.  Y. 
S.  229;  Morse  v.  Brainerd,  42  App. 
D.  C.  448. 

5.  See  Stat.  4  Geo.  II.,  c.  28,  §  6; 
Doe  V.  Marchetti,  1  B.  &  Ad.  715; 
Smith  Landl.  and  Ten.  232,  233; 
Taylor  lb.,  §  518;  1  Rev.  Stats.  N.  Y. 
744;  4  Kent  Com.  103;  117  Mass. 
357. 

Extension  or  renewal  of  a  lease 
is  often  by  an  indorsement  on  the 
original  lease,  duly  signed  by  both 
parties. 

The  failure  t»  pay  rent  due  does 
not  operate  to  terminate  the  lease; 
but  the  lessor  must  take  action.  See 
§  40. 


Nor  can  a  lessee  who  has  once  en- 
tered dispute  his  lessor's  title  with- 
out first  surrendering  pos&ession,  as 
well  as  repudiating.  Interurban  Land 
Co.  V.  Crawford,  183  Fed.  630  (Ala.)  ; 
Dunlap  V.  Moore,  98  Ark.  235,  135 
S.  ^Y.  824;  Welchi  v.  Johnson,  27 
Okla.  518,  112  Pac.  989.  A  mere 
threat  to  repudiate  the  lease  is  inef- 
fectual. Oliver  v.  Loydon,  163  Cal. 
124,  124  Pac.  731;  Green  Bay  &  Mis- 
sissippi Canal  Co.  v.  Tclulah  Paper 
Co.,  140  Wis.  417  122  N.  W.  1062; 
Chicago  Terminal  Transfer  Co.  v.  Bar- 
rett, 252  111.  96,  96  N.  E.  79^4;  Za- 
briskie  v.  Sullivan,  80  N.  J.  L.  673; 
81  Atl.  1135. 

As  to  abandonment  or  surrender, 
see  Smith  v.  Hunt,  32  R.  I.  326,  79 
Atl.  826;  In  re  Hopkins,  250  111.  372, 
95  N.  E.  496. 

6.  Bac.  A'br.  Leases,  tit.  2 ;  Doe  v. 
Wells,  10  A.  &  E.  427;  Smith  Landl. 
and  Ten.  233,  234 ;  Taylor  ib.,  §§  488- 
501. 


51 


§  40  THE  LAW  OF  PEKSONAL  PKOPERTY.       [pAET  II. 

The  old  common  law  was  very  strict  with  respect  to  forfeiture; 
more  so  than  courts  of  the  present  day  would  bo  likely  to  rule. 
But,  besides  this  sort  of  forfeiture,  there  is  another,  which  occurs 
whenever  some  condition  has  been  broken  in  a  lease  which  reserves 
to  the  lessor  the  right  to  re-enter  thereupon  and  repossess  himself 
of  the  premises.  Such  conditions  are  rather  strictly  construed ; 
and  it  is  held  that  no  re-entry  can  take  place  for  mere  breach  of 
covenant,  as  in  neglecting  to  pay  rent,  unless  the  lease  clearly 
provides  for  re-entry  and  forfeiture  in  such  a  contingency.  And 
the  lessor  waives  the  forfeiture,  by  accepting  rent  after  any  par- 
ticular breach  of  covenant,  or  by  other  acts  evincing  an  intention 
on  his  part  to  let  the  lease  continue ;  though  it  is  otherwise  where 
the  cause  of  forfeiture  is  a  continuous  one.^ 

§  40.     The  Same  Subject;  Notice  to  Quit;  Modes. 

Lastly,  a  tenancy  is  terminated  by  a  notice  to  quit,  given  in  a 
regular  manner  and  under  suitable  circumstances.  Notice  to  quit 
is  necessary  to  terminate  a  general  tenancy  at  will,  or  from  year 
to  year,  or  any  other  uncertain  tenancy  not  at  suiferance ;  ^  which 
last  species  of  tenancy  arises  where  one  lawfully  comes  into  pos- 
session, but  holds  over  wrongfully  after  his  interest  has  deter- 
mined.^ But  it  does  not  apply  to  a  lease  for  years.  Thus,  if  I 
have  a  lease  for  five  years,  I  am  not  entitled  to  a  notice  at  the 
expiration  of  that  period;  for  I  have  no  right  to  remain  longer, 
since  lapse  of  time,  as  has  been  shown,  is  enough  to  put  an  end  to 
the  lease. ^     But  if,  as  frequently  may  happen,  the  landlord  by 

7.  Doe   V.    Woodbridge,   9  B.    &   C.  8.  Taylor  Landl.  and  Ten.,  §§  466- 

376;   Doe  v.  Jones,  5  Ex.  498;  Stuy-  48T;  Smith  ib.  234-249. 

vesant  v.  Davis,  9  Paige,  427;  Taylor  9.  2  Ewell's  Bl.  Com.  150;   4  Kent 

Landl.  and  Ten.,  §§  488-501,  and  cases  Com.  116.      In  some   States  a   tenant 

cited.    See  Toleman  v.  Portbury,  L.  R.  at  sufferance  must  be  served  with   a 

7  Q.  B.  344;   Cox  v.  Title  Guarantee  notice  to  quite,  unless  he  is  actually 

&    Trust    Co.,    198    Fed.    275     (U.    S.  or  by  implication  a  trespasser.      See 

D.   C.)  ;   Perkins  v.   Kirby,   35   R.   I.  Taylor  Landl.  and  Ten.,  §§  64,  65. 

84,  85  Atl.   648;   Archdeacon  v.   Cin-  1.  Supra,  §  38. 
cinnati  Gas  &  Electric  Co.,  76   Ohio 
St.  97,  101  N.  E.  152. 

52 


CHAP.  II.]  CHATTELS    REAL.  §    40 

some  act  manifests  his  consent  for  me  to  occupy  the  premises 
longer,  though  no  new  lease  be  made  out,  I  shall  then  become  a 
tenant  from  year  to  year,  or  quarter  to  quarter,  or  other  appro- 
priate period  for  paying  rent,  and  must  be  served  with  a  proper 
notice  to  quit  before  he  can  bring  an  action  of  ejectment  against 
me  or  otherwise  regain  possession  of  the  premises.  The  right  of 
notice  to  quit  is  reciprocal,  and  it  can  be  given  by  the  tenant  as 
well  as  his  landlord.^  Thus,  to  continue  the  illustration,  if  I,  as 
a  tenant  from  year  to  year,  or  shorter  rent-paying  period,  desire 
to  leave,  rather  than  the  landlord  to  have  me  go,  it  is  my  duty  to 
serve  a  proper  notice  of  intention  to  quit  upon  him  before  I  can 
relieve  myself  of  the  obligation  of  a  tenant. 

A  notice  to  quit  can,  of  course,  have  no  effect  upon  an  outstand- 
ing lease  for  years.  It  need  not  be  given  where  no  tenancy  exists 
or  where  there  is  no  privity  between  the  parties;  nor  in  case  of 
forfeiture.  And  it  is  dispensed  with  whenever  the  premises  have 
been  regularly  surrendered  by  the  tenant,  and  that  surrender 
accepted  by  the  landlord.^ 

The  rule  concerning  the  time  when  a  notice  to  quit  should  be 
given  is  a  very  important  one,  and  gives  rise  to  much  litigation ; 
but  in  general,  for  tenancies  not  yearly  or  the  modern  estates  at 
will,  it  is  that  period  which  intervenes  between  successive  rent 
days;  while  for  yearly  tenancies,  which  are  so  common  in  Eng- 
land, the  law  requires  a  notice  of  at  least  six  calendar  months, 
ending  with  the  period  of  the  year  at  which  the  tenancy  com- 
menced. The  notice  to  quit  may  either  specify  the  particular  day 
to  quit,  or  in  general  language  refer  to  it  by  the  date  of  the  writ- 
ten notice  as  from  a  next  ensuing  rent  day  to  the  end  of  the  year, 
quarter,  or  month,  as  the  case  may  be ;   but  the  latter  form  seems 

2.  Taylor  Landl.  and  Ten.,  §   470;  of  the  lessee  pays  rent  and  holds  over 

Hall   V.   WadsAvorth,   28  Vt.   410.  after   the   expiration   of   the   orijrinal 

Where  the  tenant  holds  over  after  term    he    is    only    a    tenant    at    will, 

the  expiration  of  his  lease  he  is  pre-  Taylor     Landl.     and     Ten.,     §     525; 

Slimed  at  common  law  to  be  a  tenant  Dietriok    v.    O'Brien,    122    Md.    482, 

from  year  to  year,  although  in  many  89  Atl.  717. 

jurisdictions  he  is  a  tenant  at  will,  3.  Taylor  Landl.  and  Ten.,  §§  471, 

but  in  any  event,  where  the  receiver  473;  Smith  ib.  221,  235. 

53 


§  40  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  IL 

preferable,  since  the  exact  daj  when  a  tenancy  expires  is  still  a 
matter  of  some  legal  uncertainty. 

In  the  United  States  the  whole  subject  of  notice  to  quit  is 
largely  controlled  by  local  statutes,  which  the  practising  lawyer 
should  very  carefully  consult  when  he  wishes  to  know  how  to 
advise  his  client  in  any  particular  case."*  Notices  to  quit  are 
usually  required  to  be  in  writing;  and  while  in  essentials  the 
notice  should  be  explicit,  yet  it  receives  a  liberal  construction  in 
the  courts,  provided  that  in  other  respects  its  language  be  such 
that  the  party  receiving  it  could  not  well  misunderstand  the  mean- 
ing,^ The  notice  should  be  given  in  the  name  of  the  landlord  or 
of  the  tenant  himself,  as  the  case  may  be,  or  of  some  agent  prop- 
erly empowered,  and  it  should  be  addressed  to  the  party  with 
whom  the  privity  of  contract  or  estate  exists;  and  the  service 
should  be  made,  if  possible,  upon  that  party  himself.  But  this 
rule  has  its  reasonable  limitations ;  and  it  is  deemed  of  more 
importance  to  show  that  the  party  to  be  warned  actually  received 
a  notice  sufficiently  clear,  than  that  formalities  were  strictly  com- 
plied with.  As  regards  joint-tenants,  the  address  to  both  being 
suitable,  the  rule  is  that  service  upon  one  will  suffice ;  and  in  case 
the  tenant  is  a  corporation,  notice  should  be  delivered  to  the  proper 
managing  officer  or  officers.^  The  right  to  take  advantage  of  a 
notice  to  quit  —  or  to  follow  it  up,  as  one  might  say  —  may  be 
waived  like  any  forfeiture ;  so,  indeed,  may  one  notice  be  consid- 
ered as  superseded  by  another  subsequently  given;  the  law  pre- 
suming in  all  such  cases  that  the  party  meant  at  first  to  put  an  end 
to  the  tenancy  in  accordance  with  the  terms  of  his  notice,  and  then 
changed  or  modified  his  intention.^ 

4.  Taylor  Landl.  and  Ten.,  ?§  475-  6.  Taylor  Landl.  and  Ten.,  §§  479- 
480,  and  cases  cited;  Smith  ib.  234;  481,  484;  Smith  ib.  240;  Doe  v. 
Doe  V.  Koightley,  7  T.  R.  63  ;  4  Kent  Woodman,  4  East,  228 ;  Doe  v.  Gold- 
Com.  113,  and  notes,  latest  ed.;  win,  2  Ad.  &  E.  143 ;  Doe  v.  Watkins, 
Kemp  V.  Derrett,  3  Camp.   511.  7  East,  551.     See  Liddy  v.  Kennedy, 

5.  Smith  Landl.  and  Ten.  238,  239;  L.  R.  5  H.  L.  134. 

Taylor   ib.,    §    483;    Doe   v.    Jackson,  7.  Doe  v.  Humphreys.  2  East,  237; 

Douff.  175;   Doe  v.  ,  4  Esp.  185;       Doe   v.   Palmer,    16   East,    53;    Good- 
Currier  V.  Barker,  2  Gray,  224.  right  v.  Cordwent,  6  T.  R.  219 ;  Prin- 

54 


CHAP.  II.]  CHATTELS    REAL.  §    42 

§  41.     Contingent  Modes  of  Terminating  a  Tenancy. 

There  are  likewise  contingent  modes  bj  which  a  tenancy  may 
be  determined;  as,  for  instance,  where  the  premises  are  taken  by 
government  for  public  use;  or  (in  case  apartments  are  leased, 
and  not  a  whole  house,  to  a  certain  party)  where  the  building  is 
burned  down ;  or,  conformably  to  expressions  in  the  lease,  in  case 
of  unavoidable  a(?cident  rendering  the  premises  uninhabitable; 
or,  finally,  where  the  leased  premises  are  used  by  the  tenant  for 
some  immoral  purpose, —  for  in  that  case  the  public  must  interfere 
even  though  the  landlord  do  not.^  Leases  must  be  made  for  some 
legal  purpose,  and  if  the  landlord  lets  property  for  an  illegal  use, 
where  he  knows  of  such  intended  use,  he  cannot  recover  rcnt.^ 

§  42.  Mutual  Rights  of  Lessor  and  Lessee;  Distress,  Ejectment, 
etc. 
We  need  not  here  dwell  upon  the  consideration  of  the  mutual 
rights  and  remedies  of  lessor  and  lessee  during  the  continuance 
of  a  term  for  years  and  consequent  upon  its  determ^ination.  These 
matters  belong  properly  to  treatises  on  the  law  of  real  property, 
and  particularly  of  landlord  and  tenant.  It  is  sufficient  to 
observe,  in  passing,  that  the  most  interesting  common-law  reme- 
dies of  a  landlord  are  those  which  aid  him  in  getting  his  rent, 
where  the  lessee  proves  an  unworthy  tenant ;  and  these  are,  in 
particular,  the  process  of  distress  (a  most  suitable  word  for  a 
procedure  which  gave  the  landlord  undue  advantage),  by  which 
one  seizes  his  tenant's  goods  and  chattels,  and  applies  them  in 
satisfaction  of  his  demands ;    and  that  of  ejectment,  by  which  the 

die  V.  Anderson,  19  Wend.  391;  Smith  Ten.,    §§    519-522,    and    ea?es    cited; 

Landl.   and   Ton.   241;   Taylor   lb.,   §§  McMillan  v.  Solomon,  42  Ala.  356. 
485,  486,  and  cases  cited.     See  Deady  9.  Ralston   v.    Boady,   20   Ga.    449'; 

V.  Nicholl,   4   C.   B.   N.   S.   376;    Tay-  Berni    v.    Boyer,    90    Minn.    469.    97 

leur  V.  Wildin,  L.  R.  3  Ex.  303.  N.    W.    121;     see,    however,    Ashford 

8.  Mill     V.     Baer's     Executors,     24  v.   Mace,    (Ark.),   146   S.   W.   474.   to 

Wend.    454;     Graves    v.    Berdan,    26  the    effect    that    mere    knowledge    of 

N.  Y.  498;   Girardy  v.  Richardson,  1  intention  will  not  bar  recovery. 
Esp.  23.     And  see  Taylor  Landl.  and 

55 


§  42a  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

landlord  is  enabled  to  re-enter  upon  the  premises  and  turn  out  a 
refractory  occupant.  Public  sentiment,  in  these  later  years,  is 
directed  strongly  against  the  harsh  process  of  distress  in  American 
law;  the  disposition  being  to  place  a  demand  for  rent  more  upon 
the  footing  of  ordinary  debts,  and  to  make  an  unfortunate  man's 
small  household  goods  exempt  from  attachment,  seizure,  and  exe- 
cution,  altogether ;  yet  it  regards  with  such  favor  remedies  on  the 
ejectment  plan,  that  we  find  both  English  and  American  local 
statutes  conferring  upon  landlords  the  right  to  a  new  and  summary 
process  for  getting  rid  of  obnoxious  individuals  upon  the  premises.^ 
As  to  the  tenant,  the  law  gives  him  suitable  remedies  for  his 
protection  against  the  forcible  and  unwarranted  intrusion  of  a 
landlord,  and  against  the  wrongful  seizure  of  his  property,  at  any 
time  during  the  continuance  of  the  testimony;  and,  upon  its  dis- 
solution, the  right  of  taking  away  in  certain  cases  the  growing 
crops,  or  emblements,  and  of  carrying  off  his  fixtures.^ 

§  42a.     Leases  Follow  General  Rules  of  Contract. 

The  general  rules  of  contract  apply  in  the  construction  of  leases. 
In  all  such  agreements  the  essentials  are  considered  —  the  mutual- 
ity of  responsible  parties,  freedom  from  fraud,  mistake  or  vital 
error,  and  the  like."'     So,  too,  illegality  or  violation  of  the  law 

1.  See  Taylor  Landl.  and  Ten.,  cs.  and  admirable  method;  but  the  work 
13,  14,  16;   Smith  ib.  lectures  5,  6,  8.  needed    his    o\\ti    careful    revision    to 

2.  Taylor  Landl.  and  Ten.,  cs.  12,  make  it  all  that  it  should  have  been, 
15 ;  Smith  ib.  lees.  7,  9.  The  Ameri-  even  as  an  elementary  outline.  Among 
can  practitioner  will  find  John  N.  the  more  voluminous  English  •works 
Taylor^s  Landlord  and  Tenant  his  on  this  branch  of  law  are  those  of 
most    useful    and    compendious    text-  Comj-n  and  Woodfall. 

book  upon  this   important  branch   of  3.  Forfeiture  or  other  harsh  terms 

law,  which  we  have  only  touched  upon  and  conditions  imposed  by  the  lease 

so    far    as    seemeJ   pertinent    to    our  are   construed   against   the    lessor    in 

present     subject.       See     also     H.     G-.  case    of   doubt.      Conneaut    Lake    Ice 

Wood's  Landlord  and  Tenant,  a  work  Co.      v.     Quigley,     225     Pa.     605,    74 

of  later  date.     The  published  lectures  Atl.      648;      Hilsendegen      v.      Hartz 

of   the  late  John  William   Smith,   of  Clothing    Co..     163    Mich.     255,     130 

England,     on    the    same     topic,     are  N.   W.   646;    In   re  Larkey,   214   Fed. 

marked   by   his   usual    clearness,    ele-  867    (N.   J.   D.   C.    1915).      See   Leh- 

gance  of  style,  aptness  of  illustration,  meyer   v.    Moses,   69   Misc.   Rep.    416, 

56 


CHATTELS    REAL. 


§  42b 


CHAP.  II.] 

vitiates,   as  in  ^^^^^ ^  , ^  .„. 

should  always  be  presumed  an  ingredient  intended  by  the  parties. 
A  lease  plainly  expressed  in       ''       "         ■   ■     '  •    -  ^ 

evidence.^ 


contracts  generally;     and  the  existing  local  law 

R  ^resumed  an  ingredient  intended  by  the  parties.'* 

writing  is  not  to  be  varied  by  parol 


§  42b.     Leases  of  Office  or  Apartments. 

In  our  cities  at  the  present  time  many  buildings  are  constructed 
for  office  business  or  home  apartment  use,  with  heating,  lighting, 
water  or  elevator  service  furnished  by  the  lessor;  and  all  cove- 
nants of  this  kind,  as  well  as  those  expressed  or  implied  for 
ingress,  egress  and  other  needful  facilities  for  the  lessee,  receive 
a  just  and  reasonable  interpretation  and  enforcement  in  the 
courts.^  The  rights  of  one  such  tenant  are  subject  to  the  rights 
of  others  on  the  same  premises. 


127  N.  Y.  S.  253  ("waste")  ;  Henry 
Rahr's  Sons  v.  Buckley,  159  Wis.  589, 
150  N.  W.  994. 

Modification  or  cancellation  of  a 
lease  requires  mutual  consent,  but 
mutual  consent  may  accomplish 
clianges.  See  Rhodes  v.  Downing,  13 
Ala.  App.  494,  68  So.  788  (contract 
to  purchase  the  premises). 

4.  As  to  fraudulent  concealment  by 
lessor,  see  Norris  v.  Faddcn,  159 
Mich.  424,  124  N.  W.  54;  Flanagan 
V.  Welch,  220  Mass.  186,  107  N.  E. 
979.  As  to  fraud  by  lessee  .see  Christ- 
hilf  V.  Bollman,  114  Md.  477,  79  Atl. 
208    (purchasing  tax  title). 

As  to  use  of  premises  for  immoral 
purposes,  see  Kelly  v.  Williams,  162 
III.   App.   571. 

As  to  building  ordinance,  etc.,  see 
Kiernan  v.  Music  Co.,  229  111.  494,  82 
N.  E.  410. 

Among  special  covenants  on  a 
lessor's  part,  see  Central  Business 
College  Co.  v.  Rutherford,  47  Col.  Col. 
277,  107  Pac.  279  (racial  restrictions 
in  using  a  hall). 


As  to  lease  regarding  the  sale  of 
liquor,  etc.,  see  Fort  Worth  v.  Fair 
Association,  103  Tex.  24,  122  S.  W. 
254;  Hooper  v.  Mueller,  158  Mich.  595, 
123  X.  W.  24;  In  re  Bradley,  225  Fed. 
307  (Ala.  D.  C.  1915)  ;  Kahn  v.  Wil- 
helm,   118   Ark.   239,   177   S.   W.   403. 

As  to  the  right  to  put  up  electric 
signs,  etc.,  see  Forbes  v.  Gorman,  150 
Mich.,  291,  123  N.  W.  1089;  May  v. 
Breunig,  120  N.  Y.  S.  98  (App.  Term, 
1910). 

A  landlord  can  sell  leased  premises 
subject  to  the  lease.  Peterman  v. 
Kingsley,  140  Wis.  666,  123  N.  W. 
131;  Mulvey  Mfg.  Co.  v.  McKinney, 
184  111.  App.  476.  But  see  Neal  v. 
JefTerson,  212  Mass.  517,  99  N.  E. 
334. 

5.  Diederich  v.  Rose,  228  111.  610, 
31  N.  E.  1140. 

6.  Such  provisions  usually  run  with 
the  land.  See  Storandt  v.  Vogel  & 
Binder  Co.,  140  App.  Div.  671,  125 
N.  Y.  S.  568  (furnish  power  and 
heat)  ;  Springer  v.  Bingham's  Son 
Mfg.  Co.,  151  111.  App.  556;   Bryant 


57 


§  43  THE  LAW  OF  PERSONAL  PKOPEETY.       [PART  II. 

§  43.     Terms  of  Years  in  English  Sense  of  Trust  Arrangements ; 
Mortgage  of  Terms. 

We  have  thus  gone  over  the  main  points  of  the  law  concerning 
terms  for  years ;  meaning,  by  this,  contracts  for  the  possession  of 
land  during  a  specified  time,  which  carry  the  recompense  of  rent. 
But,  as  we  have  said,  the  law  also  contemplates  terms  for  years 
in  the  sense  of  trust  arrangements  which  merely  serve  as  a  species 
of  security  for  borrowed  money.  Such  terms  for  years  are  of 
little  or  no  consequence  in  this  country ;  but  as  they  constitute  an 
important  feature  in  the  property  system  of  England  we  may  give 
them  a  passing  notice.  The  object  of  such  terms  being,  on  the 
one  hand,  to  enable  the  security  to  be  realized,  as  far  as  possible, 
and  on  the  other  to  leave  the  ownership  of  the  land  with  the  per- 
son who  borrows,  subject  to  the  satisfaction  of  the  debt,  the  custom 
is  for  a  long  term  of  years  to  be  created  by  instrument,  say  one 
thousand  years, —  which,  the  reader  will  bear  in  mind,  is  at  the 
common  law  but  a  chattel,  and  personal  property.  This  term  is 
vested  in  trustees,  upon  trust  out  of  the  rents  and  profits  of  the 
premises,  or  by  sale  or  mortgage  for  the  whole  or  any  part  of  the 

V.  Auchmuty,  129  N.  Y.  S.  471   (App.  107   N.   E.   945    (keeping  stairway   in 

Term,      1911),       (fixtures);      Flana-  repair);    Follins    v.    Dill,    221    Mass. 

gan    V.    Welch,    220    Mass.    186,    107  93,  108  N.  E.  929 ;  O'Hanlon  v.  Grubb, 

N.  E.  979;   Kelly  v.  Brewing  Co.,  86  38   App.    D.    C.    251,    372     (heat    and 

N.  J.  L.   471,  9'2  Atl.  282;   Callahan  elevator  service)  ;   Cushier  v.  j^dams, 

V.  Goldman,  216  Mass.  238,  103  N.  E.  76  Misc.  Rep.  219,  134  N.  Y.  S.  561. 

689;    Globe  Assn.   v.   Brega,   190   111.  See   as   to   letting   furniture,    Mor- 

App.  60   (recouped  by  lessee);  White  genthau  v.  Ehrich,  77  Misc.  139;  136 

V.  Beverly  Bldg.  Ass'n,  221  Mass.  15,  N".  Y.  S.   140.     And  see  Valentine  v. 

108  N.  E.  921  (common  stairway)  ;  Wood,  59  Misc.  Eep.  471,  110  N.  Y. 
Epstein    v.    Dunbar,    221    Mass.    579,  S.   990    (keeping  roof  tight)  ;   Ashton 

109  N.  E.  730  (entrance)  ;  Oleson  v.  v.  Margolies,  72  Misc.  Rep.  70,  129 
Fader,  160  Wis.  472,  152  N.  W.  290  N.  Y.  S.  617  (contract  for  board  and 
(storage  rooms)  ;  Follins  v.  Dill,  221  rooms  distinguished). 

Mass.  93,  108  N.  E.  929  (elevator).  As  to  the  innocent  purchaser  from 

And     see    Streep    v.     Simpson,     80  lessor  without  knowledge  of  the  lease- 

Misc.    Rep.    666,    141,    N.    Y.    S.    863  hold   estate,    see   Williams   v.   Young, 

(bedbugs  from  another  flat)  ;  Mathews  78  N.  J.  Eq.  293,  81  Atl.  1118.     And 

v.   Livingston,   86   Conn.   263,   85  Atl.  see  Starr  v.  Church,  112  Md.  171,  76 

529;  Shea  v.  McEvoy,  220  Mass.  239,  Atl.  595    (merger  of  leasehold). 

58 


CHAP.  II.]  CHATTELS    REAL.  §    43 

term,  to  raise  and  paj  the  money  required,  as  it  may  become  due, 
and  upon  trust  to  permit  the  owners  of  the  land  to  receive  the 
residue  of  the  rents  and  profits.  By  this  means,  as  Mr.  Williams 
observes,  the  parties  to  be  paid  have  ample  security  for  their 
money ;  for  not  only  have  the  trustees  the  right  to  receive  on  their 
behalf  (if  they  think  fit)  the  whole  accruing  income  of  the  prop- 
erty, but  they  may  at  once  dispose  of  it  for  one  thousand  years  to 
come, —  or  whatever  the  term's  length.  On  the  other  hand,  the 
feelings  of  the  owner  are  consulted.  Until  the  time  of  payment 
comes,  he  may  receive  the  rents  and  profits  by  virtue  of  the  trust ; 
and  where  part  of  the  rents  are  required  for  the  purposes  of  the 
loan,  the  trustees  must  pay  the  residue  to  the  owner.  But,  should 
non-payment  by  the  owner  render  a  sale  necessary,  the  trustees 
will  be  able  to  assign  the  property  or  any  part  of  it  to  a  purchaser 
for  the  term  in  question  without  rent.  Yet  until  these  measures 
have  to  be  enforced,  the  ownership  of  the  land,  subject  to  the 
satisfaction  of  the  debt  secured,  remains  as  before.'' 

Under  such  circumstances  we  find  that  there  is  a  loan  of  money 
made  upon  collateral  security ;  this  security  being  a  chattel  inter- 
est, namely,  a  term  of  years.  The  trustees,  to  whom  the  term  has 
been  granted,  have  an  inferior  interest  in  the  land,  less  than  a  free- 
hold ;  and  all  this  time  the  borrower  retains  the  legal  seisin,  so 
that  he  may  convey  the  land,  or  devise  it  by  will,  or  it  may  descend 
to  his  heir.  But  this  term  remains  outstanding;  and  whenever 
there  is  default  in  paying  over  the  money,  the  trustees  come  in 
and  interfere  with  the  beneficial  enjoyment  of  the  lands  and  tene- 
ments, whoever  may  be  the  nominal  owner  for  the  time  being. 
The  security  must  respond  for  the  debt  until  the  debt  be  cancelled. 
A  certain  proviso,  known  as  cesser,  is,  however,  generally  inserted 
in  such  deeds  of  trust,  so  that  the  term  may  cease  as  soon  as  the 
loan  has  been  paid  off,  and  the  objects  of  the  trust  are  fully  accom- 
plished. Hence,  though  the  lease  run  for  a  thousand  years,  there 
may  possibly  be  a  very  speedy  collapse.^ 

7.  Wms.    Real    Prop.    22d   Eng.   ed.  8.  Wms.    Roal    Prop.   22d    Encr.    ed. 

545;  Sugd.  Vend,  and  Purch.  13th  ed.  546.  And  see  further,  ib.  380-388, 
508.  and   4   Kent  Com.   86-93,  as  to  other 

59 


§  44  THE  LAW  OF  PERSONAL  PKOPERTY.       [pART  II. 

Transactions  of  this  sort,  then,  constitute  a  species  of  mortgage ; 
and  it  is  said  that  the  custom  of  mortgaging  terms  of  years 
originated  in  the  doubt  once  entertained  by  conveyancers  (though 
now  known  to  be  without  foundation),  whether  a  mortgage  of  real 
estate  would  not  subject  the  property  mortgaged  to  dower,  and 
the  like  incidents  on  the  mortgagee's  part.^ 

§  44.     Whether  Mortgages  Are  Chattels  Real. 

Some,  indeed,  might  be  disposed  to  class  all  mortgages  affecting 
real  estate  with  chattels  real;  though  not,  we  think,  with  pro- 
priety. For  every  mortgage  transaction  consists  of  two  elements : 
first,  the  money  debt  thereby  created,  which  is  plainly  a  chattel 
personal;  and,  second,  the  security  given,  which  may  be  either 
a  chattel  personal  —  as  in  the  case  of  a  mortgage  of  household 
furniture,  or  of  a  ship  —  or  (as  we  have  just  seen)  a  chattel  real; 
or  real  estate,  which  is  no  chattel  at  all.  And  the  doctrine  of 
equity,  which  regulates  real-estate  mortgages  at  the  present  day, 
is  that  the  mortgage  debt  is  simply  a  sum  of  money  loaned  upon 
the  security  of  the  land;  that  before  foreclosure  and  sale, — 
which  in  the  great  majority  of  cases  need  not  actually  take  place 
at  all, —  the  fee  of  the  land,  with  the  right  to  enjoy  rents  and 
profits,  still  continues  in  the  borrower  or  mortgagor;  and  hence 
that  the  lender  has,  meanwhile,  simply  a  chattel  personal  in  the 
debt,  and  the  mortgage  note  which  represents  that  debt.^ 

But  the  common  law  regarded  a  real-estate  mortgage  rather  as 
an  absolute  conveyance  of  the  land,  subject  to  an  agreement  for 
reconveyance,  on  a  certain  given  event,  namely,  the  payment  of 
the  money  borrowed;  and  such,  perhaps,  is  still  the  usual  literal 
tenor  of  a  mortgage  deed.  Hence  writers  were  fonnerly  in  the 
habit  of  classing  mortgages  with  estates  in  land  upon  condition; 

technical    methods   of   getting   rid    of  even    in   England   under   the    Convey- 

such    incumbrances,    as   by   a   merger  ancing  Acts  of   1881   and   1911.      See 

in  the  freehold.     And  see  Stat.  8  &  9  Williams  on  Real  Property  22d  Eng. 

Vict.,  c.  112.  Ed.   567-577. 

9.  3    Ewell's    Bl.    Com.    158.      This  1.  See  chapter  on  Mortgages,  infra. 

form  of  mortgage  has  been  displaced 

60 


CHAP.  II.]  CHATTELS    REAL.  §    44 

under  which  aspect  of  the  law  a  mortgagee  certainly  might  be 

thought  to  have  an  interest  somewhat  analogous  to  a  chattel  real. 

And  the  designation  "  chattels  real "  was  not  ill  applied  to  Welsh 

mortgages,  estates  by  statute  merchant  or  statute  staple,  estates 

';oy  elegit,  and  the  like, —  all  of  which  have  passed  into  oblivion 

since  Blackstone's  day ;   these  being  regarded  as  conditional  estates 

in  the  creditor,  for  whoso  benefit  the  lands  were  sequestered  or 

withheld  from  the  true  owner  until  a  debt  should  become  fully 

satisfied.^ 

2.  See  2  Ewell's  Bl.  Com.,  c.  10. 


01 


CHAPTER  III. 


CHATTELS    PEKSOXAL. 


§  45.     What  Are  Chattels  Personal. 

The  term  "  chattels  personal  "  or  "  personal  chattels,"  as  the 
reader  will  gather  from  what  has  already  been  said,  applies  to 
what  is,  strictly  and  properly  speaking,  movable  property,  or  that 
property  which  is  capable  of  being  put  in  motion  and  taken  from 
place  to  place.  Not  only  cattle,  wagons,  household  furniture, 
clothing,  jewels,  provisions,  and  such  other  things  of  a  domestic 
character  as  are  moved  about  w^hen  a  man  changes  his  abode, 
are  chattels  personal ;  but  ships,  cars,  locomotive  engines,  and  the 
like,  which  one  naturally  associates  with  extensive  business  opera- 
tions, and  not  with  the  portable  convenience  of  individuals. 
Money  is  a  chattel  personal ;  and  so  are  those  other  species  of 
property  whose  value  we  so  constantly  express  by  reference  to  the 
money  standard,  but  which  of  themselves  are  only  incorporeal 
rights  to  be  satisfied  in  money;  such  as  insurance  policies,  life 
annuities,  legacies,  and  distributive  shares,  patent-rights  and  copy- 
rights, shares  in  stock  companies,  bank  deposits,  and  even  bills 
and  notes  and  negotiable  instruments  generally.  All  debts  and 
claims  to  be  satisfied  in  money  are,  indeed,  chattels  personal; 
whether  the  debt  be  unsecured,  or  aided  by  lien,  pledge,  or  mort- 
gage ;  and  whether  the  claim  arise  upon  a  contract,  or  be  for 
damages,  liquidated  or  unliquidated,  by  reason  of  some  injury 
sustained. 

Whatever  chattel  is  not  a  chattel  real  is  a  chattel  personal ;  and 
hence,  to  recur  to  common-law  distinctions  once  more,  every  spe- 
cies of  property  which  lacks  the  two  characteristics  of  real  estate  — 
to  wit,  immobility  as  to  place  and  indeterminate  duration  as  to 
time  —  and  which  is  not  annexed  to  real  estate,  is,  and  can  be, 
nothing  more  nor  less  than  a  chattel  personal.^ 

1.  See  §§  6,  7. 

62 


CHAP.  III.]  CHATTELS    PERSONAL.  §    47 

§  46.     Significance  of  the  Word  "  Personal  "  in  This  Connection. 

The  choice  of  two  reasons  for  the  application  of  the  word  "  per- 
sonal "  to  chattels,  in  this  connection,  is  given  the  reader  by 
Coke :  "  because,  for  the  most  part,  they  belong  to  the  person  of 
a  man,  or  else  for  that  they  are  to  be  recovered  by  personal 
actions."  ^  Blackstone  selects  of  these  the  former  and  more  nat- 
ural reason.^  But  Mr.  Williams,  who  has  taken  pains  to  examine 
the  doctrine  of  chattels  in  its  historical  development,  submits  that 
the  latter  reason  is  most  probably  the  true  one.'*  Regarding  the 
wants  of  a  philosophical  classification  as  paramount  to  all  anti- 
quarian niceties,  we  shall  prefer  to  avail  ourselves  of  the  choice 
of  reasons  afforded  by  Coke,  and  to  choose  the  more  appropriate. 
We  say,  then,  that  the  word  "  personal  "  is  properly  applied  to 
chattels  of  this  description,  because  of  the  facility  with  which  they 
may  be  carried  so  as  to  attend  the  person  of  the  owner.  They  are 
movables,  in  fine ;  and  were  it  not  for  chattels  real,  which  consti- 
tute another  species  of  personal  property,  we  might  always  use 
the  expressions  "  chattels  personal  "  and  "  personal  property  "  as 
synonymous. 

§  47.     Corporeal  Chattels  First  to  be  Considered ;  Next  Chattels 
Incorporeal. 

We  now  proceed  to  treat  of  chattels  personal,  in  the  present 
chapter,  under  the  two  leading  heads  of  corporeal  and  incorporeal. 

Such  things  as  one  may  see  or  touch  —  in  other  words,  those 
which  are  the  objects  of  the  bodily  senses  —  are  corporeal;  and 
such  as  cannot  be  seen  or  touched,  but  have  only  an  ideal  or 
abstract  existence, —  or,  as  the  civilians  had  it,  those  which  are 
only  rights, —  are  incorporeal.  It  should  be  borne  in  mind  that 
the  corresponding  classes  usually  made  by  our  common-law  ^\Tit- 
ers  are  those  of  choses  (or  things)  in  possession,  and  choscs  (or 
things)  in  action.^ 

2.  Co.  Lit.  118  b.  4.  Wms.  Pers.  Prop.  17th  Eng.  ed.  5. 

3.  2  Ewell's  Bl.  Com.  16,  384.  5.  See  supra,  c.  1. 

63 


§  48  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

§  48.     Corporeal  Chattels;  Animals,  Tame  and  Wild. 

And,  jirst,  as  to  those  chattels  personal  which  are  of  a  corporeal 
nature,  or  things  in  possession.  Among  these,  animals  occupy  a 
prominent  place  in  the  affections  of  mankind,  as  the  subject  of 
property ;  the  word  "  animal "  embracing  all  beings,  not  human, 
which  live  and  move.^  Animals  are  movables  in  a  double  sense; 
for  not  only  can  they  be  carried  from  place  to  place,  but,  unlike 
other  chattels,  they  have  the  power  of  voluntary  motion,^  they 
can  move  themselves. 

i!^ot  only  the  law  of  England,  but  that  of  nature  and  of  all 
civilized  nations,  distinguishes  living  animals,  regarded  as  the 
subjects  of  ownership,  into  two  leading  classes :  the  one  consisting 
of  such  animals  as  are  tame,  domitce;  the  other  of  those  which 
are  wild,  ferce  naturoe?  To  the  former  class  belong  what  we  call 
domestic  animals,  like  horses,  cattle,  sheep,  and  poultry.  In  ani- 
male  domitce  one  may  have  an  absolute  property  as  in  ordinary 
chattels, —  that  is  to  say,  he  may  own  them  absolutely, —  just  as 
much  as  he  may  the  hay,  corn,  or  other  fodder  which  he  gives 
them  to  eat.  For,  to  use  Blackstone's  words,  they  continue  per- 
petually in  his  possession  and  occupation,  and  will  not  stray  from 
his  house  and  person  unless  by  accident  or  fraudulent  enticement, 
in  either  of  which  cases  the  owner  does  not  lose  his  property.^ 
Perhaps,  however,  it  would  be  better  to  say  that,  being  tame 
animals,  they  are  not  at  liberty  to  stray  from  the  original  owner, 
or  to  transfer  the  title  in  themselves  of  their  own  will  to  others. 
In  animals  ferce  naturce,  or  wild  animals,  on  the  other  hand, 
whether  worth  owning,  or,  like  vermin,  valueless,  one  can  have 
no  absolute  property  or  right  of  ownership  while  they  are  in  the 
state  of  nature.  They  do  not  remain  willingly  in  any  one's  pos- 
session and  occupation,  else  they  would  not  be  wild  animals  at  all. 
So  long  as  they  continue  at  large,  untamed  and  fierce,  they  are 

6.  See  Bouv.  Diet.  "Animal."  8.  2   Swell's  Bl.  Com.  309;   2  Mod. 

7.  2  Ewell's  Bl.  Com.  390;  2  Kent  319.  A  domestic  animal  is  in  its 
Com.  348 ;  2  Burge  Col.  and  For.  owner's  possession  when  in  its  accus- 
Laws,  12,  20.  tomed  range.     Jones  v.  State,  3  Tex. 


App.  398. 


64 


CUAP.  III.]  CHATTELS    PERSONAL.  §    48 

not  the  subjects  of  ownership :  thej  belong  to  a  person  only  while 
they  are  in  his  actual  keeping  and  under  his  control;  and  if  at 
any  time  they  regain  their  natural  liberty,  with  or  without  his 
consent,  his  dominion  instantly  ceases,  they  return  to  the  com- 
mon stock,  and  any  one  has  the  right  to  seize  and  appropriate 
them  afterwards,  if,  at  least,  he  do  so  by  an  act  not  wrongful.' 
And  this  is  why  the  civilians  have  asserted  that  wild  animals  are 
not  possessed  per  se,  but  because  of  the  place  which  the  owner  of 
the  estate  has  provided  for  them.^  Yet  an  animal,  once  wild,  may 
have  changed  its  habits  and  become  tame;  and  then  the  rule  of 
domitoe  will  apply  to  determine  the  rights  of  ownership. 

^Natural  liberty,  the  reader  has  perceived,  are  words  applied  in 
this  distinction  between  tame  and  wild  animals.  The  theory  of 
the  law  appears  to  be  this:  that  in  a  state  of  nature,  all  animals 
have  a  sort  of  liberty,  which  is  inconsistent  with  the  condition 
of  being  held  in  serv'itude  and  possessed  or  owned  by  man;  that 
this  natural  liberty  is,  nevertheless,  something  which  man  may 
in  any  instance  lawfully  disregard,  by  bringing  the  animal  into 
subjection  to  himself;  that  when  this  subjection  is  merely  a  forci- 
ble one,  so  that  the  animal  might  be  considered  as  compelled  to 
remain  and  obey  against  its  will,  this  natural  liberty  is  suppressed 
and  not  extinguished,  and  a  man's  right  of  property  is  qualified, 
lasting  only  so  long  as  he  can  keep  the  animal  under  control ;  but 
that  when  the  animal,  by  becoming  tame  or  reclaimed,  is  con- 
sidered to  have  voluntarily  surrendered  its  natural  liberty,  it 
thereupon  becomes  the  subject  of  absolute  ownership,  and  so 
remains  ever  after;  for  its  natural  liberty  is  finally  extinguished. 
And  the  offspring,  being  born  into  the  state  of  servitude,  and 
brought  up  with  mankind,  are  at  least  presumed  to  have  no 
natural  liberty,  and  can  likewise,  if  not  returning  to  a  wild  state, 
be  owned  absolutely.  The  wild  animal  has  some  spark  of  natural 
liberty;  the  tame  animal  has  none. 

9.  2    Bl.    Com.    39-1-394;     2    Kent  1.  Pothier,  tit.  Chose3,  part  2,  §  1 ; 

Com.   348,  349 ;    Blades  v.  Higgs,   11      2  Burge  Col.  and  For.  Laws,  12. 
H.   L.   C.   621;    Bouvier's   Diet.   "Ani- 
mal." 

5  G5 


§  49  THE  LAW  OP  PERSONAL  PROPERTY.       [pART  II. 

§  49.     Animals,  Tame  and  Wild;   Subject  Continued. 

It  would  be  found  difficult  to  determine  with  precision  what 
animals,  on  general  principles,  are  wild  and  what  are  tame.  From 
their  long  and  intimate  association  with  mankind,  we  pronounce 
the  horse,  the  dog,  the  sheep,  the  ox,  and  other  creatures  which  are 
constantly  found  in  and  about  our  homes,  to  be  tame  animals ; 
domestic  animals  thej  are  often  called.  Yet  some  naturalists 
assert  that  even  these  owe  their  docility  only  to  the  hand  of  man 
which  tamed  them,  and  that  all  animals  were  originally  wild ;  ^ 
a  doctrine  consistent  with  the  theory  of  natural  liberty,  and  one 
which  the  Latin  term  domitoe  applied  to  tame  animals  of  itself 
indicates.  Grotius  seems  to  have  thought  otherwise ;  for  he  says 
that  the  reason  why  some  creatures  fly  and  avoid  us  is  not  the  want 
of  gentleness  and  mildness  on  their  side,  but  on  ours."'  All  that 
may  fairly  be  affirmed  is,  after  all,  that  wild  creatures  exhibit  a 
more  intractable,  a  more  rough  and  stubborn  disposition,  than 
the  tame."^  And  the  common  law,  wisely  avoiding  theoretical 
discussions  on  this  point,  refers  the  question  whether  an  animal 
is  wild  or  tame,  in  each  case,  to  our  knowledge  of  its  habits  and 
those  common  in  the  same  species,  as  derived  from  human  experi- 
ence and  all  the  circumstances  of  the  case.^ 

In  wild  animals  one  may  acquire  a  qualified  or  special  prop- 
erty by  occupancy  alone ;  for  it  is  enough  to  catch  and  keep,  so 
that  the  creature  cannot  escape  and  regain  its  natural  liberty. 
Almost  all  the  elementary  writers  agree,  however,  that  the  animal 
must  have  been  brought  within  the  power  of  the  pursuer  before 
the  right  of  ownership  can  vest  in  him.^  If  the  animal  once 
becomes  deprived  of  its  natural  liberty,  by  the  aid  of  nets  or 
snares  or  otherwise,  and  so  is  brought  within  the  pursuer's  power 
and  control,  he  is  constituted  its  lawful  owner,  in  the  qualified  or 

2.  See  2  Kent  Com.  348,  349,  citing  5.  2  Kent  Com.  349 ;  2  Ewell's  Bl. 
Buffon's  Natural  History.  Com.  391. 

3.  Grotius  Hist.  Belg.  cited  in  Puff.  6.  See  2  Kent  Com.  349;  2  Bl.  Com. 
Droit  Nat.  lib.  4,  c.  6,  §  5.  391:   Pierson  v.  Post,  3  Caines,   175; 

4.  See  Puff.  ib.  on  this  subject.  Buster  v.  Newkirk.  20  Johns.  75. 


CHAP.  III.]  CHATTELS    PERSONAL.  §    49 

special  sense.'^  But  it  appears  that  he  must  have  thus  far  pur- 
sued his  labor  to  a  successful  result.  For  it  has  been  held  in  New 
York  that  the  mere  pursuit  and  being  within  view  of  an  animal 
during  the  chase  does  not  create  a  right  of  property  as  against  one 
who  kills  and  takes  it  afterwards.^  Wounding  a  wild  beast  so 
severely  that  it  may  be  readily  captured  would  seem  to  give  title 
if  the  hunter  followed  up  his  advantage  with  reasonable  diligence. 
Yet  the  civilians  differed  on  this  question,  and  Justinian,  it  is 
said,  adopted  the  opinion  that  the  right  of  property  in  a  wounded 
wild  beast  could  not  attach  until  the  beast  was  actually  taken.^ 
While  this  qualified  or  special  right  of  property  lasts  it  is  as 
much  under  the  protection  of  the  law  as  any  other  right,  and 
remedies  for  its  invasion  are  given  accordingly.'  But,  as  we  have 
shown,  animals  ferce  naturce  give  the  right  of  ownership  to  man 
only  so  long  as  they  continue  in  his  actual  keeping;  and  if  at 
any  time  they  regain  their  natural  liberty  his  right  instantly 
ceases.^  Thus  the  right  which  he  acquires  by  force  he  must  main- 
tain by  force ;  he  must  first  catch  and  then  keep.  To  this  rule 
concerning  wild  animals  an  exception  is  found ;  namely,  where 
the  animal  has  grown  tame  and  allowed  itself  to  be  more  thor- 
oughly the  property  of  mankind,  submitting  voluntarily,  so  to 
speak,  to  the  laws  of  civilized  society.  Whether  this  voluntary 
submission  has  taken  place  can  only  be  judged  by  observing  the 
habits  of  the  creature  and  those  of  its  kind ;  and  hence  is  the  com- 
mon-law maxim,  that  if  an  animal  fercB  naturce  appears  to  have, 
whenever  it  goes  off,  the  intention  of  coming  back, —  animus 
revertendi, —  which  intention  is  manifested  by  habitual  return  to 
its  master,  his  right  of  property  is  still  preserved,  notwithstand- 

7.  2  Kent  Ck)m.  349;   2  Ewell's  Bl.       tiniies  in  fresh  pursuit.     See  3  Kent 
Com..  391.  Com.    349    n. ;    Laws   N.   Y.,   April    1, 

8.  Pierson  v.   Post,   3   Caines,   175;       1844,  c.  109. 

Buster    v.    Newkirk,    20    Johns.     75.  9.  Inst.  2,  1,  13;  cited  2  Kent  Com. 

But   the   New   York   legislature    have  343. 

enlarged   tliis  right,   in  certain  game  1.  Finch's  Law,   176;   2  Kent  Com. 

laws,  so  as  to  give  title  to  one  who  348  ;  2  Ewell's  Bl.  Com.  393. 

starts  the  animal,  so  long  as  lie  con-  2.  2  Ewell's  Bl.  Com.  392. 

67 


§  49  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II, 

iiig  the  animal  goes  sometimes  astray.''  Wild  animals  killed 
belong  absolutely  to  the  killer,  supposing  his  act  not  wrongful  nor 
done  on  another's  behalf.'* 

Two  other  instances  are  given  by  our  elementary  writers  where 
animals  ferce  natures  may  be  regarded  as  the  subject  of  a  qualified 
or  special  property.  The  first  —  which  might,  without  violence, 
be  referred  to  the  principles  we  have  already  laid  down  —  is  said 
to  be  in  case  of  their  own  inability,  ratione  impotentice ;  as  when 
hawks,  herons,  or  other  birds  build  in  my  trees,  or  coneys  or 
other  creatures  burrow  in  my  land  and  have  young  ones  there; 
whereby  I  gain  a  qualified  property  in  those  young  ones  till  such 
time  as  they  can  fly  or  run  away.^  The  second  is  propter  privi- 
legium,  or  where  one  has  a  special  privilege  of  hunting,  taking, 
and  killing,  to  the  exclusion  of  others.^  But  special  privileges  of 
this  latter  sort  conferred  by  legislation  are  hostile  to  the  policy 
of  a  free  government;  though  there  can  be  no  dispute  as  to  the 
right  of  the  owner  of  lands  to  keep  his  own  privileges  or  to  give 
to  another  part  of  them,  upon  such  consideration  as  may  seem 
proper;  whether  it  be  to  shoot  his  animals  or  to  eat  them  after 
they  are  shot  by  himself;  avoiding,  of  course,  all  wanton  destruc- 
tion, so  far  as  may  be  required  by  law.  And  we  may  add  that 
the  common  law,  differing,  perhaps,  in  this  respect  from  the  civil 
law,  insists  that  one  who  takes  or  kills  a  wild  animal  on  another's 
land  gains  no  title  if  a  trespasser.^ 

3.  2  Swell's  Bl.  Com.  332;  Inst.  2,  11  H.  L.  C.  621;  Rigg  v.  Lonsdale, 
1,  15;  Finch's  Law,  177;  2  Kent  Com.       1  Hurl.  &  N.  9'23. 

348.  Our   modern    law   inclines   to   treat 

4.  Blades  v.  Hif^o^,  11  H.  L.  C.  ^'^^  ™°^^  useful  and  less  dangerous 
g2i  animals   with    special    favor.      As   to 

_^  ou-ii      T-D-i/-i/~i       dogs  compare  Sabin  v.  Smith,  26  Cal. 

5.  Queen  v.  Shickle,  L.  E.  1  C.  C.  '^  ^        _  ^    '. 

App.  676,  147  Pac.  1181;  Colhnson  v. 

Wier,  91  Mis<?.  501,  154,  N.  Y.  S.  951 

6.  See  2  Ewell's  Bl.  Com.  394,  395,  ^^^^  trespassing  and  chasing  poul- 
419;  12  Mod.^144;  Blades  v.  Higgs,  ^^^^^  ,  -g^^^j^^  ^.  ^^^^^^  ^^3  ^.  ^  3^ 
11  H.  L.  C.  621.  ^g  jj-   -g    270   (shooting  a  chained  dog 

7.  The  owner  of  land  has  property  on  owner's  premises)  ;  Legault  v. 
in  game  killed  thereon  by  a  trespasser.  Malader,  156  Wis.  507,  145  N.  W. 
Blades  v.  Higgs,  13  C.  B.  N.  S.  844;  1081;   Missio  v.  Williams,  129  Tenn. 

68 


CHAP.  III.]  CHATTELS    TEKSOXAL.  §    50 

§  50.     Animals,  Tame  and  Wild;  Subject  Continued. 

Among  creatures  wliicli  are  usually  classed  as  wild  in  species, 
and  yet  are  frequently  found  tame,  may  be  mentioned  deer,  hares, 
rabbits,  pheasants,  partridges,  and  game  generally.  These  are 
often  protected,  to  some  extent,  by  statute  law,  for  the  reason  that 
they  are  useful  to  man,  as  food  or  otherwise,  and  their  promiscu- 
ous and  wanton  destruction  is  forbidden.  Rooks,  however,  and 
other  birds  which  molest  rather  than  benefit  society,  may  be  dis- 
turbed with  more  impunity.^  Doves  are  classed  as  animals  fercB 
natures,  and,  as  such,  are  not  the  subjects  of  larceny  except  when 
in  the  care  and  custody  of  the  owner ;  but  where  they  are  kept  in 
a  dovecot,  though  with  full  opportunity  to  fly  away,  a  person  may 
be  liable  to  indictment  for  stealing  them.^  Sportsmanship  is  an 
accomplishment  which  suffers  in  the  progress  of  social  refinement. 
And  young  animals,  tame  and  practically  in  the  power  and 
dominion  of  an  owner,  may  be  the  subject  of  larceny,  even  though 
liable  to  become  wild  later;  ^  besides  conferring  the  usual  civil 
rights  and  responsibilities  upon  the  owner ;  ^  and  so  with  other 

504,   167   S.  W.  473,  L.  R  A.    (1915)  145   N.    W.    1020,    51    L.   R.   A.   N.    S. 

Atl.  500;  McCallister  v.  Sappingfield,  45,   n.      See   each   local   code   on   this 

72  Ore.  422,  144  Pac.  432 ;   Rowan  v.  point.      And    see    note    next    section. 

Sussdorff,  147  App.  Div.  473,  132  N.  Phillips  v.  Garner,  106  Miss.  828,  64 

Y.    S.    550;    McDerraont   v.    Taft,    83  So.   735,   52    L.   R.   A.   N.    S.   397,  n. 

Vt.   249,   75  Atl.   276.  (a     vicious     monkey)  ;     Dunning     v. 

See  further,  American  Express  Co.  Crowfutt,  81   Conn.   101,   70  Atl.   630 

V.   Parcarello,    162    S.   W.    926    (Tex.  (right  to  offspring)  ;  First  Nat.  Bank 

Civ.    App.     1914),     (vicious    mule);  v.     Eichmeier,     153     Iowa,     154,     133 

Gunderson  v.  Bierson,  80  Wash.  459,  N.  VV.  454;  Sargent  v.  Slack,  47  Vt. 

142    Pac.    G85;    Wulfe    v.   Am.    Pack.  674. 

Co.,    186    111.    App.    292;    Graves    v.  3    g^^  ^^^,^ra  v.   Sockett.  2   B.  & 

Dunlap,  87  Wash.  648,  152  Pac.  532,  ^    g.^.^^              B^j,        j 

L.  R.  A.    (1916),  c.  338,  n.     The  will  ^    ^                    ,.,         ^, 

,,,,.,,                      a-     .        •      1  9-  Commonwealth  v.  Chace,  9  Pick, 

of  the  legislature  may  affect  animal  ^     .             ^,      , 

1  •      o^  T.r-       « ,'^    -.  .-^  >T   -IT    CI  l;"' ;  Regina  v.  Cheafor,  15  Jur.  1065; 

ownership,  86  Misc.  246,  140  N.  Y.  S.  , '^  „    „                                                 ' 

"  8  E.  L.  &  Eq.  598. 

OlJ. 

As  to  owner's  liability  for  injuries  1-  Q^^^^n  v.   Sliicklo,  L.   R.   1   C.  C. 

by  the   animal,   see   Dix   v.   Somerset  •^"'^• 

Coal   Co.,   217  Mass.   146,   104   N.   E.  2.  See,  as  to  a  young  buffalo,  Ulery 

433;  Warrick  v.  Farley,  95  Neb.  565,  v.  Jones,  81  111.  403. 

GO 


§  50 


THE  LAW  OF  PERSONAL  PKOPEKTY. 


[part  II. 


creatures  actually  tame  and  owned  for  the  time  being.  Yet  cases 
may  be  found  which  proceed  upon  the  doctrine  that  while  some 
animals  fcrcB  naturcB  may  be  so  far  subject  to  the  ownership  of 
one  person  as  to  give  him  the  usual  civil  remedies,  another  is 
not  criminally  liable  if  he  molest  them,  for  the  reason  that  they 
are  of  too  base  a  nature ;  and  to  this  category  have  sometimes 
been  referred  sables,  ferrets,  coons,  and  the  like,  which,  though 
sometimes  worth  money,  are  judicially  pronounced  to  be  unfit 
for   food.^     Herds   of   cattle   on   our   remote   ranches    are   often 


3.  See  Rex  v.  Brooks,  4  C.  &  P.  131 ; 
Norton  v.  Ladd,  5  N.  H.  203;  Rex  v. 
Searing,  Russ.  &  Ry.  350;  Warren  v. 
State,  1  Greene  (Iowa),  106;  n.  to  8 
E.  L.  &  Eq.  598.  See  also  2  Ewell's 
Bl.  Com.  393.  A  more  satisfactory- 
rule  would  seem  to  be  to  refer  cases 
of  this  sort  to  the  test  of  money 
value,  as  in  other  instances  of  steal- 
ing, instead  of  mere  fitness  for  food. 
Thus  it  has  been  held  that,  an  otter 
being  valuable  for  its  fur,  the  steal- 
ing of  the  animal  from  its  owner  is 
larceny,  if  it  be  reclaimed,  confined, 
or  dead.  State  v.  House,  65  N.  C. 
315.  But  in  order  to  sustain  a  con- 
viction of  larceny  the  animal  must 
have  been  actually  owned  when  the 
offender  took  it.     L.  R.   1  C.  C.  315. 

Under  the  criminal  law  of  some  of 
our  States,  a  dog  is  not  the  subject  of 
larceny.  State  v.  Lymus,  26  Ohio  St. 
400;  Ward  v.  State,  48  Ala.  161;  State 
V.  Doe,  79  Ind.  9'.  Otherwise  in  many 
other  States.  Harrington  v.  Miles,  11 
Kan.  480 ;  Mullaly  v.  People,  86  N.  Y. 
365.  The  regulation  of  the  keeping 
of  dogs,  so  as,  in  the  interest  of  the 
public,  to  authorize  their  summary 
destruction  if  wholesome  precautions 
are  not  followed,  is  within  the  police 
power  of  the  legislature.  Blair  v. 
Forehand,  100  Mass.  136.  See  Heis- 
rodt  V.  Hackett,  34  Mich.  283. 

7 


There  is  a  fundamental  right  in 
extreme  cases,  recognized  and  defined 
by  various  local  statutes,  to  destroy 
animals  doing  damage  to  one's  own 
property.  Marshall  v.  Blackshire,  44 
Iowa,  475;  Aldrich  v.  Wright,  53  N. 
H.  398.  And  one  has  a  natural  right 
to  defend  his  own  domestic  animals 
from  external  attacks,  as  where  a  dog 
worries  sheep.  But  one  should  not 
kill  another's  animal  merely  for  being 
on  his  premises,  while  doing  no  dam- 
age there.  Brent  v.  Kimball,  60  111. 
211.  Where  the  emergency  is  not  peril- 
ous, driving  the  intruding  creature 
off  is'  the  more  appropriate  course,  or 
else  distraining  for  doing  damage. 
Hamlin  v.  Mack,  33  Mich.  103,  66 
Barb.  345.  And  see  general  works  on 
Criminal  Law.  Distress  and  sale  of 
trespassing  animals  is  provided  in 
some  American  codes.  And  see  "  Es- 
trays,"  vol.  ii.,  post.  The  duty  to 
fence  one's  premises  is  sometimes  en- 
joined in  this  connection. 

Action  lies  against  the  owner  of  an 
animal  —  e.  g.,  a  ferocious  dog  —  for 
injury  inflicted  upon  one  who  is  free 
from  blame,  on  proof  that  the  animal 
was  vicious  and  that  the  owner  knew 
it.  The  right  to  bring  such  suits, 
whether  because  of  injury  to  one's 
person  or  property,  is  also  regulated 
and  defined  by  various  modem  stat- 

0 


CHAP.  III.] 


CHATTELS    TERSOXAL. 


§  50 


branded  by  the  owner,  in  token  of  his  title ;  and  State  codes  pro- 


utes.  A  propensity  to  bite  in  sport 
or  malice  makes  no  difference.  See 
Wright  V.  Pearson,  4  Q.  B.  582; 
Worth  V.  Gilling,  L.  R.  2  C.  P.  1,  L.  R. 
2  C.  P.  4;  Rider  v.  WTiite,  65  N.  Y.  54; 
Laverone  v.  Mangianti,  41  Cal.  138; 
Linnehan  v.  Sampson,  126  Mass.  506; 
52  Vt.  251;  Meibus  v.  Dodge,  38  Wis. 
6;  East  Kingston  v.  Towle,  48  N.  H. 
57;  Congress  Spring  Co.  v.  Edgar,  99 
U.  S.  Supr.  645;  Kightlinger  v.  Egan, 
75  111.  141;  Fallon  v.  O'Brien,  12  R.  I. 
518.  In  some  States  the  owner's 
scienter  or  knowledge  of  vice  need 
not  be  alleged  or  proved.  Newton  v. 
Gordon,  72  Mich.  642.  The  gist  of 
'such  cause  of  action  appears  to  be 
negligence  on  the  part  of  the  injuring 
animal's  owner,  the  injured  party 
being  free  from  contributory  negli- 
gence. And  see  general  works  on 
Torts,  Negligence,  etc. 

In  cases  of  injury  of  this  kind,  the 
fundamental  theory  of  a  scienter  ap- 
pears to  be  that  dogs  (and  perhaps 
cats),  living  usually  in  an  owner's 
house,  and  in  companionship  with  the 
household,  are  presumably  sufficiently 
tame  and  harmless  to  go  at  large. 
But  police  regulations  are  found  for 
muzzling  dogs  at  certain  seasons  of 
the  year  and  requiring  special  precau- 
tions, which  an  owner  must  observe. 
Whenever  an  owner  knows  that  his 
dog  is  vicious  and  likely  to  harm 
others,  if  at  large,  in  person  or  prop- 
erty, he  is  bound  to  guard  accordingly 
(as  by  chain  or  muzzle)  against  such 
danger.  And  so  with  the  owner  of 
any  other  domestic  animal,  horned 
cattle,  horses  and  the  like,  which  re- 
quire general  or  special  care  accord- 
ing to  their  knoT;\'n  general  or  special 
propensities,     and     are     presumably 


more  dangerous  than  dogS;  and  an 
owner's  scienter  becomes  always  sub- 
ject to  the  general  scienter  of  man- 
kind as  to  such  creatures.  See  37 
Fed.  317.  Even  a  horse  at  large  upon 
the  highway  is  a  nuisance.  49  Conn. 
113.  Cf.  125  Ind.  531.  As  to  a  bull, 
see  75  Mich.  557,  42  N.  W.  967. 
Animals  kno^vn  to  be  dangerous  to 
mankind,  finally,  ought  to  be  kept 
from  harm  with  commensurate  dili- 
gence by  an  owner,  or  else  the  latter 
will  be  held  to  respond  for  damage 
done  by  them  to  the  property  or  per- 
son of  third  parties;  thus  an  ele- 
phant, though  "  tamed "  in  a  sense, 
belongs  to  this  class.  Filburn  v. 
Aquarium  Co.,  25  L.  R.  Q.  B.  D.  258. 
So  with  a  wolf  kept  in  a  shop. 
Manger  v.  Shipman,  30  Neb.  352. 

Game  laws  are  found,  enacted  in 
the  public  interest,  and  to  preserve 
the  breed  of  animals  not  already 
owned,  and  worth  killing  for  food,  &c. ; 
as  in  prohibiting  killing  them  during 
breeding  time.  See  Phelps  v.  Racey, 
60  N.  Y.  10.  Such  laws  are  no  un- 
constitutional invasion  of  the  right  of 
private  property.  lb.  And  see  Hart 
v.  State,  29  Ohio  St.  666.  So,  too, 
are  laws  constitutionally  enacted  for 
sanitary  reasons,  as  to  prevent  ani- 
mals from  communicating  such  dis- 
eases as  pleuro-pneumonia.  Kenney 
v.  Hannibal  R.,  62  Mo.  476;  Caldwell 
V.  Bridal,  48  Iowa,  15;  146  N.  Y.  44. 
And  to  prevent  and  punish  needless 
abuse  or  wanton  cruelty  to  animals. 
See  Swartzbaugh  v.  People,  85  111. 
457;  Commonwealth  v.  Thornton,  113 
Mass.  457;  State  v.  Hill,  79  N.  C. 
656;  State  v.  Linde,  54  Iowa,  139; 
Chappell  V.  State.  35  Ark.  345:  Rom- 
bert  V.  State,  56  Miss.  280;   English 


71 


§  51  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

tect  such  marks  and  prosecute  those  who  brand  or  alter  brands 
unlawfully.'^ 

Bees,  too,  are  ferce  naturae;  but  when  hived  they  become  re- 
claimed, so  as  to  belong  to  the  person  who  first  hived  them.  If 
they  afterwards  fly  away,  his  right  of  ownership  continues  so  long 
as  he  can  keep  the  swarm  in  sight,  and  he  can,  under  such  circum- 
stances, pursue  and  recapture  them,  even  though  they  should  set- 
tle upon  a  tree  in  another  person's  lands. ^  But  one  cannot  gain 
an  original  title  to  bees  as  a  trespasser  upon  some  third  person's 
premises.^ 

§  51.     Offspring  of  Domestic  Animals;  How  Owned. 

Of  tame  and  domestic  animals  it  is  to  be  observed  that  the 
brood  belongs  to  the  owner  of  the  dam  or  mother;  the  maxim  of 
both  civil  and  common  law  being,  as  to  brute  creatures,  partus 
sequitur  ventrem.  Hence,  the  owner  (or  in  certain  cases  the 
hirer)  of  the  cow  is  the  owner  of  the  calf;  the  owner  of  the  mare 
is  the  owner  of  the  colt ;  and  so  on :  each  proprietor  of  the  female 

Acts  12  &   13   Vict.,   c.   92;   39   &   40  W.  154,  as  to  fish;  Dieterich  v.  Fargo, 

Vict.,   c.   77;   Murphy  v.   Manning,   2  19^4  N.  Y.  359,  87  N.  E.  518,  22  L.  R. 

Ex.    D.    307;     Durgan    a*.    Davies,    2  A.  N.  S.  696   (deer  reclaimed)  ;   State 

Q.  B.  D.   118;    12   Q.  B.  D.   66.     Dis-  v.    Shaw,   67    Ohio   St.    157,    1    N.   E. 

icrning  cattle,  however  skilfully  done,  753,  60  L.  R.  A.  481,  n.    (fish)  ;  Peo- 

is  "  cruelty."     23  Q.  B.  D.  203.  pie  v.  Wanzer,  43  Misc.  246,  88  N.  Y. 

4.  See,   e.  g.,  Texa&  code;    13   Tex.  S.  281   (oysters). 

App.  215.  Various    local    55-tatutes    and    ordi- 

5.  Goff  V.  Kilts,  15  Wend.  550.  See  nances  are  found  regarding  animals; 
Gillett  V.  Mason,  7  Johns.  16 ;  2  Kent  as  for  mark  of  ownership ;  injuries 
Com.  350;  2  Ewell's  Bl.  Com.  393.  done  by  or  to  them;  prevention  of 
This  was  also  the  rule  of  the  civil  cruelty  to  animals,  etc.  See  People 
law.  See  2  Kent  Com.  350.  Bees  in  v.  Downs,  76  Misc.  110,  136  N.  Y.  S. 
possession  of  the  ovraer  are  the  sub-  440  (green  turtle)  ;  Walton  v.  Mitchell, 
ject  of  larceny.  Hannam  v.  Dockett,  74  S.  E.  1006  (Ga.,  1912)  ;  McGilton 
2  B.  &  C.  934,  944;  State  v.  Murphy,  v.  St.  Louis  Nat.  Stockyards,  254  111. 
8  Blackf.  498.  But  see  Wallis  v.  178,  98  N.  E.  250.  The  police  welfare 
Mease,  3  Binn.  546.  See  also  1  U.  S.  of  a  city  may  demand  a  rule  stricter 
Dig.,  "Animals  Ferw  Natura:"  than    in   a   rural    community.      See   4 

6.  Rexroth  v.  Coon,  15  R.  I.  35.  Chamberlayne  Evid.,  p.  2144. 
See  further,   110   Ark.   204,   161   S. 


CHAP.  III.]  CHATTELS    PEESONAL.  §    52 

beiug  taken  rather  than  that  of  the  male.^  And  this,  not  only 
for  the  reason  which  Puifendorf  elaborates  at  some  length,  that 
the  female  parent  occasions  her  proprietor  much  the  greater  dam- 
age, requiring  during  the  time  of  pregnancy  especial  expense  in 
the  keeping,  while  disabled  from  rendering  her  usual  service ;  but 
upon  another  consideration,  quite  sufficient  in  many  instances, 
namely,  that  the  male  parent  cannot  be  clearly  identified.  It  is 
therefore  quite  a  common  thing  in  the  case  of  certain  domestic 
creatures,  where  the  pedigree  of  the  offspring  is  deemed  a  matter 
of  importance,  for  the  owner  of  the  sire  to  demand  and  receive 
from  the  owner  of  the  dam  some  special  compensation  in  advance 
by  way  of  equivalent  for  paternal  services.  The  progeny  of  cows 
and  of  other  domestic  animals  will  go  presumably  to  the  new 
purchaser  notwithstanding  no  full  transfer  of  possession  of  prem- 
ises or  animals  has  been  made.^ 

§  52.     Property  in  a  Person  or  Corpse. 

Property  in  a  living  human  being  is  no  longer  permitted  by 
English  or  American  law.^  As  to  a  corpse,  no  one  can  in  the 
strict  sense  of  the  common  law  be  said  to  own  it;  yet  there  is  a 
quasi  property  in  a  dead  body,  more  especially  for  the  purposes 
of  interment  and  protection  from  insult,  which  the  courts  will 
protect  out  of  regard  to  the  next  relatives;  and  the  persons  hav- 
ing charge  of  such  remains  hold  them  as  a  trust  subject  to  the 
regulation  of  a  court  of  equity,  and  must  act  with  decency.^     The 

7.  2  Ewell's  Bl.  Com.  390;   2  Kent  8.  Wolcott  v.  Hamilton,  61  U.  S.  79. 

Com.    361;    Puff.    Droit   Nat.,    lib.    4,  9.  Cf.  2  Ewell's  Bl.  Com.  402. 

c.  7,  §  4;  Stewart  V.  Ball,  33  Mo.  154;  1.  Tierce  v.   Swan  Point  Cemetery, 

130   U.    S.   69.      Blackstono,   however,  10  R.  I.  227,  and  cases  cited.     When 

cites  7  Co.  17,  where,  under  peculiar  a  coffin,  with  the  consent  of  all  per- 

circum-stances,    young    cj'^ets    were  sons   having  any   interest   in   it,   has 

equally   divided   ]>etween   the    owners  been  deposited   in  the  earth,  for  the 

of  the  hen  and  cock,  as  an  exception  purpose  of   interment,  with  a  corpse 

to  this   rule;   founded,  as  he  asserts,  enclosed  within  it,  it  is  no  longer  a 

upon  natural  reasons,  though  perhaps  subject  of  property,  nor  can  replevin 

it  was  upon  mere  custom.     See  Han-  for    it    be    maintained.      Guthrie    v. 

Son  v.  Millett,  55  Me.  184.  Weaver,  1  Mo.  App.  136.     As  to  cre- 

73 


§  53  THE  LAW  OF  PERSONAL  PROPEETY.       [pART  II. 

primary  right  to  regulate  is  in  the  surviving  spouse  or  nearest  of 
kin.  The  last  wishes  of  the  deceased  person,  moreover,  as  to  the 
interment  or  disposal  of  his  own  corpse,  receive  often  great  con- 
sideration from  his  executors  and  family.^ 

§  53.     Vegetables,  Minerals,  etc, ;  Severance  or  Annexation. 

l^ext  to  animals  may  be  mentioned  vegetables,  which  also,  under 
certain  circumstances,  come  under  the  designation  of  chattels 
personal  of  a  corporeal  nature.  Vegetables  are  essentially  dis- 
tinguished from  animals  in  lacking  the  quality  of  sensation; 
though  in  scientific  classification  this  may  not  always  prove  an 
exact  test,  so  closely  are  some  orders  of  animals  and  vegetables 
allied.  We  speak  of  vegetables  as  chattels  when  they  are  disjoined 
or  severed  from  the  ground;  and  so,  too,  the  fruit  of  a  tree  is  a 
chattel  when  severed  from  the  body  of  the  tree ;  and  the  tree  or 
plant  itself  is  a  chattel  when  severed  from  the  ground.'' 

The  same  may  be  observed  of  minerals  and  metals,  like  coal, 
iron,  gold  or  silver,  whose  substance  is  part  of  the  realty  while 
in  the  mine;  but  after  being  dug  out  they  are  corporeal  chattels 
personal."*  A  similar  rule  applies  to  soil  dug  out  to  be  used 
elsewhere,^  and  to  ice  formed  on  a  sheet  of  water,  when  it  is  cut 
away.^     Coal  oil  or  petroleum  is  a  mineral,  too,  in  its  natural 

mation  of  a  dead  body,  see  Williams  to  the  disposition  of  one's  body  can- 

V.  Williams,  20  Ch.  D.  659.  not   be    enforced.      Williams   v.    Wil- 

See  further,  Wright  v.  Earned,  163  liams,  20  Ch.  D.  659. 

S.    W.    685    (Tex.    Civ.    App.)  ;    Men-  3.  2  Ewell's  Bl.  Com.  389;   1  Wms. 

singer  v.   O'Hara,   189    111.   App.   48;  Ex'rs,    6th    ed.    608;    Yale    v.    Soely, 

Finley  v.  Atlantic  Transport  Co.,   90  15  Vt.  221. 

Misc.  480,  153  N.  Y.  S.  439   (damages  4.  2  Burge  Col.  and  For.  Laws,  10; 

against  person  interfering)  ;   Painter  Bainbridge   on    Mines    and    Minerals, 

V.  Fidelity  Co.,  123  Md.  301,  91  Atl.  1st  Am.   ed.,   3;    Lykens,   Ac,   Co.   v. 

158   (ordering  undertaker's  S'ervices)  ;  Dock,  62  Penn.  St.  232. 

Cooney  v.  English,  86  Misc.  292,  148  5.  Lacustrine  Fertilizer  Co.  v.  Lake 

N.  Y.  S.  285    (directions  in  will  con-  Guano   Co.,    82   N.   Y.   476.      Natural 

trol)  ;   Seaton  v.   Commonwealth,  149  gas  when  put  into  pipes  becomes  per- 

Ky.  49^8,  149  S.  W.  871,  42  L.  R.  A.  sonal    property.      Crystal   Ice   &   Cold 

N.    S.    209,    n.     (a    decent    burial)  ;  Storage  Co.  v.  Marion  Gas  Co.,   (Ind. 

Darcy  v.  Hospital,  202  N.  Y.  259.  App.),  74  N.  E.  15. 

2.  Yet  a  direction  even  by  will  as  6.  Higgins   v.    Kusterer,    41    Mich. 

74 


CHAP.  III.]  CHATTELS    PERSONAL.  §    53 

state,  and  being  a  mineral  is  part  of  the  realty  where  it  lies  con- 
fined, like  coal,  iron,  gold  or  silver,  although  of  a  liquid  character ; 
and  the  same  may  be  said  of  natural  gas,  and  of  percolating  or 
subterranean  waters.^  But  where  the  imprisoned  gas,  water,  or 
oil  escapes,  it  becomes  personal  property.^ 

Actual  severance  rightfully  made,  and  with  the  intention  of 
converting  the  thing  into  a  chattel,  makes  what  before  was  realty 
personal  property.^  But  a  constructive  severance  of  fruit,  vege- 
tables, or  trees,  or  other  products,  sometimes  takes  place  before 
there  is  an  actual  separation  from  the  land.  As  where  the  owner 
of  the  fee  in  lands  by  a  valid  deed  sells  the  trees  to  a  third  person, 
or  sells  the  land  reserving  the  trees ;  the  intention  being  that  these 
trees  shall  be  speedily  removed  from  the  land.  In  such  cases  it 
has  been  held  that  the  trees  became  chattels  personal,  and  were 
not,  under  the  Statute  of  Frauds,  to  be  regarded  as  interests  in 
land,  but  might  be  transferred  by  parol.  ^  And  we  shall  see  here- 
after that  growing  crops  are  for  many  purposes  treated  as  chattels. 
Mutual  intention,  however,  to  such  constructive  severeance  is  need- 
ful ;  likewise,  that  the  act  bo  rightful  and  not  wrongful,  and  with 

318,    2    Wall.    (U.    S.)     645.      Ponds,  Ky.  818,  178  S.  W.  1084   (oil  and  gas 

streams,  &c.,  are  usually  owned  with  lease)  ;    Tupeker  v.   Deaner,   148   Pac. 

the    soil;     but    ice    may    be    sold,    if  853   (Okla.  Sup.  IQ'IS)  ;   Fairbanks  v. 

formed,    whether    in    or    out    of    the  Warrum,  56  Ind.  App.  337,  104  N.  E. 

water,  as  personalty.     lb.     As  to  the  983,  1141  ( natural  gas ) . 
right  to  cut  ice,  see  People's  Ice  Co.  7.  Williamson  v.  Jones,  39  W.  Va. 

V.  Davenport,  149  Mass.  322,  21  N.  E.  231,  257,  28  S.  E.  411,  25  L.  R.  A.  222, 

385.     And   see   Hagerman   Co.   v.   Mc-  n.,  and  citations;  Frank  v.  Haldeman, 

Murry,  16  N.  M.  172,  113  Pac.  823.  53  Penn.  St.  223;   131  Penn.  St.  143, 

Water  stored  by  an  irrigation  com-  6  L.   R.  N.   280;   152   Penn.   St.   235; 

pany  in  its  reservoir  is  held  to  be  real  Chasomore  v.  Richards,  7  H.  L.  Cas. 

property,  the   right  to   use  being  ap-  349 ;   15  B.  Mon.  479. 
purtenant  to  the  land.      Copcland   v.  8.  lb.;  28  W.  Va.  210.     See  further, 

Fairview  Co.,  165  Cal.   148,  131  Pac.  §  130,  post. 
119.     So,  too,  semble,  with  water  for  9.  §  4. 

civic  use  while  in  a  public  reservoir.  1.  1  Ld.  Raym.  182 ;  Warren  v.  Le- 

But  water  drawn  oflF  in  a  pail  or  other  land,   2   Barb.   613 ;   Kingsley  v.   Hol- 

receptacle    for    personal    us«    becomes  brook,  45  N.  H.  313,  and  cases  cited, 

personal  property  certainly.  See  note  to  4  Kent  Com.   451,  where 

See     further,     §§      130-133,     post;  this  question  is  fully  discussed,  with 

Beckett-Iscman  Oil  Co.  v.  Barker,  165  references. 

75 


§  54  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  II. 

the  purpose  of  passing  chattel  property;  and  no  constructive  sev- 
erance can  operate  to  prejudice  subsequent  purchasers  for  value 
of  the  realty  without  notice.^ 

Even  the  conveyance  of  a  building  apart  from  the  land  is  held 
to  vest  as  personal  property  before  actual  severance.'' 

On  the  other  hand,  annexation  to  the  soil,  or  even,  as  it  would 
appear,  a  deep  embedding  in  the  ground,  will  change  that  which 
before  was  personal  into  part  of  the  realty/  And  hence,  in  a 
modern  case,  where  an  aerolite,  weighing  over  sixty  pounds,  buried 
itself  in  the  ground  where  it  fell  to  the  depth  of  three  feet,  it  was 
held  that  it  thereupon  became  the  property  of  the  person  who 
owned  the  soil.^ 

§  54.     Money  a  Corporeal   Chattel  Personal, 

Money  is  likewise  a  corporeal  chattel  personal.  This  is  the 
common  medium  of  exchange  in  a  civilized  nation.  At  our  law 
the  word  "  money  "  usually  comprehends  coins  of  gold  and  silver, 
which  have  become  the  recognized  standard  of  value  throughout 
the  civilized  world.  The  Constitution  of  the  United  States  vests 
in   Congress   the  power  to  coin  money   and  regulate   the   value 

2.  Lewis  V.  Rosier,  16  W.  Va.  333.  down.  4  Co.  63  a;  Bewick  v.  Whit- 
Soil  removed  from  the  land  of  one  field,  3  P.  Wms.  268.  But  as  to 
person  and  placed  on  the  land  of  hedges  or  trees  not  timber,  a  rule 
another,  without  intent  of  reclaiming  somewhat  less  strict  applied.  Com. 
or  removing  it,  becomes  part  of  the  Dig.  Biens,  H.  See  §  101,  post. 
latter  peri3on's  land.  Lacustrine  Fer-  3.  Hood  v.  Whitwell,  66  Misc.  Rep. 
tilizer  Co.  v.  Lake  Guano  Co.,  82  N.  Y.  49,  120  N.  Y.  S.  372. 
476.       The    owner    of    land    cannot,  4.  §   4. 

by    agreement    between    himself    and  5.  Goddard    v.    Winchell,    86    Iowa, 

another,     without     actual     severance,  71,   52  N.   W.   1124.     See  also  Elwea 

make  that  which  is  part  of  the  realty  v.    Briggs    Gas    Co.,    33    Ch.    D.    562, 

personal   property  a&  against  a   sub-  where  a  like  rule  of  title  was  applied 

sequent   purchaser  for  value   without  to  a  prehistoric  boat  whioh  was  dis- 

notice.     lb.  covered  six  feet  under  ground ;  though 

Cutting  down  timber  trees  did  not,  the  court  did  not  define  whether  this 
at    common    law,    entitle    tenant    in  was  real  or  personal  property,  but  con- 
dower  or  by  the  curtesy,  &c.,  to  them ;  sidered    the    oAvnership    the    same    in 
nor  where  a  stranger  cut  them  down;  either  case. 
nor  even  though  the  wind  blew  them 

76 


CHAP.  III.]  CHATTELS    PERSONAL.  §    54 

thereof;^  in  pursuance  of  which  hiws  have  been  framed  from 
time  to  time  regulating  the  coinage.  Again,  the  Constitution 
declares  that  "  no  State  shall  coin  money,  or  make  any  thing  but 
gold  and  silver  a  legal  tender  in  payment  of  debts."  ^  Thus  the 
power  to  legislate  in  such  matters  is  checked  and  controlled  in 
this  country  by  the  fundamental  law  of  the  land.  Civilized  na- 
tions in  general  claim  the  prerogative  of  regulating  each  its  own 
coinage,  by  taking  the  bullion,  or  precious  metal,  in  the  rough 
state,  dividing  it  into  small  portions  of  convenient  size,  and  mark- 
ing them  with  a  stamp  which  attests  their  value.  This  is  what 
constitutes  coined  money.  The  usual  money  of  the  United  States 
consists  of  gold  and  silver  coins;  and  though  copper  coins  and 
nickels  are  used  in  making  small  change,  being  authorized 
by  statutes  to  "  pass  current,"  they  are  not  constituted  a  legal 
tender  for  the  payment  of  debts.^ 

During  a  revoluntionary  period,  and  in  seasons  of  great  finan- 
cial distress,  however,  government  sometimes  puts  forth,  as  a 
means  of  temporary  relief,  notes  of  a  promissory  nature,  and 
declares  these  to  be  a  legal  tender  for  the  payment  of  debts,  thereby 
forcing  them  into  circulation  to  supply  the  place  of  the  gold  and 
silver  coins  which  have  disappeared,  establishing  them  temporarily 
as  the  medium  of  exchange,  and  constituting  them  in  effect  lawful 
money.^  Such  notes,  if  irredeemable,  are  corporeal  chattels  per- 
sonal; and,  even  though  they  be  redeemable,  we  should  say  they 
were  still  corporeal  rather  than  incorporeal ;  though  greatly  assimi- 
lating in  general  features  to  bills  and  notes  which  are  now  fully 
recognized  as  incorporeal  chattels.  For  whatever  circulates  as 
money,  whatever  we  may  pronounce  to  be  ''  cash,"  appears  to  be 
properly  treated  as  a  chose  in  possession ;  that  is  to  say,  as  a  chat- 
tel personal  of  a  corporeal  character.  And  even  bank-notes  are 
for  many  purposes  treated  as  money.  ^ 

6.  Art.  1,  §  8.  cycl.  Am.  "  Money."     And  see  §§  335- 

7.  Art.  1,  §  10.  352,  pott,  on  Money,  where  the  sub- 

8.  See  Bouv.   Diet.  "  Money ;  "   En-      jcet   of   iep^al-tendcr   notes   under   our 
cycl.  Am.  "  Money."  Constitution  is  fully  discussed. 

9.  See  Bouv.  Diet.  "Money;  "  En-  1.  Crane  v.  Frcese,  16  N.  J.  L.  305. 


§  56  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

§  55.     Ships  and  Vessels  Are  Corporeal  Chattels  Personal. 

Among  chattels  personal  of  a  corporeal  character,  no  class  is 
more  important,  in  a  legal  point  of  view,  than  that  of  ships  and 
vessels.  But  the  law  of  shipping  is  in  many  respects  peculiar ; 
and  while  ships  and  vessels  are  undoubtedly  personal  chattels 
per  se,  and  not  real  estate,  yet  the  rules  respecting  their  title  and 
transfer,  together  with  the  registry  systems  established  by  legis- 
lation in  England  and  America,  are  such  as  liken  these  consider- 
ably to  lands  and  tenements.^ 

§  56.     Miscellaneous  Corporeal  Chattels  Personal. 

There  are  many  other  chattels  personal  of  a  corporeal  character, 
which  give  rise  to  no  very  peculiar  legal  doctrines.  Among  these 
are  to  be  enumerated  household  furniture,  implements  and  uten- 
sils, garments,  plate,  jewelry,  wares,  merchandise,  and  carriages. 
The  list  might  be  indefinitely  extended.  Rolling-stock  of  a  rail- 
way, such  as  cars  and  locomotive  engines,  are  personal  chattels 
of  a  corporeal  character."'  Ice,  when  cut  and  taken  from  a  pond 
or  stream  for  purposes  of  merchandise,  becomes  a  chattel  personal 
of  the  same  description.'*  Liquors  and  imitation  butter  are  chat- 
tels personal ;  though  modern  legislation  in  various  States  may 
interfere  much  with  the  transfer  and  traffic  in  these  and  other 
things  deemed  injurious.  Whatever  personal  chattel,  in  short, 
you  can  see  or  touch  is  to  be  classed  as  corporeal.  And  such  things 
are  what  our  writers  were  wont  to  style  choses  in  possession^ 

See  contra,  Hamilton  v.  State,  60  Ind.  here   fche   rails  are  movable  property. 

193.  Woodward   v.    Exposition    R.,    39    La. 

2.  Taggard  v.  Loring,  16  Mass.  339;  An.  566;  c.  6,  post,  on  Fixtures. 
Ogle  V.  Eagle  Ins.  Co.,  4  Mason,  390;  4.  See    Minnesota    Co.   v.    St.   Paul 
1   Pars.   Shipping,  c.   2.     See   §§    300-  Co.,    2    Wall.    645;    supra,    §    53;     1 
334,  post,  on  Ships  and  Vessels.  Washb.  Real  Prop.  11;  State  v.  Pott- 

3.  But  the  roadbed,  rails  fastened  meyer,  33  Ind.  402;  Higgins  v.  Ku3- 
in  place,  and  right  of  way  in  a  rail-  terer,  41  Mich.  318;  Gregory  v.  Ros- 
road  are  usually  real  property.  Hart  enkrans,  72  Wis.  220.  See  post,  c.  6, 
V.  Benton-Bellefontaine  R.,  7  Mo.  App.  as  to  Fixtures. 

446,    and   citation.      Otherwise   as    to  5.  St-e    2   Ewell's   Bl.    Com.    389;    2 

rails    fastened    and    a    railroad    con-      Kent  Com.  351;  supra,  c.  1. 
structed  upon  the  soil  of  another;  for 

78 


CHAP.  III.]  CHATTELS    PEKSOXAX.  §    59 

§  57.     Civil-Law   Distinctions  Among  Movable   Things. 

The  civil  law  distinguished  between  two  sorts  of  movable  things ; 
those  animate,  or  animals,  which  move  themselves,  and  those 
inanimate,  which  required  to  be  moved,  and  hence  were  called 
dead  movables.  This  classification  applies  in  reason  to  corporeal 
personal  property  only.^  There  is  another  distinction  made  by 
the  civil  law ;  namely,  between  things  that  may  be  used  and  kept 
entire,  such  as  a  horse,  tables,  beds ;  and  things  which  we  cannot 
use  without  consuming  them,  such  as  fruits,  corn,  wine,  and  oil.^ 

§  58.     Incorporeal  Chattels  Personal,  or  Rights  in  Action,  to  be 
Considered. 

Secondly,  as  to  chattels  personal  of  an  incorporeal  character, 
or  choses  in  action.  Things  incorporeal  were  designated  by  a 
word  at  the  Koman  law  corresponding  to  our  English  word 
"  rights."  And  if  our  reader  keeps  the  idea  before  his  mind  that 
an  incorporeal  personal  chattel  is  a  sort  of  "  money  right,"  or 
right  in  action,  he  is  likely  to  get  all  that  was  worth  extracting 
from  the  old-fashioned  phrase,  choses  in  action,  upon  which  we 
have  commented  sufficiently  in  a  former  chapter.^ 

§  59.     Debts,  Claims,  Demands,  etc. 

The  right  to  receive  the  payment  in  money  of  what  another 
owes  me  —  or,  considered  with  reference  to  the  party  owing, 
a  debt  —  is  an  incorporeal  chattel  personal  of  a  very  important 
kind.  The  word  "  debt  "  is  used  by  Blackstone  as  though  applica- 
ble only  to  money  due  by  some  certain  and  express  agreement; 
but  in  reality  it  has  a  broader  signification,  being  properly  used 
to  denote  all  that  is  due  a  man  under  any  form  of  obligation  or 
promise.  A  debt  may  be  a  lien  on  an  estate ;  or  it  may  be  secured 
by  a  pledge  or  pawn;  or  by  a  mortgage  of  other  property;  or  it 
may  be  without  any  lien  or  security  at  all.' 

6.  Domat  Civil  Law,  by  Strahan,  9.  See  Bouv.  Diet.  "Debt;"  3  Bl. 
152.  Com.    154;    Part   III.,   c.    3,   post,   on 

7.  lb.  Debts. 

8.  Supra,  §§  11-15. 

79 


§  61  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

Money  rights  of  value  in  general  for  which  one  may  bring  an 
action  against  the  person,  whether  founded  on  contract,  or  to 
recover  damages  arising  from  injuries  to  person,  reputation,  or 
property,  are  to  be  classed  with  chattels  personal  of  an  incorporeal 
character,  whether  properly  styled  "  debts,"  or  (as  seems  to  us 
preferable)   "  claims,"  or  "  demands."  ^ 

§  60.     Debts  upon  Security. 

We  are  to  suppose  that  all  such  debts,  claims,  or  demands,  how- 
ever created,  give  a  right  of  action  against  the  person  obliged  or 
indebted,  and  also  accompany  the  owner  or  creditor  wherever  he 
goes;  so  that,  on  either  consideration,  they  are  to  be  treated  as 
movable  property.  These  qualities  being  retained,  they  remain 
movables,  although  the  indebtedness  be  secured  by  land  or  other 
immovable  property,  if  that  security  be  accessory  only  to  the  debt. 
Hence  a  mortgage,  though  of  real  estate,  represents,  before  fore- 
closure, security  for  an  incorporeal  personal  chattel.^  So,  too, 
is  any  loan  of  money  on  chattel  mortgage,  or  collateral  .security 
generally,  an  incorporeal  personal  chattel.^  Arrears  of  profits 
and  of  income,  as  well  as  the  outstanding  loans  themselves,  are 
likewise  incorporeal.'* 

§  61.     Bank  Deposits  Considered;  General  or  Special  Deposit. 

The  distinction  between  a  corporeal  and  incorporeal  chattel,  or 
betv/een  a  chose  in  possession  and  a  chose  in  action,  may  be  illus- 
trated by  the  case  of  money  at  a  bank.  If  I  deliver  money  in 
a  package  or  receptacle  properly  marked,  to  a  banker,  for  safe 
keeping,  intending  that  it  shall  be  returned  to  me  in  the  same 

1.  See  2  Ewell's  Bl.   Com.   397,  as  2.  2  Powell  Mortgages,  781,  782;  2 

modified   in   notes   by   Chitty,    Shars-  Burge  Col.   and   For.   Laws,   34.     See 

wood,  and  others.     And  see  Part  III.,  Reg.  v.  Powell,  2  C.  C.  R.  403. 

c.  3,  post,  on  Debts.     See  Bouv.  Diet.  3.  See     chapters,     post,     on    Liens, 

"  Claim  ;  "  "  Demand  " ;  Gillet  v.  Fair-  Fledges  and  Mortgages,  Part  III.,  C9. 

child,  4  Denio,  80;  Hall  v.  Robinson,  4-6. 

2  Comst.  29'3 ;  Wallen  v.  St.  Louis  R.,  4.  Wilkinson    v.    Charlesworth,    11 

74   Mo.    521;    Di'bert   v.    D'Arey,   248  Jur.  644. 
Mo.  617,  154  S.  W.  1116. 

80 


CHAP.  III.]  CHATTELS    PERSONAL.  §    62 

specific  condition,  this  is  the  deposit  of  a  corporeal  chattel,  namely, 
the  receptacle  with  its  contents ;  but  if  I  pay  the  same  money  over 
the  counter,  on  a  regular  account  with  the  banker,  to  be  subject 
to  my  check  for  a  like  amount  whenever  I  choose  to  draw,  he  owes 
me  a  balance,  and  this  balance  is  a  debt,  and  hence  an  incorporeal 
chattel.^  Banks  ordinarily  do  their  business  on  the  latter  princi- 
ple; but  we  have  in  these  days  banks  of  safe  deposit,  whose  special 
duty  it  is  to  receive  moneys,  jewels,  plate,  and  other  valuable  on 
deposit,  to  be  returned  in  presumably  the  same  condition  as  left 
by  the  owner.  There  may  be,  of  course,  the  special  deposit  of 
corporeal  chattels,  such  as  plate  or  jewels;  or  of  muniments  of 
rights,  such  as  notes  or  bonds;  or  of  both  together;  but  usually 
the  deposit  is  of  the  specific  package  or  receptacle  with  undisturbed 
contents,  which  is  corporeal. 

§  62.     Various   Instances   of   Incorporeal   Chattels   Personal. 

Among  instances  which  are  to  be  referred  to  the  class  of  incor- 
poreal chattels  personal  —  or,  as  the  courts  usually  have  it,  choses 
in  action  —  are  the  following :  contracts  for  railway  shares ;  ^  an 
interest  in  a  partnership ;  ^  a  lottery  ticket ;  ^  a  claim  against  a 
railroad  company  for  the  value  of  goods  destroyed  while  in  its 
custody,^  public  land  scrip;  a  seat  at  the  stock  exchange  or  Brok- 
ers' board  assignable  and  having  a  market  value ;  ^  book  accounts 
and  assignable  claims  and  rights  to  sue  generally.^  Those  speci- 
fied are  but  scattered  instances ;  for,  as  Chancellor  Kent  has  said, 
by  far  the  greatest  part  of  the  questions  arising  in  the  inter- 

5.  See  Carr  v.  Carr,  1  Mer.  543,  n. ;  9.  Ayres  v.  Western  R.  R.  Co.,  48 
Wyatt  V.  State  Board,  74  N.  H.  352,      Barb.  132. 

70  Atl.  387.  1.  Powell  v.  Waldron,  SO'  N.  Y.  328; 

6.  Humble  v.  Mitchell,  11  A.  &  E.      ^^4  Minn.  398.  145  N.  W.  108. 

n--  2.  Consolidated    Tank   Line    Co.    v. 

Collier.    148    111.    259,   35   N.    E.   756; 

7.  Tempest  V.  Kilner,  3  D.  &  L.  407,  g.  H.  &  S.  A.  R.  R.  v.  Freeman.  57 
2  C.  B.  300.  Tex.  150;   Shaw  v.  Colwell  Lead  Co., 

8.  Jones  v.  Carter,  8  Q.  B.  134.  20  Blatchf.  417. 

6  81 


§  63  THE  LAW  OF  PERSONAL  PROPERTY        [PART  II. 

course  of  social  life,  or  which  are  litigated  in  the  courts  of  justice, 
are  to  be  referred  to  this  head."' 

The  goodwill  of  a  newspaper  establishment  is  personal  prop- 
erty and  capable  of  being  valued  and  sold  as  such.'*  And  so  with 
the  goodwill  of  other  business  of  a  chattel  character,^  and  valua- 
ble personal  rights  or  franchises  generally.  But  it  is  held  that 
the  goodwill  of  a  public  house  grows  out  of  realty  in  such  a  man- 
ner that  it  cannot  be  considered  a  personal  goodwill.^ 

§  63.     Legacies  and  Distributive  Shares. 

To  the  same  class  of  incorporeal  chattels  personal  belong  lega- 
cies and  distributive  shares.  These  are  sometimes  placed  among 
"  equitable  choses  in  action,"  or  rights  to  be  enforced  by  suit  in 
equity;  since  the  rule  formerly  was,  that  if  the' executor  withheld 
payment,  the  legatee  could  maintain  no  action  at  law,  but  had  to 
sue  in  equity.'^  But  the  English  statutes  have  modified  that  rule, 
while  in  some  of  the  United  States  an  action  at  law  for  a  pecuniary 
legacy  has  been  maintained,  and  in  some  it  is  expressly  given  by 
statute.^  By  the  term  "  legacy  "  we  mean  a  gift  of  personal  prop- 
erty under  a  last  will  and  testament.^  By  a  ''  distributive  share  " 
we  mean  that  share  of  the  residue  of  the  personal  estate,  after 
payment  of  all  debts  and  charges,  to  which  a  person  is  entitled 

3.  2  Kent  Com.  351.  ed.  6;   Deeks  v.  Strutt,  5  T.  R.  690; 

4.  Boon  V.  Moss,  70  N.  Y.  465.  Braithwaite  v.    Skinner,    5   M.    &   W. 

313. 

8.  See  Stats.  9  &  10  Vict.,  c.  95,  §§ 
58,    65,    and    later    statutes   cited    in 

6.  Kitchin,  in  re,  16  Ch.  D.  226.  Wms.  Pers.  Prop,  ib.,  and  see  Wetlier- 
In  Texas  a  "  head-right "  or  unlocated  gU's  Am.  note  to  ib. ;  Beeker  v.  Bee- 
land  certificate  is  in  the  nature  of  a  ker,  7  Johns.  99;  Farwell  v.  Jacobs, 
chattel  personal.  Johnson  v.  New-  4  Mass.  634;  Morrow  v.  Brenizet,  2 
man,  43  Tex.  628;  Porter  v.  Burnett,  Rawle,  185;  Wooten  v.  Howard,  2 
60  Tex.   220.  A  liquor  tax  certificate      gm.  &  M.  527. 

or  license  is  personal  property.    Brew-  9.  !„  re  Ross,  140  Cal.  282,  73  Pac. 

ing  Co.  V.   G«hl,   154  App.   Div.   84?,  976.     The  word  legacy  may  also   in- 

139  N.  Y.  S.  807.    See  4  Chamberlayne  elude    realty    where    the    context    re- 

Evid.,  §  776.  quires  it.     In  re  Stuart,  115  Wis.  294, 

7.  See   Wms.    Pers.    Prop.    3d   Am.  91  N.  W.  688. 

82 


5.  Batchelder    v.    Batehelder,     220 
Mass.  42,  107  N.  E.   455. 


CHAP.  III.]  CHATTELS    PERSONAL.  §    64 

under  the  statutes  of  distribution,  relative  to  the  estates  of  persons 
dying  intestate.^ 

§  64.     Patent-Rights  and  Copyrights. 

Patent-rights  and  copyrights  are  species  of  incorporeal  personal 
chattels.  The  Constitution  of  the  United  States  confers  upon 
Congress  the  power  to  pass  laws  "  to  promote  the  progress  of 
science  and  useful  arts,  by  securing,  for  limited  times,  to  authors 
and  inventors,  the  exclusive  right  to  their  respective  writings  and 
discoveries."  ^ 

The  limited  monopoly  conferred  by  patent  and  copyrights  laws 
has  been  so  long  a  feature  of  English  and  American  jurisprudence 
as  to  make  it  questionable  what  are  the  natural  rights  of  an 
inventor  or  author.  In  either  case  free  dedication  to  the  public 
of  the  creation  of  one's  brain  debars  him  from  asserting  an  ex- 
clusive claim  subsequently,  however  valuable  it  might  be.^  As 
to  literary  property,  for  instance,  the  sole  proprietorship  of  a 
manuscript  is  in  the  author,  or  his  assigns,  before  publication; 
but  an  unqualified  publication,  such  as  one  makes  by  printing  and 
offering  copies  for  sale,  dedicates  the  contents  to  the  public,  unless 
the  sole  right  of  printing,  reprinting,  publishing,  and  vending  the 
work  is  secured  by  copyright.'*  Books  that  are  printed  or  machines 
that  are  made,  embodying  one's  ideas,  are  themselves  corporeal 
chattels  of  course.  Every  private  letter  belongs  so  far  to  the 
author  of  them  as  against  the  receiver,  that  the  latter  cannot  pub- 
lish or  sell  them  without  the  former's  consent ;  ^  thus  the  owner- 
ship of  ideas  not  fully  imparted  finds  much  protection  aside  from 
statute.^ 

1.  See  post,  as-  to  Legacies  and  Dis-  Large,  cs.  783,  1019,  35  St.  at  Large, 
tributive  Shares,  Part  III.,  c.  12.  245,  246,  38  St.  at  I-«irgc.  958. 

2.  U.   S.   Const.,   art.   2,   §   8,   cl.  9.  3.  lb.,  122  App.  Div.  260,  106  N.  Y. 
See  post,  Part  III.,  c.  10,  as  to  Pat-  S.  1016. 

ents  and  Copyrights ;   Wms.  Pers.  Prop.  4.  Parton  v.  Prang,  3  Cliff.  537. 

5th  Eng.  ed.  6.     The  patent  laws  are  5.  2   Story,  100;    Riee  v.  Williams, 

found   in   Rev.    St.,    §§    4883-4936,   as  33  Ff>d.  437,  and  cases  cited, 

amended  by  the  Act  of  19'02    (32   St.  6.  The  inventor  of  a   machine   who 

at  Large,  c.  417)    and  by  32   St.  at  sells    it   without   a   patent  may    still 

83 


§  Q6  THE  LAW  OF  PERSONAL  PKOPERTY,        [pART  II. 

But  one  who  has  ideas,  trade  secrets,  or  systems  of  his  own 
which  cannot  be  used  or  sold  without  disclosure,  must  guard  his 
own  property,  if  he  has  no  patent  or  copyright  to  protect  him; 
for  if  he  discloses  the  idea  or  secret  to  another  even  in  confidence, 
without  contract  to  guard  it  or  an  agreement  for  recompense,  such 
a  party  is  entitled  to  use  it  for  his  own  benefit  without  rewarding 
him/  It  is  otherwise,  however,  where  the  other  party  obtains 
knowledge  by  some  fraud  or  breach  of  trust  or  of  contract,  for  to 
this  extent  the  owner  of  the  original  idea  or  secret  is  protected.^ 

§  65.     Insurance  Policies. 

Debts  arising  under  contracts  to  insure,  effected  by  means  of 
what  are  called  policies  of  insurance,  are  in  the  nature  of  debts 
payable  on  contingencies ;  and  these  are  to  be  classed  among  incor- 
poreal chattels  personal.  Insurance  may  be  defined  as  a  contract, 
by  which,  in  consideration  of  a  certain  sum,  one  party  agrees  to 
indemnify  another  against  risks  incurred  in  a  certain  manner, 
during  a  specified  period.  The  usual  kinds  of  insurance  are, — 
first,  insurance  on  lives ;  second,  insurance  against  loss  by  fire ; 
third,  marine  insurance,  or  insurance  on  risks  incurred  in  navi- 
gation; and  there  are  other  kinds,  such  as  accident,  liability  and 
fidelity  insurance.^ 

§  66.     Annuities,  Pensions,  Salaries,  etc. 

Personal  annuities,  or  annual  payments  of  money,  not  charged 
on  real  estate,  are  likewise  a  species  of  incorporeal  personal  chat- 
tel.    The  law  of  personal  annuities  is  so  closely  allied  to  that  of 

have  exclusive  ownership  of  the  pat-  Co.  v.  Delaney,  211  Mass.  231.     As  to 

terns,   where   simple   measurenipnt   of  a  mere  idea  unprotected  by  contract 

the  machine  does  not  give  it      Tabor  or  statute,   see   Haskins  v.   Eyan,   75 

V.  Hoffman,  118  N.  Y.  30,  23  N.  E.  12.  N.  J.  E.  623,  73  Atl.  1118;  Henry  v. 

Cherry,  30  R.  I.  13,  73  Atl.  97. 

7.  Morison  v.  Moat,  9  Hare,  241,  q  g^^  g^^^  p-gt  "insurance;" 
263;  Bristol  v.  Equitable  Society,  132  ^y^^^  p^^^  p^^p  ^r^^^  ^^g  ^^  304. 
N.  Y.  264,  30  N.  E.  106;  Chadwick  v.  p^^.^  jjj^  ^  ^^^  p„^^^  on  the  various 
Covell,  151  Mass.  190,  23  N.  E.  1068.  ^^^^^    ^^    Insurance.      See    Chamber- 

8.  lb.     See     American     Stationery  layne  Evid.,  §  2776. 

84 


CHAP.  HI.]  CHATTELS    PERSONAL,.  §    68 

life  insurance,  at  the  present  day,  that  it  is  difficult  to  separate 
them  in  legal  principle.  Pensions,  or  those  stated  money  allow- 
ances which  government  grants  to  an  individual,  or  his  repre- 
sentatives, in  consideration  of  valuable  public  services  rendered  by 
him  to  the  country;  also  salaries  (a  term  usually  applied  to  the 
recompense  paid  for  the  performance  of  one's  official  duties)  ; 
these  are  all  to  be  classed  under  the  same  general  head,  being 
"money  rights"  of  an  incorporeal  character.^ 

§  67.     Incorporeal  Personal  Chattel;  Right  to  be  Distinguished 
from  Evidence  of  Right. 

We  are  already  getting  beyond  the  term  chose  in  action  or  the 
"  right-to-sue  "  theory,  and  coming  upon  the  more  truly  debatable 
ground  of  incorporeal  personal  property.  Let  us,  then,  take  care 
not  to  confound  our  "  money  right  "  or  right  of  action  to  obtain 
money,  with  the  instrument  which  evinces  the  possession  of  that 
right.  Thus  the  right  to  recover  money  under  a  contract,  the  debt, 
claim,  or  demand,  is  one  thing;  but  the  contract  itself  is  another, 
and  evidence,  rather,  of  the  right.  One  may  have  a  pension 
claim,  though  not  a  pension  certificate.  A  patent-right  may  exist 
before  the  letters-patent  are  issued.  And  while  there  may  be  a 
debt  due  under  an  insurance  policy,  this  is  to  be  distinguished 
from  the  insurance  policy  or  contract  itself.  To  preserve  such 
distinctions  is  not  always  easy,  especially  where  the  right  and 
the  instrument  are  closely  blended  in  legal  consideration,  as  in 
these  last  instances;  and  one  finds  himself  strongly  tempted  to 
consider  patent  and  insurance  rights  as  corporeal  property,  mis- 
taking the  instrument  —  the  letters-patent,  or  the  insurance  policy 
—  which  may  be  seen  and  touched,  for  the  right  which  is  and  must 
be  invisible  and  intangible. 


't-'' 


§  68.     Stocks  and  Shares. 

The  necessity  of  the  distinction  becomes  more  apparent  when 

1.  See     Bouv.     Diet.     "Annuity;  "      post,  as  to  Annuities,  &c.,  Part  III., 
"Pensions;"  "Salary;"  Wms.  Pers.      c.  11. 
Prop.  17th  Eng.  ed.  312.     See  chapter 

85 


§  68  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

we  come  to  consider  the  subject  of  stock,  upon  whose  nature  the 
courts  have  spoken  somewhat  doubtfully.  Said  Lord  Chief  Baron 
Kichards,  of  England,  in  King  v.  Capper,^  in  the  year  1817: 
"  JSTow  it  is  certainly  not  easy  to  define  precisely  the  meaning  of 
'  stock.'  It  is  not  an  ancient  subject  of  property  nor  known  to 
the  common  law.  It  is,  however,  a  hereditament."  And  further 
he  adds  that  stock  is  to  be  considered  "  a  chose  in  action,  or  in 
the  nature  of  a  chose  in  action.  It  is  not  a  thing  tangible  of  which 
you  can  take  corporeal  possession."  ^  And  Chief  Justice  Shaw, 
of  Massachusetts,  observed  later  of  bank  shares,  which  are  a  species 
of  stock:  "  If  a  share  in  a  bank  is  not  a  chose  in  action,  it  is  in 
the  nature  of  a  chose  in  action,  and,  what  is  more  to  the  purpose, 
it  is  personal  property."  ^  Again,  in  a  later  Pennsylvania  case 
the  same  question  was  fully  discussed  by  Judge  Rogers,  who,  after 
referring  to  what  Kent  ^  had  included  under  the  title  of  "  things 
in  action,"  proceeded  to  say  that  "  bank  shares  would  seem  to  be 
included  in  that  class,  as  they  merely  entitle  the  holder  to  receive 
on  demand  a  proportion  of  the  profits  or  earnings  of  the  bank, 
and  never  in  this  country  have  been  considered  other  than  chat- 
tels." ^  And  Judge  Comstock,  of  ^ew  York,  considers  that  cer- 
tificates of  stock  are  not  securities  for  money  in  any  sense,  much 
less  negotiable  securities ;  that  they  are  simply  the  muniments 
and  evidence  of  the  holder's  title  to  a  given  share  in  the  property 
and  franchises,  of  which  he  is  a  member.^     The  reader  will  thus 

2.  5  Price,  217,  262.    And  see  Wild-  6.  Slaymaker   v.    Gettysburg   Bank, 

man  v.  Wildman,  9  Ves.  177.  10   Penn.   St.   373.     And   see   further. 


3.  King  V.  Capper,  ib. 


Union  Bank  of  Tennessee  v.  State,  9 
Yerg.  490.     In  the  text  of  Angell  and 

4.  Hutchins  v.  State  Bank,  12  Met.  Ames  on  Corp.,  §  560,  there  is  an  in- 
421.  Shares  of  stock  are  incorporeal  accurate  use  of  the  word  "  chattels." 
personal  property.  Allen  v.  Pegram,  The  writer  says:  "Shares  in  joint- 
16  Iowa,  173.  stock     companies     are     not.     Strictly 

5.  2  Kent  Com.  351.  The  state-  speaking,  chattels;"  but  the  context 
ment  of  Chancellor  Kent  in  question  shows  that  he  meant  only  corporeal 
should    be    qualified,    considering    the      chattels. 

later  developments  of  the  law  of  per-  7.  Mechanics'    Bank    v.    Xew    York 

§onal  property.  R.  R.  Co.,  3  Kern.  627. 

86 


CHAP.  III.]  CHATTELS    PERSONAL,.  §    68 

perceive  that  the  court  sare  rapidly  outgrowing  this  chost  in 
action  doctrine,  now  that  new  and  peculiar  kinds  of  personal  prop- 
erty have  come  into  use;  while  they  intimate  plainly  enough, 
what  we  undertake  to  assert,  that  shares  in  stock,  notwithstanding 
the  visible  and  tangible  certificates  which  are  sold  in  the  market, 
and  represent  them,  constitute  a  sort  of  "  money  right,"  and  are 
an  incorporeal,  not  corporeal,  species  of  property.  The  dividend 
of  the  stock  is  incorporeal  as  well  as  the  stock  itself.^  In  Eng- 
land, shares  in  companies  acting  exclusively  on  land,  as  canal  and 
turnpike  companies,  were  at  first  sometimes  treated  as  real  estate ; 
but  in  the  great  majority  of  cases,  and  in  all  the  modern  charters 
and  acts  of  incorporation,  shares  in  joint-stock  corporations  are 
made  in  that  country,  what  they  have  been  almost  universally 
regarded  in  the  United  States,  personal  property,  or  chattels. 
This,  of  course,  is  a  matter  regulated  by  general  or  special  legis- 
lation, since  corporations  which  issue  stock  are  the  creature  of 
statute  or  charter.^ 

One  especial  difficulty,  in  regarding  the  nature  of  stock,  arises 
from  the  fact  that  stock  certificates  express  some  certain  money 
value  on  their  face.  Unlike  letters-patent,  which  represent  an 
uncertain  value,  and  insurance  policies,  where  the  liability  indi- 
cated is  purely  contingent  or  remote,  certificates  of  stock  are  the 
evidence  of  a  definite  fraction  of  a  definite  and  existing  debt ;  and 
if  the  corporation  issuing  these  certificates  be  well  conducted,  the 
certificates  will  have  a  market  value  so  precise  as  might  readily 
mislead  one  into  the  belief,  in  days  of  paper  money,  that  they  are 
themselves  money  or  securities  for  money;  though  the  par  value 
and  market  or  actual  value  of  the  shares  may  be  by  no  means 
synonymous. 

8.  Sla>Tnaker  v.  Gettysburg  Bank,  Trcpi-ar  v.  Water  Co.,  76  Cal.  537. 
10  Penn.  St.  373.  As  to  our  recent  real  estate  "  trusts  " 

9.  See  Wms.  Pers.  Prop.  17th  ed.  which  issue  stock  for  investors  quaere, 
327;  2  Kent  Com.  340,  n. ;  post.  Part  unless  local  statute  defines.  §  18, 
III.,  c.  9,  as  to  Stock;   11  Phila.  609;  supra. 

87 


§  69  THE  LAW  OF  PERSONAL  PKOPERTT.       [PABT  U. 

§  69.     Bills  and  Notes,  Checks,  etc. 

Now  let  us  look  a  little  further  into  this  subject  of  incorporeal 
chattels  personal.  Every  "  money  right "  is  a  money  right  only 
while  the  obligation  to  pay  lasts.  But  if  a  debt  be  paid  in  money 
(the  legal  tender  for  debts),  this  debt  is  extinguished,  and  the 
creditor  has  no  longer  an  incorporeal  chattel  personal  of  the  nature 
of  a  money  right,  but  in  its  stead,  a  corporeal  chattel  personal ; 
that  is,  the  money  which  was  paid  in  satisfaction.  And  so  with 
any  claim  or  demand ;  though  payment  might  be  by  agreement  in 
other  property.  And  so  long  as  the  right  of  action  to  recover  a 
debt,  claim,  or  demand  which  the  law  gives  a  person  is  without 
visible  or  tangible  instrument,  by  way  of  evidence  of  its  amount, 
we  find  no  difficulty  in  calling  the  debt,  claim,  or  demand,  an 
incorporeal  chattel.  But  it  is  otherwise  when  some  written  certifi- 
cate, which  acknowledges  an  indebtedness,  floats  about  seeking 
purchasers  in  the  money  market.  Thus,  if  A  owes  me  a  thou- 
sand dollars,  I  have  in  the  money  right  an  incorporeal  chattel 
personal.  If  he  pays  me  in  money  one  thousand  dollars,  the 
incorporeal  chattel  is  gone,  and  I  have  a  corporeal  personal  chattel 
—  namely,  one  thousand  dollars  cash  —  in  its  place.  But  sup- 
posing A  makes  out  his  note  for  one  thousand  dollars,  payable  on 
demand  instead,  and  hands  it  to  me,  what  kind  of  a  chattel  is  this 
note  ?  His  mercantile  standing  may  be  so  good  that  I  could  hand 
the  note  to  a  third  person  and  receive  one  thousand  dollars  upon 
it;  and  I  may  regard  it  as  in  every  respect  the  equivalent  of 
money.  But  it  is  not  money.  The  instrument  is  but  evidence  of 
an  indebtedness  which  A  must  eventually  pay  ofi",  as  in  the  other 
case,  in  money.  The  note  may  be  visible  and  tangible;  but  the 
money  right  which  it  represents  still  continues  incorporeal  as 
before. 

Being  misled  by  the  negotiable  quality  of  bills  and  promissory 
notes,  whereby  they  passed  current  very  much  like  money,  the 
courts  were  formerly  inclined  to  treat  them  as  choses  in  possessio7i, 
or  corporeal  property;  but  the  later  authorities  more  correctly 
hold  that  they  are  "  in  the  nature  of  choses  in  action;  "  which 

88 


CHAP.  III.]  CHATTELS    PBESONAI,.  §    70 

means,  that  thej  are  incorporeal  chattels  personal.^  Bank  checks 
are  properly  referred  to  the  same  class.^  And  the  debt  or  bal- 
ance due  from  a  bank  is  likewise  to  be  distinguished  from  the 
bank  book  which  evidences  it. 

§  70.  Bonds  and  Other  Instruments  for  the  Payment  of  Money. 
Individual  bonds  for  the  payment  of  money,  with  or  without 
security,  have  long  been  known  in  our  law.  Government  and 
corporation  loans  furthermore  have  become  an  important  subject 
for  investment  in  latter  days ;  and  not  only  does  the  federal  or 
State  government  issue  its  bonds  or  certificates  of  debt  bearing 
interest,  to  tempt  the  capitalist,  but  similar  issues  are  frequently 
authorized  by  law  in  the  case  of  public  and  private  corporations. 
Thus,  there  are  county  and  city  bonds,  railroad  bonds,  State 
bonds,  and  United  States  bonds,  all  offering  fair  rates  of  interest, 
to  be  purchased  in  the  open  stock  markets  at  this  day.  So,  too, 
we  have  a  great  variety  of  bonds  issued  by  industrial  and  other 
private  corporations.  Some  of  the  bonds  offered  are  of  a  negotia- 
ble character,  and  are  put  forth  as  coupon  bonds ;  some  are  to  be 
registered ;  some  are  bonds  accompanied  by  pledge  or  mortgage 
security.  Indeed,  private  individuals  in  many  of  the  United 
States,  who  wish  to  borrow  on  mortgage  of  their  lands,  do  so, 
by  giving  with  the  mortgage  their  coupon  bond,  as  a  matter  of 
convenience  to  the  lender,  although  the  usual  practice  in  the 
older  States  appears  rather  to  issue  a  simple  promissory  note  for 
the  loan  instead,  which  note  is  secured  by  the  mortgage.  Bond 
and  mortgage  securities  without  coupons  have  long  been  known. 

1.  Gaters  v.  Maddeley,  6  M.  &  W.  down  from  more  archaic  conditions." 

423;    Nash    v.    Nash,    2    Madd.    133;  Blackstone  v.   Miller,   188   U.   S.   189, 

Richards  v.  Richard?,  2  B.  &  Ad.  447;  206,  23  Sup.  Ct.  277,  47  L.  Ed.  439; 

Scarpollini  v.  Acheson,  7  Q.  B.  864;  Bacon  v.  Hooker,  177  Mass.  335,  58  N. 

Phelps     V.     Phelps,     20     Pick.     556.  E.   1078,   83   Am.   St.   Rep.   279.      See 

"Bonds    and    negotiable    instruments  post,    chapters    on    Bills    and    Notes, 

are   more   than    merely    evidences    of  Part  III.,  ca.  7,  8. 

debt.     The  debt  is  inseparable  from  2.  See  1  Pars.  Bills  and  Notes,  87, 

the  paper  which  declares  and  consti-  and    cases    cited ;    WmS.    Pers.    Prop, 

tutes  it,  by  a  tradition  which  comes  17th  Eng.  ed.  205. 

89 


§  70  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  II. 

Some  of  our  present  government  loans  are  nothing  more  than 
promissory  notes  bearing  interest;  others  have  the  character  of 
bonds. 

The  national  debt  of  England  is  composed  of  several  separate 
stocks,  of  which  the  most  important  is  called  the  "  consols,"  and 
a  general  designation  is  that  of  "  stock  in  the  public  funds."  We 
use  the  terms  in  this  country,  "  government "  or  "  public  securi- 
ties," in  general;  and  special  loans  were  popularly  designated, 
during  our  Civil  War  period,  as  the  United  States  "  seven-thirties," 
'^  five-twenties,"  and  the  like,  according  to  some  peculiar 
characteristic,  of  which  we  shall  speak  elsewhere.  There  are 
"  Massachusetts "  or  "  Ohio  State  bonds,"  and  so  on.  As  to 
what  are  more  properly  corporation  bonds,  appropriate  names 
are  used  in  the  stock  market;  such  as  "Chicago  City" 
bonds,  or  "  Union  Pacific  Railroad  "  bonds,  and  the  like.  From 
what  has  been  already  said,  it  is  evident  that  all  loans  on  securi- 
ties of  this  sort  are  incorporeal  chattels  personal.  Perhaps  in 
the  case  of  public  securities  of  the  United  States,  difficulty  would 
be  sometimes  found  in  drawing  the  line  between  corporeal  and 
incorporeal ;  but  we  apprehend  that  while  notes  issued  by  legis- 
lative authority  in  pursuance  of  the  Constitution,  for  circulation 
as  a  legal  tender  for  the  payment  of  debts,  should  be  classed  with 
gold  and  silver  money  as  corporeal,  others  which  were  put  forth 
to  invite  investment  merely,  being  evidence  of  a  debt  to  be  paid 
thereafter,  like  the  promissory  note  of  an  individual,  ought  to  be 
regarded  as  incorporeal.  This  subject  has  not  as  yet  received 
great  attention  in  the  courts."' 

3.  See  Wms.  Pers.  Prop.  17th  Eng.  on   Money,   Public   Securities,   Bonds, 

ed.  313  et  seq.;  Craig  v.  Missouri,  4  &c.       And    see     Attorney-General     v. 

Pet.   410;   Thomson  v.  Lee  County,  3  Jones,   1   Mac.   &  G.   574,   585.     Note 

Wall,  327;  chapters,  post,  Part  III.,  our  "Liberty  loan"  of  1917. 


90 


CHAPTER    IV. 

PERSONAL    CHATTELS    COKPOREAL    AND    INCORPOREAL    CONTRASTED. 

§  71.  Leading  Distinctions  between  Corporeal  and  Incorporeal 
Chattels  Personal. 
Having  classified  the  various  kinds  of  chattels  personal  under 
their  appropriate  headings  of  corporeal  and  incorporeal,  let  us 
now  proceed  to  point  out  some  of  the  leading  distinctions  which 
the  law  has  applied  to  the  two  classes;  or,  if  the  reader  prefers 
to  call  it  so,  as  between  clioses  in  possession  and  choses  in  action. 

§  72.     As  to  Assignment  and  Transfer;  Early  Doctrine. 

Perhaps  the  most  important  distinction  concerns  the  assign- 
ment or  transfer  of  such  chattels.  Corporeal  chattels  personal 
might  always  be  assigned  and  transferred  by  mere  delivery  of 
possession  with  appropriate  intention.'  But  as  to  those  incor- 
poreal, the  old  common-law  rule  was,  that  no  assignment  or  trans- 
fer could  be  made;  and  of  course  corporeal  delivery  was  imprac- 
ticable. We  are  still  to  bear  in  mind  that  incorporeal  chattels 
personal,  as  such,  were  not  known  in  the  early  days;  but  that 
choses  in  action,  or,  at  most,  the  right  to  sue  to  recover  some  debt, 
claim,  or  demand,  in  the  courts,  were  all  which  our  ancestors 
regarded  in  applying  their  rule  of  prohibition.  To  permit  a 
transfer  of  such  a  right  was  thought  to  encourage  litigation,  while 
the  very  attempt  to  transfer  was  looked  upon  with  abhorrence  as 
involving  the  guilt  of  maintenance,  or  maintaining  a  stranger  in 
his  private  suit.  These  were,  indeed,  the  days  of  primitive  sim- 
plicity; and  such  a  state  of  things  could  not  last  long.  With  the 
revival  of  trade,  bills  of  exchange  became  introduced  into  the 
mercantile  community  of  England.  These,  by  the  custom  of 
merchants,  were  rendered  negotiable;  that  is,  they  could  be  legally 
assigned  or  transferred  by  simple  indorsement  or  delivery;    and 

1.  See  Wms.  Pers.  Prop.  17th  Eng.  ed.  69  ct  seq. ;  2  Ewell's  Bl.  Ck)m.  441. 

91 


§    73  THE    LAW    OF    PERSONAL,    PROPERTY.  [pART  II, 

in  the  reign  of  Queen  Anne  promissory  notes  were  made  assignable 
by  indorsement  and  delivery  in  the  same  manner;  so  that  if  a 
debtor  could  be  induced  to  give  his  bill  or  note  for  what  he  owed, 
his  creditor  might  pass  the  debt  over  to  a  third  person,  and  prac- 
tically set  the  old  policy  of  the  law  at  defiance.  Bills  and  notes 
therefore  grew  into  favor  very  rapidly.  Meantime  an  indirect 
method  of  assigning  money  rights  was  discovered ;  for  in  the 
reign  of  Henry  VII.  it  was  determined  that  a  person  might  assign 
over  a  debt  secured  by  bond,  by  way  of  adjusting  his  own  liabilities 
with  a  third  person,  though  not  for  maintenance,  and  thus 
empower  the  assignee  to  sue  in  the  assignor's  name  at  his  own  cost ; 
which  principle  has  since  become  commonly  applied  to  choses  in 
action  generally.^  It  has  even  come  about  that  an  instrument 
which  is  not  a  negotiable  bill  or  note,  but  was  intended  as  such, 
may,  if  valid,  be  proved  and  assigned  as  a  contract  or  money  right ; 
though  primarily  perhaps  as  an  equitable  rule  and  of  course 
subject  to  equities  against  the  assignor  from  which  negotiable 
instruments  are  free."' 

§  73.     Assignment;  The  Subject  Continued;  Old  Rule  of  Law. 

The  legal  assignment  of  a  debt  is  now  usually  made  by  an 
instrument  in  the  nature  of  an  assignment,  coupled  with  a  power 
of  attorney,  which  confers  authority  from  the  creditor  to  his 
assignee  to  sue  the  debtor  in  the  creditor's  name ;  and  it  is  better 
to  have  such  assignment  by  deed,  or  at  all  events,  by  writing  of 
some  kind;  though  a  power  of  attorney  of  this  sort  may  be  con- 
ferred by  parol."^     The  transfer  of  debts  or  money  rights  by  means 

2.  See  Wms.  Pers.  Prop.  17th  Eng.  statutes  confirm  quite  generally  the 

ed.  31;   10  Co.  Rep.  48  a;   Bro.  Abr.  right  to  sue  on  choses  in  action,  and 

Chose  in  Action,  pi.  3,  15  Hen.  VII.  regulate  this  whole  subject. 
2;  Bouvier's  Diet.  "Chose  in  Action;"  3.  First   Nat.    Bank   v.    Carson,   60 

Bac.     Abr.     Assignment;      Welch     v.  Mich.  432,  27  K  W.  589:   §  76. 
Mandeville,  1  Wheat.  236,  per  Story,  4.  Wms.  Pers.  Prop.  17th  Eng.  ed. 

J.;    Pitts    V.    Holmes,    10    Cush.    93;  199;    Heath   v.    Hall,    4    Taunt.    326: 

Bartlett  v.  Pearson,  29  Me.  9;   Webb  Howell  v.  Mclvers,  4  T.  E.  690.     See 

V.    Steele,    13    N.    H.    230;     Blin    v.  Greenby    v.    Wileocks,    2    Johns.    1; 

Pierce,   20  Vt.    25.     Local   American  Welch  v.  Mandeville,  1  Wheat.  236. 

92 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    74 

of  an  assignment  with  power  is  recognized  and  protected  in  the 
courts  of  law.  As  a  power  of  attorney  is  legally  revoked  by  the 
death  of  the  person  giving  it,  the  question  might  be  asked  whether 
such  powers  are  available  to  the  assignees  of  creditors  under  such 
circumstances ;  but  the  general  rule  as  to  powers  of  attorney  is 
qualified  by  this  exception,  that  if  a  power  be  coupled  with  an 
interest,  it  survives  the  person  giving  it,  and  may  be  executed 
after  his  death.  Hence,  if  a  power  of  attorney  be  given  on  an 
assignment  of  a  debt  for  a  valuable  consideration,  it  is  generally 
made  irrevocable  in  terms,  and  is  certainly  deemed  irrevocable  at 
law.^  But  a  power  of  attorney,  though  irrevocable  during  the  life 
of  the  party  giving  it,  may  yet  become  extinct  by  his  death.^ 

The  principle  which  forbade  the  assignment  at  law  of  a  debt 
is  at  the  foundation  of  the  law  of  contracts.  For,  as  a  general 
rule,  a  contract  is  not  legally  assignable.''  The  instrument  of 
contract  (if  there  be  any)  passes,  it  is  true,  to  the  transferee,  so 
that  he  can  sue  to  recover  the  document ;  for  the  instrument  con- 
sidered by  itself  is  a  corporeal  thing,  and  might  perhaps  be  valu- 
able because  it  bore  a  distinguished  person's  autograph,  or  for 
other  special  reasons ;  but  the  rights  under  a  contract  cannot  be 
legally  transferred  at  the  old  common  law  so  as  to  put  the  assignee 
in  the  place  of  the  assignor,  and  entitle  him  to  sue  in  his  own  name. 
At  best,  he  can  only  sue  in  the  name  of  the  original  party  who 
assigned  the  contract,  and  he  is  regarded  rather  as  attorney  than 
an  out-and-out  assignee.^ 

§  74.     Assignment;  The  Subject  Continued;  Rule  of  Equity. 

iSTow,  in  equity,  from  an  early  period,  the  courts  viewed  the 

5.  Hunt  V.   Rousmanier,    8    \Mieat.  sin^nod.    Book  30,  N.  Y.  Epts.,  Bender 

174 ;  ib.,  1  Pet.  1.     See  Michigan  Ins.  ed.,  note,  p.  262. 

Co.  V.  Leavenworth.  30  Vt.   11;   Salt-  8.  Sniitli    Contr.    247,    248;    Chitty 

marsh  v.  Smith,  32  Ala.  404;   Walsh  Contr.    131-133    and    notes;     1    Pars. 

V.  Whitcomb,  2  Esp.  565.  Contr.  223-228 ;  Story  Eq.  Jur.,  §  1056. 

See    articles    on    the    alienability    of 

fl.  Hunt  V.   Rousmanier,   8   Wheat.  ^^^^^,  .^  ^^^.^  .^  ^^  Harvard  "Law 

174 

Review,  816,  and  in  SO  Harvard  Law 

7.  What  contracts  may  not  be  as-      Review,  97,  449,  821. 

93 


§  74  THE  I.AW  OF  PERSONAL  PROPERTY.       [PART  II. 

assignment  of  a  chose  in  action  quite  differently.  Courts  of 
equity,  dealing  with  a  great  variety  of  rights,  prospective  interests, 
whether  in  real  or  personal  estate,  contingent  gains,  such  as  freight 
to  be  earned  on  a  cargo  to  be  procured,  expectancies  of  heirs  to 
their  ancestor's  estate,  trusts  and  debts,  claims  and  demands  gen- 
erally, were  wont  to  treat  all  assignments  of  incorporeal  things, 
SO  far  as  concerned  their  own  jurisdiction,  as  amounting  to  noth- 
ing more  nor  less  than  an  agreement  to  permit  the  assignee  to 
make  use  of  the  name  of  the  assignor  at  law  for  the  purpose  of 
recovery;  or  as  a  contract  which  entitled  the  assignee  to  sue  in 
equity  in  his  own  name,  and  to  enforce  payment  of  the  debt 
directly  against  the  debtor,  whether  the  latter  had  assented  to  the 
assignment  or  not ;  making  the  debtor,  as  well  as  the  assignor, 
if  need  be,  a  party  to  the  bill.^  And  as  to  things  which  had  no 
actual  or  potential  existence,  but  rested  in  mere  possibility,  equity 
would  in  a  fair  case  support  an  assignment,  not  as  a  positive 
transfer  operative  in  prccsenti,  but  as  a  present  contract  to  take 
effect  and  attach  as  soon  as  the  thing  should  come  in  esse} 

9.  See  Story  Eq.  Jur.,  §§  1040, 1043,  held   (particularly  under  the  common 

1055,    1057,   and    cases    cited;    Smith  law    aspect)     that    he    cannot    assign 

Man.    of    Equity,    9th    Eng.    ed.    244  future    earnings    where    not    actually 

et  seq.;  Wms.  Pers.  Prop.  17th  Eng.  engaged  nor  under  contract,  as  out  of 

ed.  133.  some    mere    possibility    of    becoming 

1.  Story  Eq.  Jur.,  §  1040 ;   Calkins  employed.     Mulhall  v.  Quinn,  1  Gray, 

V.  Lockwood,  17  Conn.  154;   Langton  105;   Jermyn  v.  Moffitt,  75  Penn.  St. 

V.   Horton,   1   Hare,   549;    The   Wasp,  SQO';  Wade  v.  Bessey,  76  Me.  413.   But 

L.  R.  1  Ad.  &  Ec.  367.     A  contingent  this  seems  a  narrow  doctrine  from  the 

remainder  may  be  assigned  in  equity,  equitable    standpoint;    and    hence   an 

though  not  at  law.     Watson  v.  Smith,  assignment    of   wages   reasonably   ex- 

110  N.  C.  6.  pected  to  be  earned  in  the  future  in  a 

As  to  wages  or  earnings,  while  one  specified  employment,  and  not  a  mere 

may    assign    whatever    he    may    earn  indefinite      expectation      of      earning 

hereafter  under  an  existing  and  spe-  money,  is  held  valid  in  equity  at  all 

cific  employment  (Mallin  v.  Wenham,  events,  though  founded  upon  no  exist- 

209  111.  252,  70  N.  E.  564,  65  L.  R.  A.  ing  emplojTnent  or  contract.    Edwards 

602  n,  101  Am.  St.  Rep.  233;   Rodij-  v.  Peterson,  80  Me.  367,  14  Atl.  936; 

keit  V.  Andrews,  74  Ohio  St.  104,  77  Metcalf  v.  Kincaid,  87  Iowa,  443,  54 

N.    E.    747,    6    Ann.    Cas.    761.      See  N.  W.  867. 

O'Keefe   v.    Allen,    20   R.    I.    414,    39  Claims    for    services    already    ren- 

Atl.  752,  78  Am.  St.  Rep.  884),  it  is  dered  may,  with  their  lien  incidents, 

94 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    74 

But  equity  recognizes  just  limits  to  this  doctrine,  by  its  refusal 
to  enforce  such  assignments  as  are  against  public  policy.  Assign- 
ments of  future  pay  by  officers  of  the  government,  whether  in  the 
civil,  military,  or  naval  service,  have  been  discountenanced  on  this 
ground ;  ^  although  as  to  back  pay,  prize-money,  and  arrears  of 
pension,  it  has  been  frequently  decided  otherwise.^  Legislation 
sometimes  interposes  to  protect  soldiers,  sailors  and  others  against 
assignments  of  this  nature.  And  the  assignment  of  a  government 
claim  is  in  general  void  under  an  act  of  Congress."*  So,  too,  on 
principles  of  public  policy,  equity  will  not  uphold  assignments 
which  plainly  involve  champerty  or  maintenance,  nor  where,  in 
general,  litigation  would  be  thereby  encouraged  on  a  mere  specu- 
lation. But,  in  this  mattt?!*  of  money  rights,  equity  deals  more 
liberally  than  the  law ;  and  while  the  assignment  of  a  mere  naked 
right  to  litigate, —  such  as  the  right  to  set  aside  a  conveyance  for 
fraud, —  which  is  incapable  of  giving  any  benefit  except  through 
the  medium  of  a  suit,  would  not  be  enforced  by  courts  of  equity, 
because  against  public  policy;  yet  they  permit  a  person  to  take 
an  assignment  of  the  whole  interest  of  another  in  a  contract,  or 

be  readily  assigned  in  any  case.  But  assignment  of  officers'  salaries,  Book 
one  who  agrees  to  perform  personal  25,  N.  Y.  Rpts.,  Bender  ed.,  note, 
services  requiring  skill  or  peculiar  p.  364.  Assignment  of  unearned  sal- 
qualifications  cannot,  without  the  as-  aries  of  public  officers  and  future 
sent  of  the  other  contracting  party,  earnings  generally.  Book  29,  N.  Y. 
so  assign  over  his  executory  contract  Rpts.,  Bender  ed.,  note,  p.  7. 
to  perform  as  to  substitute  another  3.  See  Story  Eq.  Jur.,  §§  763,  1040, 
in  his  place  to  complete  the  service.  and  cases  cited;  Ileald  v.  Hay,  3  Gif. 
Sloan  V.  Williams,  138  111.  43.  Local  467;  Smith  Man.  Equity,  238-240. 
statutes  now  regulate  to  a  consider-  Cf.,  Johnstone  v.  Cox,  19  Ch.  D.  17. 
able  extent  the  subject  of  assignments  And  see  as  to  Pensions,  &c.,  c.  post. 
of  wages,  and  confirm  the  right  upon  4.  See  Act  Feb.  26,  1853,  §  1.  But 
pursuance  of  prescribed  formalities.  cf.  48  Fed.  43.  And  see,  as  to  assign- 
See  Day  V.  Vinson,  78  Wis.  198,  47  ing  a  public  contract,  Littlefield  v. 
N.  W.  269;  47  Minn.  364.  Pinkham,  72  Me.  369;  First  National 
2.  Schwenk  v.  Wyckoff,  46  N.  J.  Bank  v.  Ottawa,  43  Kan.  294,  23  Pac. 
Eq.  560,  20  Atl.  259,  9  L.  R.  A.  221,  485;  local  statutes.  Assignments  of 
19  Am.  St.  Rep.  438.  Wages  of  fire-  claims  against  the  United  States,  Book 
men,  Sandwich  Mfg.  Co.  v.  Krake,  66  30,  N.  Y.  Rpts.,  Bender  ed.,  note, 
Minn.  110,  68  N.  W.  606.    Validity  of  p.  337. 

95 


§  75 


THE  I.AW  OF  PERSONAL  PROPERTY. 


[part  II. 


security,  or  property  which  is  in  litigation,  provided  he  does  not 
make  any  advance  beyond  the  mere  support  of  the  interest  which 
he  has  so  acquired.  And,  not  to  follow  too  far  the  subtile  and 
rather  finely  drawn  distinctions  which  are  made  in  this  respect  of 
transactions  against  public  policy,  we  may  lay  it  down  as  well 
established  in  chancery,  that  a  legatee  may  assign  his  legacy ;  also 
that  a  creditor  may  assign  his  interest  in  a  debt,  although  he  may 
have  already  commenced  a  suit  to  recover  it.^ 

§  75.     Assignment;  The  Subject  Continued;  Modem  Fusion  of 
Equity  and  Common-Law  Doctrines. 

Modifications,  like  these,  of  the  rigor  of  the  common  law  con- 
cerning the  assignment  of  money  rights,  have  produced  a  marked 
effect  upon  the  modern  jurisprudence  of  personal  property.^     And 


5.  See  Story  Eq.  Jur.,  §§  1049-1054, 
and  oases  cited;  Tjrson  v.  Jackson,  30 
Beav.  384;  Smith  Man.  Equity,  241, 
242.  The  subject  of  the  assignment 
of  rights  of  action,  as  tending  to  the 
common-law  offences  of  champerty 
■and  maintenance,  is  left  by  the  later 
decisions  in  a  state  of  considerable 
uncertainty.  See  Danforth  v.  Street- 
er,  28  Vt.  490;  and  Story  Eq.  Jur., 
§  1057  c,  10th  edition. 

6.  A  patent  right  is  assignable,  and 
so  is  a  copyright;  and  such  rights 
being  conferred  by  statute  they  are 
likewise  protected  by  appropriate 
legislation.  In  case  of  the  former, 
where  letters-patent  are  requisite,  the 
thing  to  be  assigned  is  not  the  mere 
parcliment,  but  the  monopoly  con- 
ferred,—  the  right  of  property  which 
it  creates;  and,  when  the  party  has 
acquired  an  inchoate  riglit,  an  assign- 
ment of  it  is  legal,  and  an  invention 
may  be  sold  as  well  before  as  after 
the  application  for  a  patent.  Act  of 
Congress,  July  8,  1870,  K.  S.  U.  S., 
§   4898;   Gayler  v.   Wilder,   10  How. 


477,  493 ;  Rathbone  v.  Orr,  5  McLean, 
132;  Jones  v.  Eeynolds,  120  N.  Y. 
213,  24  N.  E.  270.  See  Part  III.  c. 
10,  post,  on  Patents  and  Copyrights. 
An  unliquidated  balance  of  account 
is  now  assignable.  Westcott  v.  Pot- 
ter, 40  Vt.  271.  But  not  items  in  a 
mutual  account  unadjusted  and  before 
a  balance  is  struck.  Nonantum.  Co. 
V.  Webb,  124  Penn.  St.  125,  16  Atl. 
632.  Assignment  of  the  right  to  sell 
and  canvass  for  a  patented  machine 
as  agent  may  be  verbal.  Springfield 
V.  Drake,  58  N.  H.  19.  And  a  claim 
for  damages,  though  arising  ex  de- 
licto, of  a  kind  which  on  the  death  of 
the  party  would  survive  to  his  execu- 
tors or  administrators  as  assets,  may 
also  in  many  instances  be  assigned. 
Freeman  v.  Newton,  3  E.  D.  Smith, 
246;  McKee  v.  Judd,  12  N.  Y.  622; 
Quin  v.  Moore,  15  ib.  432.  But  a 
mere  right  of  action  for  a  tort  is  not 
assignable  unless  statute  permits. 
Hunt  V.  Conrad,  47  Minn.  557,  50 
K  W.  614,  14  L.  R.  A.  512,  n.:  Mur- 
ray V.   Buell,    76   Wis.    657;    Central 


96 


CHAP.  IV.]  PEESONAL    CHATTELS    COXTRASTED. 


75 


in  this  country,  where  we  find  that,  in  many  States,  a  fusion, 
more  or  less  imperfect,  of  equity  and  common-law  doctrines  is 
gradually  being  accomplished,  it  appears  to  be  already  a  well- 
settled  rule  that,  if  the  assignment  of  a  debt  be  followed  by  the 
debtor's  promise  of  payment  to  the  assignee,  the  latter  may 
enforce  it  by  a  suit  in  his  own  name;  inasmuch  as  such  a  promise 
operates  as  a  ratification  of  the  duty  recognized  in  equity  which 


R.  V.  Brunswick  R.,  87  Ga.  386;  as- 
signability of  causes  of  action  for  tort, 
Book  3,  N.  Y.  Rpts.,  Bender  ed.,  note, 
p.  401.  Nor  the  right  to  bring  a  bill 
in  equity  for  a  fraud  oommitted  on 
the  assignor.  Gardner  v.  Adams,  12 
Wend.  297;  Story  Eq.  Jur.,  §  1040  h; 
Dunklin  v.  Wilkins,  5  Ala.  199 ;  Dick- 
inson V.  Seaver,  44  Mich.  624 ;  104  Mass. 
353.  And  see  Dewitt  v.  Brisbane,  16 
N.  Y.  508.  For  in  these  last  two  in- 
stances an  assignment  is  thought  to 
be  contrary  to  public  policy,  and 
savoring  of  the  character  of  mainte- 
nance ;  grounds,  as  we  have  just  seen, 
upon  which  equity  refuses  to  lend  its 
assistance  to  petitioners.  Supra,  §  74. 
But  as  to  waiving  the  tort  one  may 
assign  a  right  of  action  for  conver- 
sion. Smith  V.  Thompson,  94  ilich. 
381.  One's  interest  in  a  suit  may  be 
as&igned  in  various'  modem  instances. 
As  a  suit  for  negligence.  78  Mich. 
681.  Or  against  a  common  carrier 
for  loss  or  injury  to  goods.  Norfolk 
R.  V.  Read,  87  Va.  185.  Or  any  cause 
of  action  founded  on  injury  to  prop- 
erty which  survives.  Webber  v. 
Quaw,  46  Wis.  118 ;  Chouteau  v. 
Boughton,  100  Mo.  406,  138  S.  W. 
877.  But  an  instalment  of  alimony 
not  yet  due  is  not  assignable.  Kemp- 
ster  v.  Evans,  81  Wis.  247,  51  N.  W. 
327.  Nor  is  a  contract  founded  in 
personal  trust  and  confidence  assign- 
able at  the  option  of  one  party  alone. 

7  97 


Lansden  v.  McCarthy,  45  Mo.  106; 
Sloan  v.  Williams,  138  111.  43,  27  N. 
E.  531.  A  promissory  note  with  its 
accompanying  bond  or  guaranty  may 
be  thus  transferred.  43  Minn.  466. 
Or  stock  certificates  with  their  inci- 
dental rights.  Wages  or  earnings  are 
assignable.  §  74,  note.  And  the  pref- 
erence or  lien  that  goes  with  it.  Or  a 
broker's  or  agent's  profits.  Knevalsv. 
Blauvelt,  82  Me.  458,  19  Atl.  819.  Or 
a  la%vj'er's  fees  in  a  suit,  subject  to 
equities  of  parties  litigant.  36  Fed. 
147.  Heirs  or  legatees  may  assign.  142 
Mass.  366;  62  Hun,  622;  even  expec- 
tancies in  an  ancestor's  estate. 
Fritz's  Estate,  160  Penn.  St.  156,  28 
Atl.  642.  Or  partners,  so  as  to  give 
the  assignee  the  right  to  sue  for  a 
partnership  accounting.  Greenwood 
V.  Marvin,  111  N.  Y.  423,  19'  N.  E. 
228.  A  right  of  action  on  a  contract 
is  assignable,  unless  statute  or  the 
nature  and  terms  of  the  contract  ex- 
clude it.  First  Nat.  Bank  v.  Maxfield, 
22  Atl.  479.  83  Me.  576.  Particularly 
if  its  obligation  may  be  dischargiHi  by 
a  mere  money  payment.  Rochester 
Co.  V.  Stiles  Co.,  135  N.  Y.  209.  The 
limits  prescribed  in  a  contract  must 
be  observed.  Burck  v.  Taylor,  152 
U.  S.  634,  14  S.  C.  696.  Statutes  are 
found  in  aid  of  this  right  to  assign. 
And  see  Codman  v.  Brooks,  159  Mass. 
477. 

It  is  held  against  public  policy  for 


75 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  II. 


resulted  from  the  assignment.''     This  subject  is  regulated  by  vari- 
ous practice  codes  as  to  the  party  in  whose  name  a  suit  should  be 


an  executor  (semble  any  fiduciary  in 
the  probate  court)  to  assign  his  fees 
not  yet  ascertained  and  approved. 
Worthington,  Re,  141  N.  Y.  9,  35  N. 
^E.  929,  23  L.  R,  A.  97. 

7.  Compton  v.  Jones,  4  Cow.  13 ; 
Crocker  v.  Whitney,  10  Mass.  316; 
Cromelien  v.  Mauger,  17  Penn.  St. 
169;  2  Am.  Lead.  Cas.  5th  ed.  145, 
209,  and  eases  cited;  Tiernan  v. 
Jackson,  5  Pet.  580. 

"  If,"  as  was  observed  in  a  Penn- 
sylvania case,  "  there  be  a  debt  due 
by  the  defendant,  which  has  been 
assigned  to  the  plaintiff,  and  in  con- 
sideration of  that  debt  and  that  as- 
signment the  defendant  expressly 
promises  to  pay  the  plaintiflF,  the 
latter  has  a  good  cause  of  action." 
Per  Lowry,  J.,  in  Cromelien  v.  Mau- 
ger, 17  Penn.  St.  169.  But  the  law 
courts  of  England  do  not  seem  to 
have  proceeded  quite  so  far  in  favor 
of  the  assignee;  for  they  adhere  very 
strictly  to  the  doctrine  that  a  promise 
made  by  the  debtor  to  his-  creditor 
for  the  payment  of  his  debt  to  a  third 
person  is  not  valid  unless  such  third 
person  is  a  party  to  the  contract,  and 
agrees  to  relinquish  some  claim  or 
demand  against  the  original  creditor ; 
even  though  such  third  person  subse- 
quently accepted  the  promise  in  lieu 
of  an  original  demand  which  he  had 
against  the  original  creditor.  Coch- 
ran V.  Green,  9  C.  B.  x.  s.  448.  See 
Lilly  v.  Hays,  5  A.  &  E.  548.  In 
New  Hampshire  it  has  been  decided 
directly  to  the  contrary.  Warren  v. 
Batchelder,  16  N.  H.  580.  But  see 
Blymire  v.  Boistle,  6  Watts,  182. 
See  Am.  Lead.  Cas.  5th  ed.  209-217. 
The  common-law  objection  to  Such  a 


transaction  would  be  that  the  third 
person  does  not  thereby  discharge  the 
original  creditor  from  liability  on  the 
debt  due  to  himself,  but  accepts 
the  debtor's  liability  to  the  original 
creditor  as  a  sort  of  collateral  secu- 
rity for  his  own  benefit.  But  in  equity 
such  a  transaction  would  be  viewed 
as  an  equitable  appropriation,  trans- 
fer, or  assignment  of  the  debt.  And, 
to  sustain  an  equitable  assignment, 
it  is  not  necessary  that  the  debt,  on 
account  of  which  the  transfer  is 
•made,  should  be  satisfied;  it  is 
enough  that  it  exists ;  and  an  assign- 
ment by  way  of  collateral  security  is 
as  valid  as  if  it  were  accepted  in  pay- 
ment. See  3  Lead.  Cas.  Eq.  379,  3d 
Am.  ed.;  2  Am.  Lead.  Cas.  214,  215. 
And  see  chapter  on  Debts,  post.  It 
is  towards  this  latter  and  more  liberal 
view  of*  an  assignment  of  money 
rights  that  the  American  courts  are 
steadily  tending. 

"  The  ordinary  course,"  says  Bo- 
vill,  C.  J.,  in  a  modern  English  case, 
"  where  it  is  intended  to  give  a  secur- 
ity on  a  fund  in  the  hands  of  a  third 
party,  is  to  give  an  order  upon  such 
third  party  to  pay,  or  an  authority  to 
the  creditor  to  receive,  the  money." 
Field  V.  Magaw,  L.  E.  4  C.  P.  660. 
In  this  case  it  was  held  that  a  mere 
verbal  promise  (without  notice  to  the 
debtor)  to  pay  money  when  the  debtor 
received  a  debt  due  him  from  a  third 
person  constituted  no  assignment  of 
such  third  person's  debt.  lb.  Upon 
the  doctrine  of  equitable  assignment 
of  a  debt,  which  is  subtle,  the  com- 
mon-law courts  inclined  to  put  a  re- 
straint. And  yet  in  English  practice 
it  is  a  proper  equitable  plea  (allowed 


98 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED. 


§  76 


brought;    but  there  are  still  various  informal  assignments  which, 
if  not  legal,  are  upheld  as  equitable. 

§  76.     The  Same  Subject;  What  May  now  be  Assigned. 

Every  species,  therefore,  of  incorporeal  personal  property,  with 
a  few  nominal  exceptions, —  as  certain  rights  to  litigate,  whose 
transfer  is  still  deemed  repugnant  to  sound  policy,^  or  made  illegal 
by  statute,^  and  in  positive  instances  things  with  no  actual  or 
potential  existence,^  — may  now  be  assigned.  Debts,  claims,  and 
demands  of  a  money  value  may  accordingly  change  o"\vners ;  which 
is  constantly  done,  though  not  always  without  pursuing  formalities 
of  a  peculiar  sort,  based  upon  the  theory  that  an  incorporeal  chat- 
tel of  a  particular  class  requires  delivery  of  its  appropriate  muni- 
ment or  voucher  and  of  a  writing  of  transfer  besides.  A  contract 
involving  personal  services  cannot,  however,  be  assigned,  as  every 


in  a  court  of  law,  since  otherwise 
equity  would  enjoin),  that  the  plain- 
tiff assigned  tlie  debt  to  B,  who  gave 
notice  to  the  defendant,  and  that  the 
assignment  still  remains  in  full  force. 
Jeffs  V.  Day,  L.  R.  1  Q.  B.  372. 

8.  A  right  of  action  for  malicious 
prosecution  is  not  assignable  even 
after  verdict.  Lawrence  v.  Martin, 
22  Cal.  174.  And  neither  is  a  right 
of  action  for  assault.  Weber  v.  Gaffin, 
(Nova    Scotia),    9    East    L.    R.    277. 

9.  Supi-a,  §  74,  and  note.  All  right 
and  title  to  the  goods  in  a  replevin 
suit  is  upheld.  Caldwell  v.  Perry,  86 
Mich,  266. 

1.  Kendall  v.  United  States,  7 
Wall.  113;  Gragg  v.  Martin,  12  Al- 
len, 498. 

An  assignment  of  fish  not  yet 
caught  is  void  as'  being  of  a  mere 
possibility.  Low  v.  Pew,  108  Mass. 
350,  11  Am.  Rep.  357.  So  for  the 
same  reason  the  unearned  fees  of  an 


executor  before  they  are  fixed  are  not 
assignable.  In  re  Worthington,  141 
N.  Y.  9,  35  N.  E.  929,  23  L.  R.  A.  97. 

An  assignee  of  hay  to  be  grown  on 
a  certain  field  has  a  title  inferior  to 
that  of  a  purchaser  of  the  hay  after 
it  is  cut.  Shaw  v.  Gilmore,  81  Me. 
396,  17  Atl.  314. 

A  contingent  remainder  in  chattels 
can  be  a.ssigned  only  by  estoppel  as 
in  case  of  land.  Ridgeway  v.  Under- 
wood, 67  111.  41D. 

This  rule  of  the  common  law  has 
been  modified  by  statute  and  decision 
so  that  a  contingent  interest  may  be 
assigned.  Ham  v.  Van  Orden,  84  N. 
Y.  257;  Putnam  v.  Story,  132  Mass. 
205. 

A  contingent  equitable  remainder 
may  be  taken  by  i^iuitable  process 
and  sold  at  suit  of  a  creditor  of  the 
remainderman.  National  Park  Bank 
V.  Billings,  144  N.  Y.  App.  Div.  536, 
129  N.  Y.  Supp.  846. 


99 


§  76  THE  LAW  OF  PERSONAL  PROPERTT.       [PART  II. 

man  has  the  right  to  decide  with  whom  he  will  have  contractual 
relations.^ 

Equity  is  constantly  encroaching  upon  the  legal  doctrine  of 
assignment,  and  nullifying  the  letter  of  transfer  requirement,  out 
of  regard  to  the  transferring  party's  intent.^  All  personal  prop- 
erty of  an  incorporeal  character,  if  not  negotiable,  may,  as  a  rule, 
be  assigned  by  the  owner  at  the  present  day;  and  even  the  trans- 
fer of  a  negotiable  instrument  by  mere  delivery,  without  the 
technical  indorsement,  has  been  in  certain  instances  protected,  for 
the  transferee's  benefit,  on  the  broad  basis  of  a  transferring  intent 
and  an  equitable  assignment;  though  an  assignment  imports  not, 
like  an  indorsement,  the  ability  of  the  primary  debtor  to  pay,  but 
rather,  if  for  value,  the  thing's  genuineness,  as  in  a  corresponding 
transfer  of  corporeal  property."* 

In  this  connection  the  terms  "  legal  "  and  "  equitable  "  assign- 
ments are  sometimes  used  confusedly.  The  law  has  in  truth  so 
far  succumbed  to  equity,  that  it  now  lends  its  support  and  pro- 
tection to  the  enforcement  of  an  assignee's  rights,  though  in  prac- 
tice requiring  suit  to  be  brought  in  the  assignor's  name, —  a 
practice,  moreover,  which  local  statute  has  largely  modified. 
Equity,  when  invoked,  pursues  remedies  after  its  ovni  form.  But 
the  doctrine  of  legal  assignment  has  become  substantially  that  of 
equitable  assignment,  as  concerns  the  right ;  and  in  general  every 
transfer  by  assignment  of  incorporeal  chattels,  whether  by  deed, 
by  writing  not  under  seal,  or  even  by  delivery  of  the  muniment 
or  voucher  with  mere  words  of  parol  transfer  (though  local  stat- 
utes often  repudiate  parol  assignments  to  a  great  extent,  while 

2.  Boston  Ice  Co.  v.  Potter,  123  Stiles  v.  Farrar,  18  Vt.  444;  Dyer  v. 
Mass.  28,  25  Am.  Eep.  9.  See  BuTck  Homer,  22  Pick.  253  ;  Giffert  v.  West, 
V.  Taylor,  152  U.  S.  634,  14  Sup.  Ct.  33  Wis.  617 ;  Robinson  v.  McXeill,  51 
696,  38  L.  Ed.  578.  Assignment  of  111.  225;  First  Nat.  Bank  v.  Carson, 
mechanics'  lien,  Book  26,  N.  Y.  Rpts,  60  Mich.  432,  27  X.  W.  589.  And  see 
Bender  ed.,  note,  p.  1098.  §   84,  post,  as  to   indorsement.     The 

3.  Winfield  v.  Hudson,  4  Dutch,  selling  of  non-transferable  trading 
255;  Welch  v.  Mandeville,  1  Wheat.  stamps  may  be  enjoined.  Sperry  & 
236,  per  Story,  J.  Hutchinson  Co.  v.  Weber  &  Co.,  161 

4.  Wolfe  V.    TylQT,    1   Heisk.    313;  Fed.  219. 

100 


CHAP.  IV,]  PERSONAL    CHATTELS    CONTRASTED.  §    77 

equity  inclines  to  sustain  them),   is  upheld  in  law  as  well  as 
equity.^ 

§  77.     The  Subject  Continued;  What  Constitutes  an  Assignment. 

As  a  general  rule,  anything  written,  said,  or  done  in  pursuance 
of  an  agreement,  and  for  valuable  consideration,  or  in  considera- 
tion of  some  pre-existing  debt,^  to  place  a  money  right  or  fund 
out  of  the  original  owner's  control,  and  to  appropriate  in  favor  of 
another  person,  amounts  to  an  equitable  assignment.  Hence  no 
particular  writing  or  form  of  words  is  necessary,  provided  only 
a  consideration  be  proved,  and  the  intention  of  the  parties  made 
apparent  by  suitable  evidence.^  And  assignment  of  chattels  cor- 
poreal or  incorporeal  is  made,  according  to  the  nature  of  the 
property  and  the  circumstances,  by  a  direct  transfer  or  by  some 
draft  or  order  upon  a  particular  fund. 

Any  act,  therefore,  which  amounts  to  an  appropriation  of  a 
particular  fund  —  as  where  an  order  is  drawn  for  the  whole  of 
a  specific  sum  or  deposit  —  constitutes,  in  equity,  an  assignment 
thereof,  and  (upon  due  notice  to  the  drawee)  will  bind  it.^  In 
like  manner  there  may  be  an  appropriation  of  this  specific  fund, 
pro  tanto,  to  the  amount  of  an  order,  which  equity  courts,  at  least, 
will  protect.^     But  though  the  phraseology  used  is  immaterial, 

5.  See   Allen   v.   Pancoast,    Spencer  Hoey,   89  N.  Y.   537.     Best  evidence 

(N.  J.),   68;   Welch  v.  MandeAnlle,   1  rule     applied     to     assij^nments,     see 

Wheat.  236;   Hooker  v.   Eagle  Bank,  Cliainberlayne  Evid.,  §  3570. 

30  N.  Y.  83.  7.  Story  Eq.  Jur.,  §  1047,  and  cases 

But  the  assignee  of  a   legal   right  cited ;    Row  v.   Dawson,   1   Ves.   332 ; 

may    not    proceed    by    bill    in    equity  Morton  v.  Naylor,  1  Hill,  583.     Oral 

merely  because  he  cannot  sue  in  law  assignments,    Book    37,    N.    Y.    Rpts., 

in   his   own   name.     Hayward   v.   An-  Bender  ed.,  note,  p.  559. 

drews,  106  U.  S.  Supr.  672;   Walker  8.  Mandeville   v.    Welch,    5    Wheat. 

V.   Brooks,   125   Mass.  241,  per  Gray,  277;  Robbins  v.  Bacon,  3  Greenl.346; 

C.    J.,    commenting    upon    Story    Eq.  Black   v.    Zacharie,    3    How.    (U.    S.) 

Jur.,  §  1057  a.  483;    McWilliama  v.  Webb,  32   Iowa, 

8.  A  valuable  consideration  actually  577 ;    Conway   v.    Cutting,    51    N.    H. 

rendered  is  a  necessary  element  to  an  407;  Blin  v.  Pierce,  20  Vt.  25. 

equitable  assignment,  the  assignment  9.  I^ewis   v.    Berry.    64    Barb.    593 ; 

being  insufficient  in  law.    Tallman  v.  Christmas   v.    Russell,    14    Wall.    69; 

101 


§  77 


THE  LAW  OF  PEESONAL  PROPERTY. 


[part  II. 


provided  the  assigning  intent  be  clear,  there  must  be  something 
more  than  a  mere  promise  —  an  actual  appropriation  in  fact, 
without  reserving  to  the  holder  of  the  fund  any  control  over  it  — 
to  constitute  an  assignment.^  And  the  splitting  up  of  a  demand, 
though  otherwise  admissible  in  equity,  is  said  to  be  ineffectual  as  a 
part  assignment,  without  the  debtor's  assent,  that  is  to  say,  the 
assent  of  the  third  party  who  has  the  payment  to  make,  inasmuch 
as  it  subjects  him  to  responsibilities  and  embarrassments  not  orig- 
inally undertaken  by  him  ;^  a  theory  which  in  equity  yields  often, 
in  these  days,  to  the  practical  accomplishment  of  just  ends.^  A 
remittance  may  be  specially  made  for  paying  off  a  certain  creditor, 
so  as  to  constitute  an  assignment  of  that  remittance ;  and  wherever 
A  owes  B,  and  B  owes  C,  and  it  is  mutually  agreed  that  A 
shall  pay  C  (the  principle  which  is  at  the  foundation  of  foreign 
exchange  transactions),  there  is  an  assignment  which  the  courts 
will  protect,'*  if  the  mutual  arrangement  is  complete.^     Indeed,  it 


Moody  V.  Kyle,  34  Misa.  506;  Public 
Schools  V.  Heath,  2  McCart.  22.  But 
only  upon  consideration.  Alger  v. 
Scott,  54  N.  Y.  14. 

1.  Christmas  v.  RusSell,  supra; 
Field  V.  Magaw,  L.  R.  4  C.  P.  660; 
Canfield  v.  Monger,  12  Johns.  346; 
Blin  V.  Pierce,  20  Vt.  25;  Story  Eq. 
Jur.,  §  1044;  Clarke  v.  Thompson,  2 
R.  I.  146. 

2.  Story,  J.,  in  Mandeville  v. 
Welch,  5  ViTieat.  277;  Getchell  v. 
Maney,  69  Me.  442.  See  Carvill  v. 
Mirror  Films,  Inc.,  163   K  Y.   Supp. 

268,  (App.  Div.),  which  seems  to 
uphold  the  right  of  the  assignee 
under  a  partial  assignment  to  sue  at 
law.  A  recent  view  is  that  the  as- 
signee should  be  allowed  to  sut  at 
law  by  joining  the  assignor  as  co- 
plaintiff.  Dickinson  v.  Tyson,  125  N. 
Y.   App.   Div.    735,   110   N.   Y.    Supp. 

269.  Assignment  of  part  of  claim, 
validity   of,   Book   32,   N.   Y.   Rpts., 


Bender  ed.,  note,  p.  1143.  But  as  this 
assent  raay  be  implied,  and  notice  of 
an  assignment  should  always  be  given 
the  debtor,  the  rule  is  not  harshly  en- 
forced. See  Gibson  v.  Cook,  20  Pick. 
15 ;  Stevens  v.  Bowers,  16  N.  J.  L. 
16;  Gardner  v.  Smith,  2  Heisk.  256; 
McPike  V.  McPherson,  41  Mo.  521; 
Pomeroy  v.  Manhattan  Life  Ins.  Co., 
40  111.  398. 

3.  Exchange  Bank  v.  iMcLoon,  73 
Me.  498',  and  various  English  and 
American  cases  cited.  The  assign- 
ment of  a  fractional  part  of  a  fund  is 
good  in  equity  where  the  person  who 
is  to  pay  raises  no  objection.  Kings- 
bury V.  Burrill,  151  Mass.  199;  Lan- 
igan  V.  Bradley  &  Currier  Co.,  50 
N.  J.  Eq.  201,  24  Alt.  505. 

4.  Harwood  v.  Tucker,  18  111.  544; 
Wiggins  V.  McDonald,  18  Cal.  126. 

5.  See  Borden  v.  Boardman,  157 
Mass.  410,  32  N.  E.  469. 


102 


CHAP.  IV.]  PEKSO.NAL    CHATTELS    CONTRASTED.  §    77 

has  long  been  a  settled  principle  that  any  liquidated  and  complete 
debt  may  be  transferred  by  a  triple  arrangement,  so  that  the 
debtor  of  the  assignor  shall  become  the  debtor  of  the  assignee,  and 
that  such  an  assignment  is  with  sufficient  consideration  ;^  but 
(subject  to  modern  qualifications  as  to  giving  a  debtor  notice  of 
assignment'^)  the  principle  of  the  case  requires  not  only  a  definite 
and  existing  fund  or  debt,  but  the  assent  of  the  debtor  or  depos- 
itary to  the  assignment.^  A  general  order  drawn  on  no  particular 
fund  is  no  assignment  f  and  merely  to  draw  upon  the  debtor  or 
party  who  makes  payment  is  insufficient,  whether  pro  tanto  or 
otherwise.^ 

No  particular  form  of  assignment  is  at  the  present  day  requisite ; 
since  the  only  indispensable  thing  upon  which  equity  has  insisted 
is  that  the  assignor  intended  to  transfer,  and  the  assignee  to  accept 
the  transfer;  so  that  the  latter  might  be  enabled  to  come  into 
court,  and  have  the  full  formalities  on  his  behalf.^  An  instru- 
ment in  the  form  of  a  deed  setting  forth  the  parties,  the  subject- 
matter,  and  the  consideration,  and  reciting  that  the  one  party  does 
hereby  "  grant,  sell,  assign,  and  set  over "  the  subject-matter 
described,  and  all  his  "  right,  title,  property,  and  interest  "  in  the 

6.  lb. ;  Fairlee  v.  Denton,  8  B.  &  C.  Avitliout  the  bank's  acceptance.  First 
395;  Crowfoot  v.  Gurney,  9  Bing.  Nat.  Bank  v.  Clark,  134  N.  Y.  368, 
372;  Stiles  V.  Farrar,  18  Vt.  444.  33   N.    E.   38.     See  further,   Hull   v. 

7.  See  infra,  %  78.  S"^';''''„^^^  J"'.  ^^^'  ^  ^-  ^-  f  .^^l 

8.  See  Kendall  v.  Unitwi  States,  7 

Wall.    113,    per    Miller,    J.;    Ford    v. 

Garner,  15  Ind.  298.     An  unaccepted  ,.  ,  .^     ,      , 

,  .„     r        1  J     ti.  •         2.  an  entire  and  specific  fund  makes  a 

bill  of  excnanore  or  draft  is  not  even  ,       ,        .  ,     „        ,  -,,      -.r    , 

.,   , ,  .  .      o     V  le^al  assi^ment.    Hemphill  v.  Yerkes, 

an  equitable  assignment.     Cashman  v.         *=    ^       *^,         ^      .,..,„„     ,t^  ., 

tr       •  n^  o  1    on-    o^  -D        oQo  132  Penn.  St.  545,  19  Atl.  342.    \Mule 

Harrison,  90  Cal.  297,  27  Pac.  283.  ,       ,  ,  .  ... 

part  of  a  debt  or  monev  claim  is  not 

9.  Drafts  and  orders  are  not  assign-  ^ggi^able  at  law,  it  mav  be  assigned 
ments.  Book^l2,  N.  Y.  Rpts.,  Bender  .^  ^^^^.^^^  ^^  ^^  ^^  constitute  an  equi- 
ed.,  note,  p.  331.  ^^^5^,^  ,Jpj^  ^^p^^  ^j^p  ^^^^^      Warren  v. 

1.  Hall  V.  Flanders,  83  Me.  242,  22  First  Nat.  Bank  of  Columbus.  149  HI. 

Atl.   158;   Covert  v.   Rhodes,   48  Ohio  9,  38  N.  E.  122,  25  L.  R.  A.  746. 
St.  66,  27  N.  E.  94.     The  check  of  a  2.  Fourth  Street  National  Bank  v. 

genera!  depositor  for  part  of  his  de-  Yardley,  165  U.  S.  634,  17  Sup.  Ct. 

posit  is  not  an  assignment  pro  tanto  439,  41  L.  Ed.  855. 

103 


First   Nat.    Bank   v.    Hartman    Steel 
Co.,  87  Ga.  435,  13  S.  E.  586. 

But  a  check  or  draft  or  order  upon 


§    77  THE    LAW    OF    PEESONAJL    PROPEETY.  [PAET  II. 

same,  to  the  other  party,  "  to  have  and  to  hold  the  same  "  to  the 
latter,  "  his  executors,  administrators,  and  assigns,  to  his  and  their 
use  and  hehoof  forever,"  is  a  suitable  means  of  making  formal 
assignment;  the  instrument  being  properly  dated  and  executed 
by  the  assignor,  upon  the  addition  of  a  power-of-attorney  clause 
to  enable  the  assignee  to  collect  and  recover  the  same,  and  being 
duly  delivered.^  Some  such  formal  writing  is  peculiarly  appro- 
priate to  the  transfer  of  a  mere  debt,  claim,  or  demand,  like 
wages,  a  legacy,  or  a  money  balance  due,  which  is  utterly  without 
visible  or  tangible  voucher  of  title ;  and  it  may  well  accompany 
the  delivery  of  certificates  of  stock,  bonds,  letters-patent,  and  other 
muniments  of  title,  in  case  one  of  these  latter  money-rights  be  the 
property  assigned.  But  other  writings,  manifesting  by  language 
the  assigning  intent,  are  constantly  accepted  by  the  courts  as  suffi- 
cient, if  duly  delivered,  without  regard  to  any  particular  form  of 
words,  or  even  requiring  the  use  of  the  word  "  assign,"  or  an 
expression  of  value  received, —  such  as  an  order  on  the  debtor ;  * 
a  letter  of  attorney  with  words  expressive  of  an  assigning  purpose, 
even  though  not  irrevocable  in  terms ;  ^  or  special  written  direc- 
tions to  the  debtor ;  ^  while,  on  the  other  hand,  are  writings  which 
have  been  pronounced  insufficient  because  indicating  less  than  an 
assigning  intent  on  the  owner's  part,  such  as  the  mere  authority  to 
another  to  collect  and  receive  on  his  behalf.^  Assigning  a  security 
or  document  of  title,  not  negotiable,  by  handing  it  over  with  the 
assignor's  name  indorsed  on  the  back,  is  often  held  sufficient ;   the 

3.  See  Curt.  Conveyancer,  "Assign-      Rich,  6  Vt.  666;  Adams  v.  Robinson, 
ments;"  Bromley  v.  Holland,  7  Ves.       1  Pick.  461. 

28;    People   v.    Tioga,    19    Wend.    73.  5.  Weed    v.    Jewett,    2    Met.    608; 

To    execute    an    assignment    without  Bromley  v.  Holland,  7  Ves.  28 ;   Peo- 

delivering  it  is  InsuiBcient.     Clark  v.  pie  v.  Tioga,  19  Wend.  73. 

Boyd,  2   Ohio,  56;   Ritter  v.   Steven-  6.  See  King,  Re,  14  Ch.  D.  179;  7 

son,  7  Cal.  388.  Oh.   D.   419 ;    In   re   Hurst,    7    Wend. 

4.  Field  v.   Magaw,  L.   R.   4   C.   P.  239 ;  Able  v.  Shields,  7  Mo.  120. 
660;  Tiernan  v.  Jackson,  5  Pet.  59&;  7.  Green   v.    Ashby,    6    Leigh,    135; 
Blin  v.  Pierce,  20  Vt.  25 ;   Clarke  v.  Spain  v.  Hamilton,  1  Wall.  604 ;  Rob- 
Thompson,    2    R.    I.    146;    Moore    v.  inson   v.   Tipton,    31   Ala.    595;    Ford 
Lowrey,  25  Iowa,  336;  Harrington  v.  v.    Garner,    15    Ind.    298;    Boesch    v. 

Graff,  133  U.  S.  697. 

104 


CHAP.  IV.]  PEKSONAL    CHATTELS    CONTRASTED.  §    77 

indication  here  being,  not  to  indorse  as  in  negotiable  paper,  but 
as  it  would  appear  (especially  if  the  word  "  assigned  "  were  writ- 
ten or  there  was  a  printed  blank  on  the  back  of  the  instrument 
which  was  really  signed  by  the  assignor),  to  authorize  the  assignee 
to  write  a  formal  assigimient  to  himself  over  the  signature.^  One 
should  not  expect  indorsement  of  a  non-negotiable  instrument  like 
a  stock  certificate  to  have  the  same  effect  as  indorsing  a  bill  or 
note;  though  mercantile  tendency  is  so  greatly  to  assimilate  all 
such  instruments.^  Far  less  than  this  is  acceptable,  however. 
Even  gifts,  transfers  utterly  without  consideration,  are  now  estab- 
lished, as  to  many  species  of  incorporeal  chattels,  by  merely  deliv- 
ering the  security  or  document  of  title  with  no  other  writing 
whatever;  *  which  is  a  rule  of  application,  no  less,  but  rather 
more,  to  transfers  for  value.^  There  should  be,  doubtless,  the 
intent  to  transfer  title  accompanying  the  delivery;  but,  upon 
proof  of  suitable  intent,  any  assignment  by  word  of  mouth  will 
stand,  as  the  rule  is  now  applied, —  even,  as  it  is  held,  the  assign- 
ment of  an  account,  or  other  incorporeal  money  right  utterly  with- 
out corporeal  voucher;  and  the  verbal  assignment  which  is  thus 
established  by  the  conduct  of  the  parties,  as  what  they  really  meant, 
is  at  least  enough  to  entitle  the  assignee  to  equitable  protection 
in  the  courts,  proper  notice  thereof  having  been  given  to  the 
debtor."'     A  like  principle  is  applicable  to  re-assignments ;  ^    and 

8.  See  Nevill   v.   Hancock,   15   Ark.      failed  to  execute  properly.     Mowry  v. 
511;    Ryan   v.    Maddux,   6    Cal.    247;       Todd,  12  Mass.  281. 

Odenheimer   v.    Douglass,   5   B.    Mon.  g.  But  cf.  Tallman  v.  Hoey.  89  N. 

107;Hen]eyv.  Bush,  33Ala.  636.  ^     537       p^^,    transaction    may    be 

9.  See  White  v.  Brooklyn,  122  N.  Y.  ^^^^^  .^  ^^^^^.^^  ^^  assignments.    See 
53,  as  to  indorsing  a  tax  certificate  chamberlayne  Evid.,  §  3546. 

by  way  of  assignment. 

1.  2  Schoul.  Pors.  Prop.,  §§  75,  166;  3.  Crane  v.  Gough,  4  Md.  316:  Pass 

Story  Eq.  Jur.,  §  1047.    And  see  Licey  v.    McRea,    36    MisS.    143 ;    Noj-es    v. 

V.   Licey,   7   Penn.   St.   251;    Grain   v.  Brown,  33  Vt.  431;   Hackett  v.  Mox- 

Paine,    4    Gush.    483;    Boyd   v.    Eock-  ley,  65  Vt.  71,  25  Atl.  898;   Garnsey 

port,  &c..  Mills,  7  Gray,  406.     Hence  v.    Gardner,   49   Me.    167;    Gurrier   v. 

one  might  deliver  the  security  so  as  Howard,   14   Gray,  511;   Cleveland  v. 

to  give  the  transfer  effect,  though  an  Martin,  2  Head,  128;  BriggS'  v.  Dorr, 

aasignment  accompanied  it  which  he  19   Johns.   95;    Galway  v,   Fullerton, 

105 


§  77 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  IL 


parol  authority  given  by  the  owner  to  another  to  assign  for  him 
in  writing  has  been  pronounced  satisfactory.^  An  instrument  of 
assignment  ought  of  course  to  be  suitably  delivered  and  received, 
as  between  the  parties.** 


2  C.  E.  Green,  390;  Durst  v.  Swift, 
11  Tex.  273. 

4.  Ball  V.  Larkin,  3  E.  D.  Smith 
(N.  Y.),  555;  Sumpter  v.  Tucker,  14 
Ark.  185.  The  doctrine  of  the  text 
is  affected  somewhat  by  local  statutes 
and  practice,  as  applied  to  certain 
classes  of  personal  property.  But  the 
rule  is  broadly  applied  as  to  strictly 
personal  chattels;  even  to  dispensing 
in  most  States  with  assignments  of 
bonds  and  other  specialties  by  instru- 
ment as  solemn  as  the  original.  See 
Currier  v.  Howard,  14  Gray,  511; 
Gillett  V.  Campbell,  1  Den.  520.  But 
see  Chadsey  v.  Lewis,  1  Gilm.  153. 
Mortgages  of  personal  property  follow 
the  rule.  But  the  principle  is  not  uni- 
versally admitted  as  to  mortgages  of 
real  estate.  Cf.  DufBeld  v.  Elwes,  1 
Bligh,  N.  s.  533;  Allen  v.  Pancoast, 
1  Spencer,  68 ;  Prescott  v.  Ellingwood, 
23  Me.  345;  Olds  v,  Cummings,  31  111. 
188. 

5.  Spiker  v.  Nydegger,  30  Md.  315. 
See  the  clear  language  of  Shaw,  C. 

J.,  in  the  Massachusetts*  case  of  Pal- 
mer V.  Merrill,  6  Gush.  282,  286 
(1866).  Here  the  insured  person 
under  a  life  policy,  by  his  indorsement 
in  writing,  assigned  part  of  the  sum 
thereby  insured,  but  still  kept  the 
policy  in  his  bands;  and  upon  this 
ground,  as  well  as  others,  it  was  held 
that  the  assignment  was  insufficient, 
although  notice  of  the  assignment  had 
been  given  to  the  insurers.  Palmer  v. 
Merrill,  6  Cush.  282.  But,  when  ac- 
companied by  suitable  delivery,  the 
assignment  of  a  life-insurance  policy 


is  good  whether  absolutely  or  by  way 
of  moregage  or  pledge  to  secure  some 
debt.  Wright  v.  Wright,  1  Ves.  409 ; 
Ashley  v.  Ashley,  3  Sim.  149;  St. 
John  V.  Am.  Mut.  Life  Ins.  Co.,  3 
Kern.  31.  See  c.  post,  as  to  Life  In- 
surance. Policies  of  insurance  against 
fire  or  marine  risks  are  not  of  their 
own  nature  assignable,  being  in  the 
nature  of  personal  contracts  with  the 
party  insured;  though,  with  the  in- 
surer's assent,  an  assignment  may  be 
and  frequently  is  effected,  where,  for 
instance,  the  insured  property  is  sold 
or  made  security  for  borrowed  money. 
Flanders  Fire  Ins.  69,  434;  Lynch 
V.  Dalzell,  4  Brown  Pari.  Cas.  431; 
^tna  Ins.  Co.  v.  Tyler,  16  Wend. 
385.  See  post,  Part  III.,  c.  11.  If  a 
bond  is  assigned,  it  should  be  deliv- 
ered to  the  assignee.  See  Smith  Man. 
Eq.  247;  Carey  v.  Dennis,  13  Md.  1; 
Chase  v.  Breed,  5  Gray,  440.  And  the 
assignment  of  shares  in  joint-stock 
companies,  such  as  banks  and  railroad 
companies,  by  way  of  pledge  or  se- 
curity for  money  advanced,  is  usually 
effected  by  delivery  of  the  certificates, 
with  a  power  of  attorney  to  the  lender 
to  make  the  actual  transfer  on  the 
company  books;  while  upon  an  abso- 
lute sale  of  stock  the  old  certificates 
should  be  delivered  up  to  the  company 
and  new  ones  issued.  2  Kent  Com. 
577,  n.,  and  Part  III.,  e.  9,  post. 
Upon  this  topic  we  shall  have  more 
to  say  when  we  consider  at  length  the 
various  species  of  incorporeal  prop- 
erty. 

6.  See  assignment  void  for  want  of 


106 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    78 

§  78.     The  Subject  Continued ;  Notice  of  Assignment  to  Debtor, 
etc. 

The  principle  of  an  assignment  being,  where  incorporeal  rights 
are  concerned,  that  three  parties,  the  assignor,  the  assignee,  and 
the  debtor,  are  to  be  regarded  in  the  transaction,  the  rights  of  an 
assignee  are  not  taken  to  be  perfect  so  long  as  the  debtor  is  ntterly 
ignored.  The  old-fashioned  assignment  viewed  the  three  parties 
as  standing  on  an  equal  vantage  ground  of  mutuality.''  But  the 
modern  rule  pays  less  deference  to  the  debtor,  unless  specially 
compelled  by  statute  or  the  contract;  for  it  is  usually  satisfied 
when  simple  notice  of  the  assignment  is  given  to  the  debtor.  In 
order,  then,  to  perfect  an  assignment  of  incorporeal  personalty 
not  of  a  negotiable  character,  there  must  be  at  least  notice  of  such 
assignment  given  to  the  debtor;  else,  by  the  law  of  England  and 
many  of  the  United  States,  the  assignee's  rights  are  postponed  to 
the  subsequently  acquired  bond  fide  claims  of  creditors  and  pur- 
chasers against  the  assignor,  and  to  all  intervening  rights  and  equi- 
ties of  the  debtor  himself.^  The  debtor  avoids  the  assignee's  claim 
by  bond  fide  paying  the  assignor  before  notice  of  the  assignment ; 
though,  upon  the  receipt  of  notice,  his  relations  are  changed,  and 
he  makes  payment  to  any  other  party  than  the  assignee  at  his 
peril.^  So,  too,  as  to  subsequent  purchasers  and  creditors,  who- 
ever takes  a  new  assignment  with  notice  of  a  prior  assignment 
to  another,  which  carried  the  legal  title,  acquires  no  interest  in 
the  thing;   while  a  second  assignee,  who  takes  without  such  notice 

delivery  before  the  assignor  died.     50  Ilatkett    v.    Martin,    9    Greenl.    77; 

Ohio  St.  444.  Goodrich    v.    Stanley,    23    Conn.    79; 

7.  Supra,  §  73.  Murdock  v.  Finney,  21  Mo.  138;  Reed 

8.  Dearie  v.  Hall,  3  Russ.  1;  Bishop  v.  Marble,  10  Pai<?e,  409;  Eastman  v. 
V.  Holeomb,  10  Conn.  444;  Murdock  Wright,  6  Pick.  322;  Field  v.  New 
V.  Finney,  21  Mo.  138;  Clodfetter  v.  York,  6  N.  Y.  179.  The  rule  of  no- 
Cox,  1  Sneed,  330;  Ward  v.  Morrison,  tice  applies  where  an  executor  or 
25  Vt.  593;  Fisher  v.  Knox,  13  Pcnn.  trustee  or  corporate  officer  is  the  party 
St.  622 ;  Porter  v.  Dunlap,  17  Ohio  to  pay  the  debt.  Parks  v.  Innes,  33 
St.  591;  Field  v.  Magaw,  L.  R.  4  Barb.  37;  Thayer  v.  Lyman,  35  Vt. 
C.  P.  660.  646 ;  In  re  Hercules  Ins.  Co.,  L.  R.  19 

9.  Loomis   v.    Loomis,    26    Vt.    198;  Eq.  302. 

107 


78 


THE  LAW  OF  PEKSONAL  PROPEETY. 


[part  II. 


and  gives  the  debtor  the  first  notice  of  assignment,  has  the  prior- 
ity.^ With  snch  qualifications  an  assignment  is  to  be  pronounced 
valid  as  between  assignor  and  assignee.^ 

But  it  should  be  added,  that,  as  concerns  the  rights  of  subse- 
quent attaching  creditors  and  purchasers,  there  are  certain  States 
which  hold  to  the  contrary;  regarding  the  assignment  as  complete 
in  itself,  so  far  as  all  but  the  debtor  himself  is  concerned,  though 
without  notice  of  the  assignment ;  and  consequently  permitting 
the  first  assignee  to  prevent  the  debtor  from  actually  paying  over 
to  a  third  party,  regardless  of  the  latter's  notification  to  the  debtor, 
by  making  his  own  title  known  at  that  late  day.^  Cases  may  arise 
where  the  peculiar  circumstances  require,  for  perfect  safety  of  the 
transaction,  that  third  parties  should  be  seasonably  notified  who 
might  otherwise  be  misled,  or  bond  fide  holders  without  notice ;  and 
where  again  there  is  some  party  holding  the  chattel  who  himself 
needs  to  be  notified,  though  rather  a  bailee  than  a  debtor.'* 


1.  Dearie  v.  Hall,  3  Russ.  1,  and 
other  cases,  supra. 

Re  Freshfield's  Trusts,  11  Ch.  D. 
198,  reaffirms  the  principle  of  Dearie 
V.  Hall  (3  Russ.  1)  against  all  techni- 
cal objections;  and  holds  that  the 
second  assignee  of  an  equitable  inter- 
est in  a  fund,  who  has  given  notice 
of  his  assignment  to  the  fund-holder, 
takes  priority  of  a  first  assignee  who 
has  failed  to  give  notice.  For  notice 
given  to  the  legal  depositary  of  the 
fund  is  going  as  far  towards  taking 
equitable  possession  as  it  is  possible 
to  go.     Ib.^  citing  3  Russ.  1,  58. 

A  bank  is  justified  in  paying  under 
•an  original  assignment  though  receiv- 
ing notice  of  a  second  assignment. 
Beran  v.  Tradesmen's  Bank,  137  N. 
Y.  450. 

2.  See  Moore  v.  Metropolitan  Nat. 
Bank,  5&  K  Y.  41;  Bishop  v.  Hol- 
comb,  10  Conn.  444.  Notice  to  a 
debtor  is  not  always  a  prerequisite  in 


equity,  especially  where  there  is  no 
contest  between  the  assignor  and  his 
assignees. 

3.  Kingman  v.  Perkins,  105  !Mass. 
Ill;  Quigley  v.  Welter,  95  Minn.  383, 
104  N.  W.  236;  Warren  v.  Copelin,  4 
Met.  (Mass.)  59'4;  Bank  of  Valley  v. 
Gettinger,  3  W.  Va.  309. 

All  this  is  matter  of  statute  regu- 
lation to  a  considerable  extent,  espe- 
cially with  reference  to  particular 
classes  of  transactions.     Post,  §  82. 

4.  Notice  to  one  of  joint  trustees 
of  a  fund  will  sufiice.  Ward  v.  Dun- 
combe,  (1893)  App.  Cas.  369.  No- 
tice to  one  of  the  selectmen  of  the 
town  suffices,  as  financial  agents. 
63  Vt.  296.  And  as  to  a  city,  see 
Bank  of  Harlem  v.  Bayonne,  48  N. 
J.  Eq.  246.  But  there  must  be  a 
notice.  First  Nat.  Bank  v.  Fair,  137 
Penn.  St.  328.  See  Newman  v.  Irwin, 
43  La.  Ann.  1114. 


108 


CHAP.  IV.]  PEESONAL    CHATTELS    COXTRASTED.  §    79 

Xotice  to  the  debtor  suffices  without  showing  the  security  or 
offering  evidence  of  the  assignment,  especially  if  the  debtor  asks 
for  no  proof ;  notice  in  court  has  been  to  a  certain  extent  deemed 
acceptable;  implied  notice  too,  and  likewise  the  debtor's  own  ad- 
missions, will  charge  him,  not  actual  notice  alone.^  But  whether 
actual  or  constructive,  there  should  be  a  positive  notice  of  one's 
title  under  the  assignment  sufficient  to  put  the  debtor,  bailee,  or 
fund-holder  on  his  guard.^  Nor  can  the  want  of  notice  to  the 
debtor  by  the  first  assignee  avail  a  subsequent  creditor  or  pur- 
chaser who  himself  is  chargeable  with  notice  of  the  assignment.^ 
It  is  notice  to  such  creditor,  rather  than  notice  to  the  debtor, 
which  the  rule  in  such  a  case  exacts ;  ^  and  notice  by  the  assignee's 
procurement  binds  as  well  as  notice  given  by  the  assignee  person- 
ally.^ 

Where  the  assignee  himself  sells  or  incumbers  a  money  right 
which  has  been  equitably  assigned  to  him,  notice  in  fact  should  be 
given  to  the  debtor  or  holder  of  the  fund  assigned ;  else,  if  he  was 
only  notified  of  the  first  assignment,  his  payments  to  the  first 
assignee  will  sufficiently  discharge  him.^  The  debtor,  fund-holder, 
or  bailee  is  entitled  to  set  off  his  own  lien  claims  against  the 
assignment,  and  equities  between  the  original  parties  must  be 
respected  by  an  assignee.  So  do  original  equities  affect  subse- 
quent assignees.^ 

§  79.     The  Subject  Continued;  What  an  Assignment  Confers. 
An  assignment  carries  with  it  the  accruing  interest  or  income 

5.  In  re  Hercules  Ins.  Co.,  L.  R.  v.  Holcomb,  10  Conn.  444 ;  Creed  v. 
16  Eq.  302;  Bean  v.  Simpson,  16  Me.       Lancaster  Bank,  1  Ohio  St.  1. 

49;    Jewett   v.   Dockra}-,    34    Me.    45;  8.  See  Brady  v.  State,  26  Md.  290. 

Buchanan  v.  Taylor,  Add.   (Pa.)   154;  g    ^^^^^^  v.' Porter,  44  Vt.  587. 

Dale  V.  Kimpton,  46  Vt.  76.  ,    „,     ,  t.  ,,^.        .  t^    ,,    „   « 

«    o      ir  1 1  TT  -.A  c    P  1-  Stocks  V.  Dobbins,  4  D.  M.  &  G. 

6.  See  Kcllowor  v.  Krauser,  14  S.  &  .    ,  _^         _,         ^ 

■D    ..or,    T3  I-  Tir      u  11    -.-.  -MTj  H.   l^.     And   SCO   Wms.   Pers.   Prop. 

R.  137;  Robinson  v.  Marshall,  11  Md.  „  ,  ^ 

or-.      A    J  xr       Ai        -.o   T  1,  17th  Eng.  ed.  613. 

251 ;  Anderson  t.  Van  Alen,  12  Johns.  ° 

343;    Stewart    v.    Kirkland,    19    Ala.  2.  Burton  v.  Willin.  6  Houst.  522; 

162;  Gaboon  v.  Morgan,  38  Vt.  234.         Commercial   Bank  v.   Burch,    141    111. 

7.  Dearie  v.  Hall,  3  Russ.  1 ;  Bishop       519.    Otherwise  with  negotiable  paper. 

109 


§  79 


THE    LAW    OF    PERSO^'AL    PROPERTY. 


[part  II. 


of  the  principal  thing  assigned ;  ^  and  further,  concerning  per- 
sonalty at  least,  the  assignment  of  a  debt,  the  principal  thing,  is 
presumed  to  include  as  its  incident  an  assignment  of  the  collateral 
security  which  the  assigning  party  may  hold  to  enforce  payment.'* 
In  short,  the  assignment  entitles  the  assignee  to  every  assignable 


3.  Kane  v.  Bloodgood,  7  Johns.  Ch. 
90;  G-annett  v.  Cunningham,  34  Me. 
56.  And  see  Boylen  v.  Leonard,  2 
Allen,  407,  as  to  the  assignment  of 
wages  carrying  future  wages  under 
the  engagement.  And  see,  as  to 
additional  or  subsequent  machinery 
under  an  assignment,  Holroyd  v. 
Marshall,  10  H.  L.  Cas.  192;  Hope 
V.  Hayley,  5  EI.  &  Bl.  845.  The 
principle  of  such  cases  is  that,  if  the 
assignment  of  after-acquired  property 
does  not  strictly  operate  as  an  assign- 
ment to  pass  the  title,  it  will  never- 
theless be  effective  as  a  license,  on 
the  part  of  the  assignor,  for  the  as- 
signee to  take  possession  and  hold 
tlie  property  as  part  of  his  security. 
See,  too,  as  to  assigning  an  inchoate 
right  of  action.  The  Wasp,  L.  R.  1 
Ad.  &  Ec.  367. 

The  fundamental  principle  of 
notice  in  equitable  assignments,  re- 
quiring all  parties  affected  by  the 
transaction  between  assignor  and 
assignee  to  be  notified,  appears  to 
be  that  everything  should  be  done 
towards  obtaining  quasi  possession 
that  the  subject  admits  of,  so  as  to 
prevent  payment  by  the  holder  of  a. 
fund  or  person  indebted  to  the  as- 
signor himself,  and  to  guard  against 
the  demands  of  subsequent  assignees 
or  purchasers,  who  might  otherwise 
be  deceived  into  the  supposition  that 
the  assignor  had  still  the  complete 
title ;  also  to  some  extent  by  way  of 
an  assignee's  more  adequate  protec- 
tion   against    the    assignor    himself. 


Story  Eq.  Jur.,  §§  1046,  1047;  Loomis 
V.  Loomis,  26  Vt.  198;  Foster  v. 
Blackstone,  1  Myl.  &  K.  297.  Thus, 
notice  of  the  assignment  of  an  insur- 
ance policy  must  be  given  to  the  in- 
surer. Thompson  v.  Tompkins,  2  Dr. 
&  Sm.  8;  Flanders  Fire  Ins.  69,  434; 
§  547,  post.  In  the  case  of  shares  in 
a  stock  company,  notice  of  pledge  or 
transfer  must  be  given  to  the  com- 
pany. See  post,  §§  495-500;  2  Kent 
Com.  577,  n.  Where  freight  is  as'- 
signed,  notice  to  the  charterers  is 
required.  Brown  v.  Tanner,  L.  R.  2 
Eq.  806.  Instances  where  the  same 
principle  applies  might  be  multiplied. 
And  our  patent  and  copyright  acts 
require  the  assignments  of  interests' 
of  this  nature  to  be  in  writing  and 
duly  recorded  at  the  proper  public 
ofBee,  in  default  of  which  the  assign- 
ment is  void  as  against  subsequent 
purchasers  or  mortgagees  for  valu- 
able consideration  without  notice. 
See  Act  of  July  8,  1870,  §§  36,  89;" 
§§  528,  539,  post. 

4.  Jones  v.  Huggeford,  3  Met.  515 ; 
Waller  v.  Tate,  4  B.  Monr.  529; 
Craig  V.  Parkis,  40  N.  Y.  181;  Hurt 
V.  Wilson,  38  Cal.  263;  Fitzsim- 
mons's  Appeal,  4  Penn.  St.  248 ; 
Strother  v.  The  Hamburg,  11  Iowa, 
59;  Miller  v.  Hoyle,  6  Ired.  Eq.  269; 
Story  Eq.  Jur.,  §  1047  a.  Assignment 
of  debt  carries  security.  Book  29, 
N.  Y.  Rpt«.,  Bender  ed..  note,  p.  1162. 
Transfer  of  account  and  note  therefor. 
Book  6,  N.  Y.  Rpts.,  Bender  ed.,  note, 
p.  127. 


110 


CHAP.  rV.]  PEESONAL    CHATTELS    COXTRASTED.  §    72 

remedy,  lien,  or  security  available  to  the  assignor  as  a  means  of 
indemnity  or  payment,  unless  expressly  excepted  in  the  assign- 
ment. This  doctrine  is  subject,  however,  to  statute  modification 
and  the  distinct  agreement  of  the  parties ;  and  where,  as  in  the 
case  of  a  pledge  and  not  a  mere  lien,  the  security  should  be  in 
possession  of  the  creditor,  a  pledgee's  assignment  of  the  debt  ought 
to  be  accompanied  by  a  delivery  of  the  pledge  in  order  to  carry 
the  security  over.^ 

§  80.  The  Subject  Continued;  Disputing  Consideration,  etc., 
of  Assignment, 
The  rule  is  general  in  equity,  that  the  assignee's  interest  in 
incorporeal  personalty  shall  prevail  against  all  persons  having 
express  or  implied  notice  of  the  trust  or  assignment,  provided  the 
assignment  be  hond  fide  and  for  valuable  consideration.^  An 
assigiiment,  like  any  transfer,  may  be  directly  impeached  for 
fraud  upon  the  assignor  or  his  creditors;  in  which  event,  suppos- 
ing the  transfer  set  aside,  the  debtor  must  respond,  not  to  the 
assignee,  but  to  the  assignor  or  original  creditor,  or  to  those  rep- 
resenting his  interest,  consistently  with  the  finding  in  the  case.^ 
But,  unless  the  title  be  thus  disputed,  it  matters  not,  as  between 
debtor  and  assignee,  what  consideration  was  paid ;  for  the  former 
must  respond  to  the  same  extent  as  before  (though  the  fact  of  an 
assignment  puts  him  to  the  exercise  of  greater  caution  on  his  own 

5.  See  Johnson  v.  Smith,  11  Humph.  6.  See  Henry  v.   Milham,   1   Green, 

396;    Chapman   v.    Brooks,   31    N.   Y.  266;     Anderson     v.     Van     Alen,     12 

75;   Whittle  v.  Skinner,  23  Vt.   531;  Johns.    343;    Laughlin    v.    Fairbanks. 

Dovey's    Appeal,    97    Penn.    St.    153.  8   Mo.   367;   Kennedy  v.   Parke,   2   C. 

Assignment    of    a    contract,    modified  E.  Green,  415. 

since  its  original  execution,  eraibraces  7.  See   Holbrook  v.   Burt,   22   Pick, 

such    modifications.      Wood   v.    Dono-  546;   Lonsdale's  Estate,  29^  Penn.  St. 

van,  132  Mass.  84.     As  to  assignment  407 ;   Langley  v.  Berry,  14  N.  H.  82 ; 

of   an   overdue  note,   see   Wetmore  v.  Crawford     v.     Brooke.     4     Gill.     213; 

Neuberger,  44  Mich.  362 ;  Van  Schoon-  Doolittle   v.   McCullough.   7   Ohio   St. 

hoven  v.  Curley.  86  N.  Y.  187.     The  299;   Parmelee  v.  Cameron,  41  N.  Y. 

assignee  is  here  put  upon  inquiry.  392. 

Ill 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    80 

behalf,  while  the  latter  is  assumed  to  be  the  real  party  in  interest, 
with  a  title  fairly  obtained  upon  adequate  consideration.^ 

Under  the  rules  of  evidence,  proof  may  be  submitted  to  show 
that  a  transfer,  —  such  as  the  indorsement  in  blank  of  a  non- 
negotiable  instrument,  —  which,  on  its  face,  purports  an  assign- 
ment carrying  full  title  and  ownership,  was  in  reality  only  a 
transfer  as  security  for  a  loan  of  money,  or  otherwise  by  way  of 
mere  bailment  or  trust ;  ^  for  assignment  may  be  for  a  special  pur- 
pose, as  concerns  all  parties  affected  by  notice  thereof.^ 

§  81.     The  Subject  Continued;  Assignee's  Rights  and  Remedies. 

But  what  is  the  assignee's  position  under  a  valid  assignment? 
To  use  the  common  phrase,  he  stands  in  the  assignor's  shoes: 
that  is  to  say,  he  takes  the  incorporeal  money-right,  or  right  in 
action,  subject  in  general  to  all  equities  and  offsets  which  at  the 
time  of  assignment  prevailed  against  his  assignor ;  acquiring  no 
more  and  no  less  than  the  assignor's  rights,  save  so  far  as  qualified 
by  active  fraud  or  the  debtor's  failure  to  receive  immediate  notice 
of  the  assignment.  For  no  one  can  transfer  a  better  right  than 
he  himself  possesses.  This  rule  is  of  universal  application  to 
assignments ;  ^  and  consequently  the  bond  fide  assignee  for  value 
of  a  money-right  without  notice  of  an  infirm  title  is  much  less 


8.  Huson  V.  Pitman,  2  Hayw.  331 
Horn  V.  Thompson,  11  Fost.  562 
Hancock's  Appeal,  34  Penn.  St.  155 
Wliittaker  v.  Johnson,  10  Iowa,  161 


1.  lb. 

2.  Mangles  v.  Dixon,  3  H.  L.  702; 
Story  Eq.  Jur.,  §  1047 ;  Bush  v.  Lath- 
rop,  23  N.  Y.  535;  Ketehum  v.  Foot, 


Belden  v.  Meeker,  47  N".  Y.  307.     Cf.  15    Vt.    25»;     Scott    v.    Shreeve,    12 

Tallman  v.  Hoey,  89  N.  Y.  537,  where  Wheat.  605 ;  Smith  v.  Rogers,  14  Ind. 

no   actual   assignment   could   be   said  224;    Leathers  v.   Carr,   24   Me.   351; 

to  have  taken  place,  and  the  presump-  Decker  v.  Adams.  4  Dutch.  511 ;  Fault 

tion  of  the  text  was  repelled.  v.  Tinsman,  36  Penn.  St.  108;   Shot- 

9.  Baldwin  v.  Ely,  9  How.    (U.  S.)  well  v.  Webb,  23  Miss.  375;   Jack  v. 

580;  Gerrish  v.  Sweetser,  4  Pick.  374;  Davis,  29  Ga.  219.    Eight  of  assignees. 

Owens  V.  Miller,   29  Md.   144 ;    Cuth-  Book  21,  N.  Y.  Rpts.,  Bender  ed.,  note, 

bert  V.  Wolfe,  19  Ala.  373.     And  as  p.    807.      Rights    of   executor    of    as- 

to    the    interpretation    of    particular  signee.     Book  37,  N.  Y.  Rpts.,  Bender 

assignments,    see    U.    S.    Digest,    1st  ed.,  note,  p.  593. 
Series,  "Assignment,"  §§  351-523. 

112 


CHAP.  IV.]  PERSONAL    CHATTELS    CON-TKASTED.  §    81 

favored  than  the  corresponding  holder  of  negotiable  paper  by 
indorsement,  as  we  shall  presently  see.^  It  is  further  held,  not- 
withstanding the  distinction  taken  by  some  authorities  between 
"  latent  equities,"  so  called,  and  those  prevailing  between  the  origi- 
nal parties  to  the  instrument,  that  the  equities  existing  between 
the  assignor  and  assignee  of  incorporeal  personalty  attend  the  title 
transferred  to  a  subsequent  assignee  for  value  and  without  notice, 
the  latter  taking  the  exact  position  of  his  seller."* 

It  follows  that  the  assignor  will  not  be  allowed  to  impair  or 
defeat  his  bond  fide  assignee's  rights,  whether  the  assignment  be 
enforceable  at  law,  or  only  in  equity ;  ^  that  the  assignee  of  incor- 
poreal personalty  will  be  protected  against  the  assignor's  hostile 
acts  and  declarations  subsequent  to  the  transfer ;  ^  and  that,  the 
transfer  once  made  bond  fide,  the  assignor's  right  of  subsequent 
interference  without  his  assignee's  consent  is  limited  to  the  right 
of  requiring  indemnity  against  costs  in  proper  cases  where  suit 
is  brought  on  the  debt  or  demand  in  his  name  by  the  assignee, 
and  of  preventing  experiments  from  being  made  at  his  risk  in  a 
litigation  which  concerns  the  debtor  and  assignee  only.^ 

The  assignee's  rights  against  the  debtor,  too,  are  virtually  those 
of  the  assignor  previous  to  the  assignment.  Notice  of  the  assign- 
ment of  incorporeal  personalty  not  negotiable,  given  by  the  assignee 
to  the  debtor  (which  has  been  shown  essential  to  the  transfer  of 
a  full  title),  fixes  the  latter's  liability  from  the  time  he  gets  the 
notice,  and  cannot  defeat  any  equity  or  offset  then  existing.^  But 
it  appears  to  be  the  duty  of  the  debtor,  upon  receiving  notice,  to 

3.  §§  83,  84.  675;    Halloran   v.    Whitcom'b,    43   Vt. 

4.  Bush  V.  Lathrop,  22  N.  Y.   535.       306. 

See  Ohio  Life  Ins.  Co.  v.  Ross,  2  Md.  7.  Reed    v.    Nevins,    38    Me.     193; 

Oh.  25;  Davis  v.  Barr,  9  S.  &  R.  137.  Gordon  v.  Drury.  20  N.  H.  353.     But 

Assignee  of  non-negotiable  chose  takes  as  to  fraudulent  assignees,  see  Atkin- 

su'bject   to   equities.      Book    5,   N.   Y.  son  v.  Runnells,  60  Me.  440. 

Rpts.,  Bender  ed.,  note,  p.  380.  8.  Lea  hi    v.    Dugdale,    34    Mo.    99; 

5.  Chapman  v.  Haley,  43  N.  H.  300;  Huntington  v.  Porter,  32  Barb.  300; 
Blin  V.  Pierce,  20  Vt.  25;  Parker  v.  Kugler  v.  Taylor,  19  La.  Ann.  100; 
Kelly,  10  Sm.  &  M.  184.  supra,  %  78. 

6.  Kimball  v.  Huntington,  10  Wend. 

8  113 


§  81 


THE  LAW  OF  PERSONAL  PEOPEKTY. 


[part  II. 


inform  the  assignee  promptly  of  such  equity  or  offset  on  his  part 
as  is  evidently  unknown  to  the  latter.^  After  receiving  notice 
under  a  bond  fide  assignment,  the  debtor  must  make  payment  to 
the  assignee,  and  recognize  him  as  owner,  until  correspondingly 
notified  of  a  sub-assignment  and  further  change  of  ownership;  ^ 
and  equities  between  himself  and  the  assignor  later  than  the  as- 
signment and  receipt  of  notice  are  unavailable.^  In  the  case  of 
various  partial  assignments  duly  recognized  by  the  debtor,  assignees 
have  liens  in  the  order  of  the  respective  assignments."'  And 
should  the  debtor  prove  insolvent,  all  rights  of  priority  which  the 
assignor  may  have  had,  pass  to  his  assignee.'* 

Where  it  becomes  necessary  to  sue  the  debtor,  the  old  rule  of 
the  common  law  requires  an  assignee  to  sue  in  the  name  of  the 


9.  See  Scott  v.  Jones,  1  Brock.  244 ; 
In  re  Hercules  Ins.  Co.,  L.  R.  19  Eq. 
302.  But  see  Decker  v.  Adams,  4 
Dutch.  511.  Qu.  as  to  how  far  this 
duty  extends,  beyond  an  obligation 
on  the  debtor's  part  not  to  mislead 
the  assignee  to  the  latter's  disadvan- 
tage. The  assignee  of  a  chose  in 
action,  or  security  of  any  kind,  where 
there  has  been  no  fraud,  stands  in 
the  same  situation  as  the  assignor  as 
to  the  equities  arising  upon  it.  He 
must  be  taken  to  be  cognizant  of 
them.  It  is  his  duty  to  make  in- 
quiries, and,  as  a  general  rule,  the 
creator  of  the  security  thus  assigned 
is  not  bound,  on  receiving  a  simple 
notice  of  the  assignment,  to  volun- 
teer information.  If  a  loss  arises,  it 
falls  upon  him  whose  duty  it  was'  to 
make  the  inquiries,  and  who  has  not 
made  them.  Cator  v.  Burke,  1  Bro. 
C.  C.  434;  Turton  v.  Benson,  1  P. 
Wms.  496;  Chambers  v.  Goldwyn,  9 
Ves.  264.  But  if  the  notice  given  by 
the  assignee  discloses,  on  the  face  of 
it,  that  which  induces  the  belief  that 
he    has    been    deceived    in    accepting 


the  assignment,  the  creator  of  the 
security  is  bound  to  inform  the  as- 
signee of  the  real  circumstances ;  and, 
if  he  should  not  do  so,  he  may  be 
bound  to  perform  the  stipulations  of 
the  security,  without  <being  allowed 
to  take  advantage  of  the  equities  ex- 
isting as  betAveen  the  assignor  and 
himself.  Duke  of  Beaufort  v.  Neeld, 
12  CI.  &  Fin.  248.  Yet,  where  no 
fraud  exists,  nothing  to  lead  to  a  con- 
clusion in  the  creator's  mind  that  the 
other  party  has  been  deceived,  he  is 
not  bound  to  volunteer  information 
to  the  assignee.  Mangles  v.  Dixon, 
3  H.  Ld.  Cas.  702. 

1.  Myers  v.  South  Feather,  &c.,  Co., 
14  Cal.  268;  Leahi  v.  Dugdale,  and 
other  cases  svpra. 

2.  See  Bartlett  v.  Pearson,  29  Me. 
9;  Cummings  v.  Fullam,  13  Vt.  434; 
Daviess  v.  Newton,  5  J.  J.  Marsh.  89; 
Upton  V.  Wallace,  44  Vt.  552. 

3.  Chester  v.  Jumel,  125  N.  Y.  237, 
26  N".  E.  757.  Otherwise  where  not 
recognized.     lb.     See  §  82,  post. 

4.  McAvity  v.  Lincoln  Co.,  82  Me. 
504. 


114 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    81 

assignor,  but  for  his  own  benefit :  and  there  are  numerous  decisions 
which  prohibit  the  assignee  from  bringing  the  suit  in  his  own 
name  upon  certain  non-negotiable  choses ;  unless,  indeed,  an  express 
promise  has  passed  from  the  debtor  to  himself  which  may  serve 
as  the  basis  of  the  suit.^  But  this  awkward  rule,  which  exposes 
the  assignor  to  hazard  while  forcing  the  assignee  into  a  circuitous 
procedure,  has  been  much  altered  under  our  local  practice  acts, 
so  as  to  permit  of  an  action  at  law  bv  the  beneficial  owner  in  his 
own  name.^  Equity  treats  the  assignee  as  the  party  in  interest, 
and  has  afforded  him  relief,  where  it  could  properly  take  juris- 
diction, in  proceedings  in  his  own  name:  but  an  assignee  should 
not  go  into  equity,  if  the  law  furnishes  an  appropriate  remedy ;  ^ 
nor  is  the  assignor  an  unnecessary  party  to  a  bill  in  equity,  if  he 
has  an  interest  which  may  be  affected  by  the  decree.^  Where  one 
does  not  take  a  full  assignment  (e.  g.  of  security  as  well  as  the 
principal  claim),  he  is  not  in  a  position  to  sue  iq.  his  own  name.^ 
What  the  debtor  can  set  up  in  defence  of  the  assignee's  suit  is 
substantially  what  might  have  been  set  up  against  the  assignor 

5.  Pollard  v.  Somerset  Fire  Ins.  Co.,  As  to  foreign  attachment,  garnishee 
42  Me.  221;  Skinner  v.  Somes,  14  or  trustee  process,  which  affords  to 
Mass.  107;  Mt.  Olivet  C^met^ry  v.  creditors  under  local  legislation  a 
Shubert,  2  Head,  116;  Ruckman  v.  means  of  reaching  credits  and  other 
Cutwater,  4  Dutch.  571 ;  McKinney  incorporeal  property  of  a  debtor  in 
V.  Alvis,  14  111.  33;  De  Barry  V.  With-  a  third  person's  hands,  irrespective 
ers,  44  Penn.  St.  356;  Clarke  v.  of  a  valid  assignment,  see  Bouv.  Diet. 
Thompson,  2  R.  I.  146;  Smilie  v.  "Trustee  Process;"  Merrill  v.  En- 
Stevens,  41  Vt.  321.  See  Reed,  J.,  glesby,  ,28  Vt.  150;  Story  Eq.  Jur., 
in  De  Barry  v.  Withers,  supra,  as  to  §  1040  a.  A  discretionary  right  to 
the  debtor's  express  promise  to  the  sue  either  as  at  common  law  or  in 
assignee.  Right  of  assignee  to  con-  one's  own  name  is  permitted  in  vari- 
tinue  action  in  assignor's  name.  Book  ous  Stat©  codes.  Hampson  v.  Owens, 
27,  X.  Y.   Rpts.,  Bender  ed.,  note,  p.  55  Md.  583. 

459.  7.  Hooker  v.  Eagle  Bank,  30  N.  Y. 

6.  Dickinson  v.  Burr,  15  Ark.  327;  83;  Adair  v.  Winchester,  7  Gill  &  J. 
Warner  v.  Wilson,  4  Cal.  310;  lage  114;  Haynes  v.  Thompson,  34  Miss, 
v.  Bossieux,  15  Gratt.  83;  Bacon  v.  17;  Dixon  v.  Buell,  21  III.  203. 
Bates,  53  Vt.  30;  Gordon  v.  Downey,  8.  Montague  v.  Lobdell,  11  Cush. 
1  Gill.  41;  Cook  v.  Benn,  18  Mich.  Ill;  James  River,  4c.,  Co.  v.  Little- 
387;    Harper   v.   Butler,   2   Pet.   239;  John,  18  Gratt.  53. 

Myers  v.  Davis,  22  N.  Y.  489.  9.  Batchelder  v.  Jenness,  59  Vt.  104. 

115 


§  81  THE  LAW  OF  PERSONAL  PEOPERTY.        [pART  II. 

himself.^  And  accordingly,  the  consideration  of  the  assignment 
cannot  be  questioned  or  disputed  by  the  debtor  when  the  assignee 
sues,  unless  special  cause  can  be  shown  for  doing  so.^ 

Instances  may  arise  where  the  assignee,  who  has  diligently 
pursued  his  remedies  against  the  debtor,  and  sustained  loss,  has 
a  right  to  turn  and  pursue  the  assignor.  But  the  courts  are 
reluctant  to  admit,  upon  an  assignor's  part,  any  intention  to  stand 
as  indorser  or  guarantor  of  the  incorporeal  thing  transferred ;  and 
mutual  intention  is  doubtless  material  in  such  an  issue.  Where 
consideration  was  paid  the  assignor,  the  case  appears  to  be  subject 
to  the  rule  of  ordinary  sales  as  to  title,  genuineness,  and  war- 
ranty or  condition  precedent  generally ;  ^  otherwise,  where  the 
transfer  was  gratuitous.  If  the  assignment  was  by  way  of  mere 
security,  the  assignee's  remedy  on  the  assignor's  principal  obliga- 
tion follows  the  usual  rule  of  collateral  security  or  pledge.  If  the 
assignee  took  the  risks  absolutely,  and  was  not  defrauded  by  the 
assignor,  the  latter  is  not  liable ;  and,  even  supposing  the  assignor 
to  have  undertaken  to  stand  towards  his  assignee  as  a  guarantor, 
the  assignee  can  have  no  recourse  against  him,  unless  he  has  pur- 
sued his  remedies  against  the  debtor  with  such  diligence  as  the 
circumstances  required,  and  without  success.'* 

1.  See  Johnson  v.  Irby,  8  Humph.  Fant  v.  Fant,  17  Gratt.  11;  Emmer- 
654;  Allen  v.  Miller,  11  Ohio  St.  374;  eon  v.  Claywell,  14  B.  Mon.  18;  Fur- 
Myers  V.  Davis,  22  N".  Y.  489;  Henry  niss  v.  Ferguson,  15  N.  Y.  437.  By 
V.  Brown,  13  Johns.  49.  The  assignee's  assigning  for  consideration  a  chose  in 
remedy  after  the  assignor's  death  action  at  its  face  value,  the  assignor 
is  protected ;  though  the  practice  of  warrants  by  implication  that  the 
the  different  States  is  not  uniform.  maker  is  liable.  Daskam  v.  Ullman, 
See  Grover  v.  Grover,  24  Pick.  261;  74  Wis.  474,  73  N.  W.  321. 

Moar  V.  Wright,  1  Vt.  57;   Seeley  v.  4.  Graham-   v.    Goudy,    Add.     (Pa.) 

Seeley,  2  Hill,  496;  Andrews  v.  Rue,  55;    Greenlee  v.  Young,   1   Hayw.   3; 

34  K  J.  L.  402;  61  Vt.  213.  Weaver  v.  Beard,  21  Mo.  155;   Lewis 

2.  Bamett  v.  Ellis,  34  Neb.  539 ;  43  V.  Hoblitzell,  6  Gill  &  J.  259 ;  Cham- 
La.  Ann.  1036;  Young  v.  Hudson,  99  bers  v.  Keene,  1  Met.  (Ky.)  289.  Att 
Mo.  102,  128  S.  W.  632.  express  undertaking  of  the  assignor  to 

3.  See  2   Sch.  PerS.  Prop:,   §§   318,  be  liable  as  indorser  .requires  the  de- 


373 ;  Stout  V.  Stevenson,  1  South.  178 
Flynn  v.  Allen,  57  Penn.  St.  482 
Mackie  v.  Davis,  2  Wash,  (Va.)  219' 


mand  upon  the  debtor  and  notice, 
customary  in  the  case  of  negotiable 
paper.    Ellis  v.  Dunhamj  14  Ark.  127. 

116 


CHAP.  IV.]  PERSOXAL    CHATTELS    CONTRASTED. 


§  82 


§  82.     Subject  of  Assignment  as  Regulated  by  Statute. 

This  whole  subject  of  assignment  of  incorporeal  rights  is  to  a 
great  extent  regulated  and  controlled  in  these  days  by  statute.^ 
Registry  acts  are  quite  common  in  the  United  States;  especially 
with  reference  to  mortgages,  whether  of  real  or  personal  property, 
which  are  given  to  secure  a  debt,  and  in  cases  of  sale,  assignment, 
and  transfer  generally,  where  there  has  been  no  such  manifest 
delivery  of  the  property  or  transferred  possession  as  might  suffice 
to  put  third  parties  on  their  guard.  Such  statutes  have  accord- 
ingly a  special  reference  to  the  assignment  of  money  rights  or 
incorporeal  property;  they  insist  upon  a  writing  (with  perhaps 
witnesses  or  an  acknowledgment),  and  the  assignment  under 
American  policy  should  be  recorded.^  The  general  policy  of  such 
statutes  is  to  protect  subsequent  purchasers  and  incumbrancers 
without  notice,  yet  not  necessarily  disturbing  the  rights  of  the 
original  parties  to  the  transaction  as  between  themselves.^ 


Tlie  assignee  under  a  sealed  contract 
does  not  presumably  become  liable  on 
the  contract.  New  England  Co.  v. 
Rockport  Co.,  149  Mass.  381. 

Whether  one  signed  over  in  blank 
by  way  of  guaranty  or  indorsement, 
rather  than  simple  assignment,  is  mat- 
ter of  mutual  agreement  and  open  to 
proof.     Welsh  v.  Ebersole,  75  Va.  651. 

5.  The  English  Act,  36  &  37  Vict., 
c.  66,  §  25,  pronounces  any  absolute 
assignment  by  writing  under  the  as- 
signor's hand  of  any  debt  or  other 
legal  chose  in  action,  of  which  express 
notice  in  writing  shall  have  been 
given  to  the  debtor,  &c.,  sufficient  to 
transfer  all  the  assignor's  legal  rights 
and  remedies  to  the  assignee  from 
the  date  of  such  notice.  The  debtor 
may  thus  discharge  the  debt  without 
the  assignor's  concurrence ;  saving 
Tight.9  of  protection  by  interpleader 
in  case  of  conflicting  claims  of  riglit. 

6.  See,  e.  g.,  Browning  v.  Parker,  17 


R.  I.  183;  Mutual  Life  Ins.  Co.  v. 
Watson,  30  Fed.  653;  Riley  v.  Far- 
num,  62  N.  H.  43;  Burck  v.  Taylor, 
152  U.  S.  634.  A  recorded  assignment 
which  conforms  to  statute  takes  prece- 
dence of  an  unrecorded  one  of  earlier 
date.  Pea;body  v.  Lewiston,  83  Me. 
286.  But  an  unrecorded  assignment 
might  be  good  as  between  the  parties. 
Pullen  V.  Monk,  82  Me.  412,  13  Atl. 
909.  And  perhaps,  too,  as  against 
those  affected  with  seasonable  notice 
of  such  assignment.  An  informal 
writing  miglit  be  supported  between 
the  parties  as  an  equitable  assignment. 
Hyne  v.  Osborn,  62  Mich.  235,  28  N. 
W.  821;  §  77;  Moeser  v.  Schneider, 
158  Penn.  St.  412,  27  Atl.  1088. 

7.  A  public  official  may  not  assign 
freely  his  wages  or  salary.  Trow  v. 
Moody,  27  Cal.  App.  403,  150  Pac. 
77;  Anderson  v.  Branstrom,  173  Mich. 
157,  139  N.  W.  40,  43  L.  R.  A.  N.  S. 
422,  n. ;  Granger  v.  French,  152  Mich. 


117 


§  83 


THE    LAW    OF    PERSONAJ.    TKOPERTY. 


[part  II. 


§  83.     Negotiable  Instruments  Excepted  from  the  Old  Rule  of 
Assignment. 

To  the  old  rule  which,  makes  the  assignment  of  incorporeal 
chattels  personal,  or  things  in  the  nature  of  a  chose  in  action. 


3-56,  116  N.  VV.  181;  American  Nat. 
Bank  v.  Petry,  141  S.  W.  1040  (Tex. 
Civ.  App.  1911)  ;  Schmitt  v.  Dooling, 
145  Ky.  240,  140  S.  W.  197. 

A  contract  which  involves  some  re- 
lation of  personal  confidence  and  ca- 
pacity is  not  assignable.  Central  Co.  v. 
Stuber,  220  Fed.  909,  136  C.  C.  A. 
475;  Gribbling  v.  Bohan,  148  Pae.  530, 
26  Cal.  App.  771;  Winslow  v.  Dun- 
dom,  46  Mont.  71,  125  Pac.  136; 
King  V.  West  Coast  Grocery  Co.,  72 
Wash.  132,  129'  Pac.  1081;  Nassau 
Hotel  V.  Barnett,  162  App.  Div.  381, 
147  N.  Y.  S.  283;  Detroit  Postage 
Stamp  Service  Co.  v.  Schermack,  144 
Mich.  8,  146  N.  W.  144;  Board  of 
Education  of  Flemington  v.  State 
Board  of  Education,  81  N.  J.  L.  211, 
81  Atl.  163. 

But  if  the  contractor  assents'  to  such 
■assignment,  he  practically  employs 
the  assignee  as  an  accepted  personal 
substitute.  Haag  v.  Reichert,  142  Ky. 
208,  134  S.  W.  191.  And  see  Smith 
V.  Craig,  211  N.  Y.  456,  105  N.  E. 
798;  Bauwens  v.  Goethals,  187  111. 
App.  563. 

Statute  restrictions  are  found  as  to 
assigning  unearned  wages.  Heller  v. 
Lut7.,  254  Mo.  704,  164  S.  W.  123, 
(1915),  L.  R.  A.  B.  191;  Fay  v.  Bank- 
ers' Surety  Co.,  125  Minn.  211,  146  N. 
W.  359';  cf.  Leonard  v.  Farrington,  124 
llinn.  160,  144  N.  W.  763;  Hall  v. 
Boston  Plate  &  Window  Glass  Co., 
207  Mass.  328,  93  N.  E.  640.  In  gen- 
eral the  rightsi  under  an  executory 
contract  are  assignable,  unless  ex- 
press stipulation  was  made  to  the  con- 


trary, Stephens  v.  Northern  Pac.  Ey. 
Co.,  50  Mont.  489,  148  Pac.  396.  As 
to  assigning  wages  (whether  wages 
are  afterwards  raised  or  lowered). 
Close  V.  Independent  Gravel  Co.,  156 
Mo.  App.  411,  138  S.  W.  81  (existing 
and  future  contract  of  employment). 
See  further,  Jump  v.  Bernier,  221 
Mass.  241,  108  N.  E.  1027  (statute)  ; 
Brewer  v.  Brown,  268  111.  562,  109 
N.  E.  264  (widow's  homestead)  ; 
Bryne  v.  Dorey,  221  Mass.  399,  109 
N.  E.  146  (damages  for  breach  of 
contract)  ;  Hillsdale  Distillery  Co.  v. 
Briant,  129  Minn.  223,  152  N.  W.  265 
(claim  under  a  liquor  license)  ;  Big 
Bend  Land  Co.  v.  Hutchings,  71 
Wash.  345,  128  Pac.  652  (option  con- 
tract) ;  Heiliger  v.  Ritter,  78  Misc. 
264,  138  N.  Y.  S.  212  (account  ma- 
tured under  a  non-aSsignable  con- 
tract) ;  Leonard  v.  Springer,  174  111. 
App.  516  (fraud)  ;  Phillips  v.  Ports- 
mouth, 115  Va.  180,  78  S.  E.  651; 
Hughes-Buie  Co.  v.  Mendoza,  156  S. 
W.  328  (Tex.  Civ.  App.  1913)  (as- 
signment of  part  of  a  claimO  ;  Na- 
tional Union  Fire  Co.  v.  Denver  &  R. 
G.  R.  Co.,  44  Utah,  26,  137  Pac.  653; 
Coons  v.  McKees  Rocks  Borough,  243 
Pa.  340,  90  Atl.  141 ;  Busch  v.  Strom- 
berg-Carlson  Telephone  Mfg.  Co.,  217 
Fed.  328,  133  C.  C.  A.  244  (an  under- 
writing) ;  Anders  v.  Gardner,  151  N. 
C.  604,  66  N.  E.  665;  Keeley  Co.  v. 
Hargreaves,  226  111.  316.  86  N.  E.  132 
(secret  formula  assigned)  ;  Brindse  v. 
Atlantic  City  Association,  77  N.  J. 
Eq.  272,  79  Atl.  686  (circus  profits)  ; 
Selden   v.    Illinois    Trust    &    Savings 


118 


CHAP.  IV.]  PERSON AI,    CHATTELS    CONTRASTED. 


§  83 


ineffectual  at  law,  or  at  least  ineffectual  without  a  power  of  attor- 


Banks  Co.,  239  111.  67,  87  N.  E.  860 
Berry  v.  Chase,  174  Fed,  426,  102  C 
C.  A.  572;  King  v.  West  Coast  Gro 
•eery  Co.,  72  Wash.  132,  129  Pac 
1081;  Wilson  v.  Seybold,  216  Fed 
975  (sale  of  an  option)  ;  First  Nat 
Bank  v.  Corporation  Securities  Co., 
128'  Mo.  341,  150  N.  W.  1084;  Phila- 
delphia Veneer  &  Lumber  Co.  v.  Gar- 
rison, 160  Ky.  329,  169  S.  W.  714; 
Smith  V.  Craig,  211  N.  Y.  456,  105 
N.  E.  798 ;  Cowart  v.  Singlotary,  140 
Ga.  435,  79  S.  E.  196,  47  L.  R.  A.  N.  S. 
621  (common-law  rule  extended  by 
statute)  ;  Jackson  Lumber  Co.  v. 
Western  Union  Telegraph  Co.,  7  Ala. 
App.  344,  62  So.  266 ;  Quinn  v.  Whit- 
ney, 204  N.  Y.  363,  97  N.  E.  724. 

As  to  the  element  of  giving  notice 
to  the  debtor  or  fundholder,  see 
Palmer  v.  Palmer,  112  Me.  149,  91 
Atl.  281;  Philadelphia  Veneer  Lum- 
ber Co.  V.  Garrison,  160  Ky.  329,  169 
S.  W.  714;  Goldman  v.  Murray,  164 
Cal.  419,  129  Pac.  462;  Metropolitan 
Life  Ins.  Co.  v.  Morrow,  10  Ga.  App. 
433,  73  S.  E.  607. 

Delivery  of  evidence  of  the  debt 
may  sometimes  offset  an  assignment. 
7g  N.  J.  E.  47,  82  Atl.  36.  And,  with 
or  without  assignment,  there  should 
<be  such  delivery. 

Whether  the  assignment  must  be  in 
writing,  see  Bockett-Iseman  Oil  Co. 
V.  Backer,  65  Ky.  818,  178  S.  W. 
1084 ;  Title  Guaranty  &  Surety  Co.  v. 
State,  111  N.  E.  19  (Ind.  App.  1916) 
(mere  parol)  ;  Lexington  Brewing  Co. 
V.  Hamon,  155  Ky.  711,  160  S.  W. 
264;  Smith  v.  Glass  Co.,  Ill  Mo.  696, 
77  Atl.  264;  Herring  v.  First  Nat. 
Bank,  13  Ga.  App.  492,  79  S.  E.  359. 

WTiat  constitutes  an  assignment, 
see  Fleming  v.  Law,  163  Cal.  227,  124 


Pac.  1018  (insufficient)  ;  Kretzer  v. 
Lorshbaugh,  117  Md.  562;  Brown  v. 
Southern  Ry.  Co.,  140  Ga.  539,  79 
S.  E.  152;  Northwestern  Mutual  Life 
Ins.  Co.  V.  Wright,  153  Wis.  252,  140 
N.  W.  1078.  "  Equitable  assignment  " 
is  based  on  principles  of  actual  fair- 
ness and  justice  without  regard  to 
form.  Fidelity  &  Deposit  Co.  v.  City 
of  Stafford,  93  Kan.  539,  144  Pac. 
852;  Stratton  v.  Athol  Savings  Bank, 
213  Mass.  46,  99  N.  E.  454. 

The  text  of  the  assignability  of  a 
cause  of  action  is  survivorship.  Ing- 
ersoll  V.  Gourley,  72  Wash.  462,  130 
Pac.  743 ;  Leonard  v.  Springer,  174 
111.  App.  516;  Fuller  v.  Bilz,  161 
Mich.  589,  126  N.  W.  712. 

A  mere  potential  right  is  not  as- 
signable, but  a  genuine  expectancy 
may  be  assigned.  See  Baedcr's  Estate, 
224  Pa.  452,  73  Atl.  915.  As  to  as- 
signing an  expectant  interest  in  an 
estate,  see  Gatzert  v.  Lucey,  218  Fed. 
395  (N.  Y.  D.  C.  1914)  ;  Black^vell  v. 
Harrelson,  99  S.  C.  264,  84  S.  E.  233; 
Black,  Matter  of,  138  App.  Div.  562, 
123  N.  Y.  S.  371  (a  potential  inter- 
est) ;  Kinsey  v.  Kinspy,  139  App.  Div. 
455,  124 N.Y.  S.  301  (wholly  future)  ; 
Taylor  v.  Swafford,  122  Tcnn.  303, 
123  S.  W.  350,  25  L.  R.  A.  N.  s.  442; 
Simmons  v.  Ross,  270  111.  372,  110 
N.  E.  507 ;  Thompson  v.  Gimbel  Bros., 
71  Misc.  126,  128  N.  Y.  S.  210; 
Bridge  v.  Kedon,  163  Cal.  493,  126 
Pac.  149.  Right  of  action  for  a  per- 
sonal tort  or  crime  is  not  usually 
assignable.  Clark  v.  Lanam,  31  S.  D. 
109,  133  N.  W.  771;  Irion  v.  Knapp, 
133  T.a.  60,  60  So.  719,  43  L.  R.  A. 
N.  s.  940,  n.;  Sensenig  v.  Pennsylvania 
R.  Co.,  229  Pa.  168,  78  Atl.  91  (not 
l)efore  a  verdict)  ;  Wilson  v.  Shrader, 


119 


§  83 


THE  LAW  OF  PERSONAL  PBOPEETT. 


[part  II. 


ney  to  enable  the  assignee  to  sue,  negotiable  instruments  always 


73  VV.  Va.  105,  79  S.  E.  1083  (pen- 
alty under  statute)  ;  Perkins  v.  Tele- 
phone Co.,  155  Cal.  702,  103  Pac. 
190;  Cameron  v.  111.  Steel  Co.,  165 
111.  App.  121.  But  as  to  merely  in- 
juring property,  see  Williamsport 
Hardwood  L.  Co.  v.  Baltimore  &  0. 
R.  Co.,  71  W.  Va.  741,  77  S.  E.  333; 
Perkett  v.  Manistee  &  N.  E.  R.  Co., 
175  Mioh.  253,  141  N.  W.  607; 
Lasher  v.  Carey,  182  111.  App.  147; 
Empire  State  Surety  Co.  v.  Cohen, 
•93  Misc.  293,  156  N.  Y.  S.  935  (mak- 
ing good  a  penal  sum  on  a  bond). 
See  Delval  v.  Gagnon,  213  Mass.  203, 
99  N.  E.  1095;  Remmers  v.  Remmers', 
217  Mo.  541,  117  S.  W.  1117;  Babcock 
V.  Farwell,  245  111.  14,  91  N.  E.  683 
(fraud). 

As  to  purchase  of  a  foreign  draft, 
see  MuUer  v.  Kling,  209  N.  Y.  239', 
103  N.  E.  138. 

A  check  on  a  bank  does  not  operate 
as  an  assignment  against  the  bank 
until  the  latter  accepts  or  ratifies  the 
check.  First  Nat.  Bank  of  Chicago  v. 
O'Byrne,  177  111.  App.  473  (statute)  ; 
Meads  V.  Earle,  211  Mass.  409,  97  N. 
E.  916.  And  see  In  re  Yungbluth, 
209  Fed.  116  (Wash.  St.  C.  C.  A. 
1915)  ;  Le  Breton  v.  Stanley  Contract- 
ing Co.,  15  Cal.  App.  429,  114  Pac. 
1028;  Blakely  Artesian  Ice  Co.  v. 
Clarke,  163  N.  C.  140,  79^  S.  E.  526 
(note  assigned  with  word  of  reserva- 
tion) ;  Shearer  v.  Shearer,  137  Ga.  51, 
73  S.  E.  428 ;  Maxfield  v.  Jones,  106 
Ark.  346,  153  S.  W.  584  ("without 
recourse");  Trustees  of  Broaddus 
Institute  v.  Siers,  68  W.  Va.  125,  69 
S.  E.  468.  Assignment  should  be 
against  a  particular  fund  presum- 
ably at  leas.t)  ;  Goldman  v.  Murray, 
164  Cal.  419,  129  Pac.  462;  Windsor 


Cement  Co.  v.  Thompson,  86  Conn. 
511,  86  Atl.  1 ;  Youngberg  v.  El  Paso 
Brick  Co.,  155  S.  W.  715  (Tex.  Civ. 
App.  1913).  As  against  the  drawer, 
the  giving  of  a  check  for  value  on  an 
ordering  bank  account  is  held  to  be 
an  assignment  of  the  fund  pro  tanto. 
Wasgatt  v.  First  Nat.  Bank,  117 
Minn.  9,  134  N.  W,  224,  4Z  L.  R.  A. 
N.  s.  109,  n. ;  Elgin  v.  Gross-Kelly  Co., 
20  N.  M.  450,  150  Pac.  922,  L.  R.  A. 
(1916)  A.  711,n.;  Findlay  v.  Corn  Ex. 
Nat.  Bank,  166  III.  App.  57.  But  cf. 
Glennan  v.  Rochester  Co.,  209  N.  Y. 
12,  102  N.  E.  537,  52  L.  R.  A.  N.  S. 
302.  As  a  rule,  notice  to  a  debtor  of 
the  assignment  of  a  debt  is  unneces- 
sary. Doughty  v.  Weston,  90  Misc. 
314,  152  N.  Y.  S.  1035.  Notification 
is  to  be  distinguished  from  acceptance 
by  the  debtor.  Johnson  v.  Belanger, 
85  Vt.  249,  81  Atl.  621.  But  priority 
in  giving  notice  to  the  debtor  may  be 
of  consequence.  Market  Nat.  Bank 
V.  Raspberry,  34  Okla.  243,  124  Pac. 
758 ;  Lexington  Brewing  Co.  v.  Hamon, 
155  Ky.  711,  160  S.  W.  260;  Cross  v. 
Page  &  Hill  Co.,  116  Minn.  122,  133 
N.  W.  178.  Transfering  portions  of 
a  fund  will  be  satisfied  in  due  order. 
A.  A.  Fielder  Lumber  Co.  v.  Smith, 
151  S.  W.  605  (Tex.  Civ.  App.  1912). 
See  King  Bros.  v.  Central  Ga.  Ry. 
Co.,  135  Ga.  225,  69  S.  E.  113. 

As  to  method  of  suing,  etc.,  see 
Bryne  v.  Dorey,  221  Mass.  399,  109 
N.  E.  146  (suit  in  assignee's  own 
name)  ;  Salt  Fork  Coal  Co.  v.  Eld- 
redge  Coal  Co.,  170  111.  App.  268; 
Bank  of  Commerce  v.  Rufiin,  190  Mo. 
App.  124,  175  S.  W.  303  (assignee 
takes  risk  of  enforcing)  ;  American 
Lithographic  Co.  v.  Bigelow,  216 
Mass.  287,  103  N.  E.  909   (partial  in- 


120 


CHAP.  IV.] 


PEKSOXAL    CHATTELS    COXTRASTED. 


§  83 


constituted  an  exception.^     These  are,  most  conunonly,   bills  of 
exchange,. promissory  notes,  and  bank  checks. 

It  is  of  the  essence  of  a  negotiable  instrument  that  the  legal 
right  to  that  which  is  evidenced  by  it,  and  the  right  of  action  on 
it  in  case  of  a  default,  are  transferable  from  one  person  to  another, 
so  as  to  enable  the  latter  to  sue  upon  it  in  his  own  name.  Bills, 
notes,  and  checks  are  negotiable  to  an  ample  extent;  they  may 
pass  from  hand  to  hand  by  delivery,  with  or  without  indorsement, 
as  the  case  may  require ;  and  the  transfer  vests  in  the  hond  fide 
transferee  a  right  of  action  in  his  own  name  on  the  instrument 
assigned.^  A  formal  holder  for  value  of  a  bill  or  note  will  not  be 
affected  by  intermediate  fraud  or  infirmity  of  title,  of  which  he  had 
no  prior  notice  sufficient  to  put  him  on  his  guard,  provided  that 
he  took  the  instrument  before  it  became  due,  and  in  good  faith.^ 
But  if  this  holder  took  the  bill  or  note,  being  a^vare  at  the  time 
of  circumstances  which  rendered  it  improper  that  payment  should 


validity)  ;  Leonard  v.  Springer,  174 
III.  App.  516;  Hull  v.  Mass.  Bonding 
&  Ins.  Co.,  86  Kan.  342,  120  Pac.  544. 

Assignment  carries  equitably  the 
securities  held  by  the  assignor.  Med- 
ler  V.  Childers,  17  N.  M.  530,  130  Pac. 
490;  Thomp.son  v.  Erie  K.  Co.,  207 
N".  Y.  171,  100  N.  E.  791 ;  Huntingdon 
Park  Impr.  Co.  v.  Park  Land  Co.,  165 
Cal.  429,  132  Pac.  760;  Jenkinson  v. 
New  York  Finance  Co.,  79'  N.  J.  E. 
247,  82  Atl.  36. 

Defences  against  the  assignor  avail 
usually  against  the  assignee  when  the 
assignee  has  no  greater  right  tlian  his 
assignor.  Bank  of  Commerce  v.  Puf- 
fin, 190  Mo.  App.  124,  175  S.  W.  303 ; 
Miers  v.  Chas.  H.  Fuller  Co.,  167  111. 
App.  49;  Fleming  v.  Law,  163  Cal. 
227,  124  Pac.  1018 ;  Hervey  v.  Fonts, 
91  Kan.  680.  139  Pac.  407:  Minne- 
tonka  Oil  Co.  v.  Cleveland  Vitrified 
Brick  Co.,  27  Okla.  180,  111  Pac.  326; 
Thurston  v.  McLellan.,  34  App.  D.  C. 


294 ;  L^nited  Shoe  Machinery  Co.  v. 
Ramlose,  210  Mo.  631,  109  S.  W.  567; 
Selden  v.  Williams,  108  Va.  542,  62 
S.  E.  380.  The  assignee  cannot  be 
compelled  to  perform  his  assignor's 
covenants.  Anderson  v.  New  York  & 
Harlem  P.  Co.,  132  App.  Div.  183, 
116  N.  Y.  S.  954. 

There  may  be  a  reassignment  to  the 
original  assignor  if  no  intervening 
rights  are  prejudiced  thereby.  Jones 
V.  American  Creosote  Works,  129'  La! 
596,  56  So.  544.  As  to  the  implied 
warranty  of  assignor,  S'ee  Miners' 
Bank  v.  Burriss,  164  Mo.  App.  690, 
147  S.  W.  1110. 

8.  Supra,  §  72. 

9.  See  2  Pars.  Bills  &  Notes,  279; 
Smith  Merc.  Law,  202;  Wms.  Pcrs. 
Prop.  17th  Eng.  ed.  436. 

1.  Pars.  Bills  &  Notes.  183.  184, 
257,  278;  Byles  on  Bills.  5th  Am.  ed. 
34,  125,  127,  158. 


121 


§    84  THE    LAW    OF    PERSONAI.    PROPERTY.  [PART  II. 

be  enforced,  he  has  no  better  interest  than  that  of  the  person 
who  transferred  it  to  him.^  And  the  rule  in  case  of  transfer  of 
an  overdue  bill  or  note  is,  that  the  holder  takes  it  subject  to  exist- 
ing equities.^ 

§  84.     Indorsement  as  Distinguished  from  Assignment. 

JSTegotiable  paper  follows  the  rule  of  indorsement  where  applica- 
ble rather  than  that  of  assignment ;  '*  though  a  strict  comparison 
will  show  that  our  modem  assignments  are  often  hastily  made 
after  the  fashion  of  indorsing  over,  as  though  the  thing  were 
negotiable ;  the  usual  effect  being  to  authorize  a  formal  assigTiment 
to  be  written  on  the  back  over  the  assignor's  name.^ 

Indorsement  in  fact  is  a  quality  pertaining  to  bills,  notes,  and 
other  negotiable  instruments,  and,  in  strictness,  to  none  other. 
One  who  means  to  transfer  his  title  in  any  chattel  of  this  class, 
expressed  to  be  payable  to  himself  or  order,  writes  his  name  on  the 
back  of  it  before  delivering  the  instrument,  mainly  with  the 
intent  of  passing  over  his  title  in  the  chattel  to  the  fullest  extent ; 
though  a  natural  consequence  would  be  to  subject  him  to  the  lia- 
bility of  paying  off  the  debt  according  to  the  tenor  of  the  writing, 
in  a  certain  contingency,  as  security  for  the  party  primarily 
liable.^ 

To  use  the  mercantile  phrases,  an  indorsement  may  be  in  hlank, 
or  where  the  indorser  writes  his  own  name  simply,  and  thus  gives 
his  liability  the  widest  range.  It  may  be  in  full,  or  where  he 
names  the  party  to  whom  he  indorses,  and  thus  obliges  the  latter 
to  sign,  in  turn,  upon  any  new  transfer;  which  might  also  be 
termed  one  sort  of  restrictive  indorsement.  It  may  be  restrictive 
or  qualified,  even  to  the  extent  of  clearing  himself  of  all  legal 
liability  as  indorser,  and  merely  for  the  purpose  of  conferring 

2.  lb.  4.  See   Harris   v.    Clark,    3    Comst. 

3.  2  Pars.  Bills  &  Notes,  603,  604.  115;  49  Barb.  221;  Cushman  v. 
See   also    3   Kent   Com.    75-128 ;    and       Haynes,  20  Pick.  132. 

Part   III.,   c.    7,   post,   on   Bills   and  5.  Hupra,  §§  78,  81. 

Notes.  6.  See  Part  III.,  c.  7,  post,  on  Bills 

and  Notes. 

122 


CHAP.  IV.]  PERSONAL,    CHATTELS    CONTRASTED.  §    85 

his  title ;  as  where  he  indorses  "  without  recourse."  On  the  other 
hand,  one  party  may  put  his  name  upon  the  back  of  another  man's 
negotiable  paper,  not  primarily  to  enable  the  instrument  to  be 
formally  transferred,  but  for  the  purpose  of  lending  his  name  as 
security,  so  that  the  other  may  raise  money  upon  it  elsewhere ;  in 
which  case  the  indorser,  if  receiving  no  consideration,  but  signing 
as  a  favor,  stands  with  the  qualified  liability  of  accommodation 
indorser. 

A  negotiable  instrument,  when  indorsed  in  blank  or  payable 
to  bearer,  has  the  negotiable  character;  but  such  instruments  may 
for  the  time  be  deprived  of  their  negotiable  character.^ 

§  85.  Various  Classes  of  Negotiable  Instruments  Considered. 
There  are  various  instruments  which  are  salable  by  mercantile 
usage,  in  much  the  same  manner  as  a  bill  or  note,  and  yet  are 
not,  properly  speaking,  negotiable ;  since  they  must  be  sued  in 
the  name  of  the  original  assignor.  A  bill  of  lading  has  sometimes 
been  considered  negotiable,  for  instance ;  since,  by  indorsement  and 
delivery,  it  passes  the  property  in  the  goods  to  the  indorsee,  sub- 
ject to  the  right  of  the  unpaid  vendor  to  stop  in  transitu.  But 
the  better  opinion  is,  that  such  a  bill  is  only  quasi  negotiable, 
and  the  effect  of  indorsement  is  to  transfer  the  property  in  the 
goods  only,  and  not  the  right  upon  the  contract  itself;  and  gen- 
erally, independent  of  local  practice  acts,  the  action  cannot  be 
maintained  in  the  assignee's  name.^  Bank  checks,  though  very 
much  like  bills  of  exchange  in  form,  are  not  so  to  all  intents; 
still  they  are  negotiable  in  the  fullest  sense.^  Coupon  bonds,  a 
new  species  of  incorporeal  chattels  personal  since  1860,  which 
consist  in  bonds  payable  to  bearer  (usually  under  a  corporate 
seal),  and  which  for  the  most  part  have  coupons  or  interest  war- 
rants   annexed,    are  by  our  decisions   put   substantially   on    the 

7.  Part  III.,  c.  7,  post.  10  Wall.  647;   1  Am.  Lead.  Cas.  5th 

8.  1  Pars.  Contr.  289;  2  Kent  Com.  cd.  407.  A  check  is  not  an  assign- 
549,  n.;  1  Am.  Lead.  Cas.  5th  ed.  40  ment  of  money  in  the  hands  of  a 
et  seq.  banker.     Hopkinson  v.  Forstor,  L.  R. 

9.  Merchants'  Bank  v.   State  Bank,  19  Eq.  74. 

123 


§  86  THE  LAW    OF  PERSONAL  PROPERTY.        [pART  II. 

general  footing  of  negotiable  paper,  with  the  same  qualities  and 
incidents.^  And  the  same  thing  has  been  declared  tme  of  the 
coupons  or  interest  warrants  themselves,  detached  from  the  bonds, 
if  such  coupons  or  warrants  be  in  words  negotiable.^  To  no 
other  species  of  property  than  the  foregoing  can  the  term  nego- 
tiable at  this  day  be  strictly  applied ;  though  upon  various  instru- 
ments, such  as  bills  of  lading,  the  local  statute  will  be  found  to 
confer  some  of  the  advantageous  incidents  of  negotiability.^ 

§  86.     General   Conclusion   as  to   Assignment,   etc.;    Civil-Law 
Rule. 

The  reader  has  thus  perceived  that,  with  the  progress  of 
modern  civilization,  and  the  growing  wants  of  trade,  finance  and 
commerce,  the  old  common-law  objection  to  the  assignment  of 
rights  in  the  nature  of  a  chose  in  action  has  come  at  last  to  amount 
to  little  more  than  a  standing  requirement  that  the  assignee  shall 
make  use  of  the  original  assignor's  name  in  bringing  his  suit  on 
the  thing  assigned ;  and  that  even  this  is  obviated  to  a  considerable 
extent  in  equity  proceedings,  and  in  courts  of  law  under  local 
statutes;  while  in  case  of  negotiable  instruments  it  is  dispensed 
with  altogether.  The  public  policy  which  discouraged  assignments 
of  this  character  per  se  was  a  narrow  and  illiberal  one.  And  in 
the  civil  law,  as  well  as  in  the  jurisprudence  of  the  modem  com- 
mercial countries  of  continental  Europe,  an  opposite  policy  ap- 
pears to  have  prevailed;  for  all  debts  were  from  an  early  period 
allowed  to  be  assigned  under  the  civil  law  system,  if  not  formally, 
at  least  in  legal  effect ;  while  for  the  most  part,  if  not  in  all  cases, 
they  may  now  be  sued  for  in  the  name  of  the  assignee."* 

1.  Murray  v.  Lardner,  2  Wall.  110;  2.  Thomson  v.  Lee  County,  3  Wall. 

Morris  Canal  v.  Fisher,  1  Stoekt.  700 ;  330. 

Johnson  v.  County,  24  111.  92;   Clark  3.  §§  321,  471. 

V.  City  of  Janesville,  10  Wis.  136;   1  4.  Cod.  lib.  8,  tit.  42,  1.  1;  1  Domat, 

Am.    Lead.   Cas.    5th   ed.    408;    In   re  book   4,    tit.    4,   §§    3,   4;    Pothier   on 

Imperial  Land,  &e.,  Co.,  L.  R.  11  Eq.  Sales,   by   Cushing.   n.,    550,    555-559; 

478.     And  see  Part  III.,  c.  8,  post.  Story  Eq.  Jur.,  §  1040  b. 

124 


CHAP.  IV.]  PERSONAL,    CHATTELS    CONTEASTED.  §    87 

§  87.     As  to  Delivery;  Chattels  Corporeal  and  Incorporeal. 

iJ^ext,  as  to  the  absolute  transfer  by  way  of  gift  or  sale  of  per- 
sonal property,  there  is  a  distinction  observable  between  personal 
chattels  corporeal  and  those  incorporeal,  which  has  been  in  a 
measure  anticipated  by  what  we  have  just  said  in  reference  to 
their  assignment.  This  is  not  a  suitable  place  for  elaborating 
those  important  principles  of  law  which  relate  to  the  gift  or  sale 
or  to  the  transfer  generally  of  personal  property.^  But  we  may 
notice  in  brief  that  delivery  of  the  thing  sold,  in  whole  or  in  part, 
is  an  important  element  in  every  sale ;  and  that,  in  cash  sales, 
payment  of  the  price  by  the  buyer,  and  delivery  of  the  goods  by 
the  seller,  are  immediate  and  concurrent  acts  which  complete  the 
transaction.^  And  a  gift  of  personal  chattels,  to  be  effectual, 
should  in  general  be  accompanied  by  delivery  of  possession, 
whether  the  gift  be  one  inter  vivos  or  causa  mortis  J  Now  the 
delivery  of  a  corporeal  chattel  personal  must  be  very  different 
from  that  of  a  purely  incorporal  chattel;  for  in  the  one  case  you 
can  make  a  manual  delivery  of  the  thing,  or  what  is  equivalent 
to  it ;  while  in  the  other  case,  which  is,  strictly  speaking,  that  of 
an  invisible,  intangible  thing,  a  manual  delivery  would  be  impos- 
sible. But  the  rule  applicable  to  incorporeal  chattels  personal, 
or  chases  in  action^  is  that,  so  far  as  the  thing  can  be  transferred 
at  all  (a  subject  which  we  considered  incidentally  while  treating 
of  assignments),  such  a  delivery  as  the  thing  will  admit  of  —  a 
symbolical  delivery — is  admitted  as  the  substitute  for  a  manual 
delivery.  Hence,  where  the  thing  sold  is  a  bill  of  exchange,  the 
bill  should  be  delivered ;  where  it  is  a  policy  of  insurance,  there 
should  be  delivery  of  the  policy;  where  it  is  stock,  of  the  old 
certificate  as  preliminary  to  the  issue  of  a  new  one;  where  it  is  a 
bond,  of  the  bond  itself;  and  so  on.  And  in  general  the  written 
instrument  which  is  evidence  of  the  debt  or  money  right  should, 
•^  ■ 

5.  Gifts   and   sales   are  treated   at      to  show  intent  of  delivers-  of  cliatt<"l3, 
length  in  vol.  ii'.  of  this  work.  see  Chamberla^Tie  Evid.,  §  2604. 

6.  2  Kent  Com.  496,  and  n. ;  Smith  7.  2    Kent   Com.    438;    Wms.   Por.^. 
Merc.  Law,  461,  472,  5th  ed. ;  vol.  ii.,       Trop.  17th  Eng.  ed.  70;  vol.  ii..  post, 
post;  Schoul.   Pers.   Prop.     Evidence 

125 


§    88  THE    LAW    OF    PfiKSONAL    PROPERTY.  [PART  II. 

if  there  be  one,  be  delivered  when  that  debt  or  right  is  sold.* 
The  rule  of  symbolical  delivery  is  sometimes  applied  to  corporeal 
chattels  likewise,  in  cases  where  it  is  not  possible  to  make  an 
immediate  and  complete  delivery  of  the  thing  sold  or  given ;  as 
in  the  instance  of  goods  in  a  warehouse,  where  the  delivery  of  the 
key  has  been  held  sufficient.^  But  it  would  appear  that,  in  this 
latter  class  of  cases,  symbolical  delivery  is  accepted  instead  of 
actual  delivery,  on  the  supposition  that  actual  delivery  can  pres- 
ently follow;  for  sooner  or  later  the  actual  delivery  of  a  personal 
thing  corporeal,  or  movable  proper,  would  be  possible ;  whereas, 
of  a  money  right  or  thing  incorporeal,  only  some  voucher  or 
muniment  of  title  can  be  actually  delivered  in  transfer.^ 

§  88.     Rule  as  to  Transfer  of  a  Ship  or  Vessel. 

A  peculiar  rule  is  applied  in  the  case  of  a  ship  or  vessel,  which, 
as  we  have  seen,  is  a  personal  corporeal  chattel.  Partly  because 
of  the  great  bulk  and  value  of  such  chattels,  partly  because  it 
would  be  impossible  to  deliver  property  of  this  nature  (whose 
element  is  the  water)  like  things  transported  on  land,  and  in  a 
great  measure  from  reasons  of  expediency  and  public  policy  apper- 
taining to  the  intercourse  of  commercial  nations  with  one  another, 
a  registry  system  has  been  fostered  by  legislation  which  assimilates 
the  title  and  transfer  of  vessels  very  closely  to  that  of  real  estate. 
The  Registry  Statutes  of  the  United  States,  like  those  of  England, 
have  always  required  a  certain  registration  in  order  to  entitle 
the  ship  to  the  full  privileges  of  an  American  vessel.  The  English 
statutes  have  gone  so  far  as  to  require  registration  to  make  the 
transfer  valid.     And  an  act  of  Congress  was  passed  in  1850  which 

8.  See  supra,  §§  72,  77;  Civil  Code  cited;  ib.  500-504,  and  cases  cited;  1 
La.,  arts.  2456,  2612.  Risley  v.  Phenix  Atk.  171;  per  Lord  Kenyon,  1  East, 
Banli,  83  N.  Y.  328,  38  Am.  Rep.  421.  194;  Parkard  v.  Dunsmore,  11  Cush. 
But  where  the  assignment  is  made  by  282.  Often  the  delivery  of  a  cor- 
a  separate  paper  it  ma,y  be  valid  poreal  chattel  is  accompanied  by  some 
though  the  document  itself  may  not  muniment,  such  as  an  invoice  or  bill 
be    delivered.      Planters'    Ins.    Co.    v.  of  sale. 

Tunstall,  72  Ala.  142.  1.  See    Stevens   v.    Stewart,    3    Cal. 

9.  2  Kent  Com.  446-448,  and  cases       140. 

126 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    89 

required  the  registration  of  all  such  transfers  by  sale,  mortgage, 
or  pledge.^ 

The  universal  custom  under  the  law  merchant  is  to  require  the 
transfer  of  a  ship  by  a  written  document.  Can,  then,  a  ship  be 
transferred,  independently  of  a  bill  of  sale  or  other  written  docu- 
ment, like  any  other  chattel,  by  mere  delivery?  It  seems  to  be 
reasonably  certain  that  it  can ;  and  that,  leaving  legislation  out  of 
consideration,  which  might  at  any  time  control  the  question,  the 
sale  and  ownership  of  a  ship  are  regulated  by  the  same  principles 
as  apply  to  corporeal  chattels  in  general."' 

§  89.     As  to  Seizure  and  Attachment;  Chattels  Corporeal  and 
Incorporeal. 

Thirdly.  Another  distinction  is  noticeable  between  corporeal 
and  incorporeal  chattels  personal,  in  the  matter  of  seizure  and 
attachment.  The  usual  mode  of  seizure  in  the  case  of  corporeal 
personal  property  would  be  taking  it  into  actual  and  manual  pos- 
session; as  in  the  case  where  implements  are  seized  for  violation 
of  the  internal  revenue  laws.  But  an  incorporeal  chattel  mani- 
festly cannot  be  seized  in  the  same  way.  Indeed,  except  for  the 
garnishee  or  trustee  process  of  which  we  have  spoken,**  or  some 
similar  remedy,  a  mere  debt  could  not  be  attached  or  seized  at  all. 
Here,  too,  the  principle  seems  properly  applied,  wherever  a  stat- 
ute confers  the  right  to  seize  or  attach  incorporeal  chattels,  of 
making  a  sort  of  symbolical  seizure  or  attachment,  such  as  the 
thing  in  its  nature  and  according  to  its  class  admits  of,  sufficient 
to  hold  the  property  for  judicial  proceedings.^ 

2.  See  1  Pars.  Shipping,  c.  2  ;  and  a  ship  is  valid  as  between  the  parties 
post.  Part  III.,  c.  1,  Ships  and  Ves-  thereto.  Moore  v.  Simonds,  100  U.  S. 
s«ls.       See    U.     S.     Comp.     St.     1916,       145. 

§  7707  et  seq.  4.  Supra,  §  81. 

3.  lb. ;  Tlie  Amelie,  6  Wall.  18 ;  5.  Tliis  is  one  of  the  principles 
Scudder  v.  Calais  Steamboat  Co.,  1  upon  which  the  case  of  Miller  v. 
Cliff.  370;  s.  c,  2  Bl.  372.  And  see  United  States,  11  Wall.  268,  under  the 
Pars.  Partn.  2d  ed.  550,  and  cases  "  Confiscation  Acts  "  of  1861  and  1862, 
cited.     An   unrecorded  conveyance  of  was  decided. 

127 


§    91  THE    LAW    OF    PEESOlHrAL    PROPEETY.  [PAKT  II. 

§  90.    As  to  Larceny;   Chattels  Corporeal  and  Incorporeal. 

Fourthly — Choses  in  action,  or  incorporeal  chattels  personal, 
were  not,  at  the  common  law,  the  subject  of  larceny,  because  they 
were  deemed  to  be  of  no  intrinsic  value,  "  nor  importing  any 
property  in  possession  of  the  person  from  whom  they  were  taken." 
Eut  bonds,  bills,  and  valuable  securities  generally,  being  import- 
ant muniments  of  title  to  some  incorporeal  right,  are  now  rendered 
by  statute  the  subject  of  larceny  and  punished  accordingly.^ 
There  are  negotiable  instruments  in  these  days  whose  possession 
by  a  bond  fide  holder  for  value  would  give  title  to  the  chose;  so 
that  the  criminal  safeguards  ought  to  be  very  strong/  The  rea- 
son of  the  old  exemption  ceasing,  the  exemption  itself  ought  to 
be  made  to  cease. 

We  have  seen  that  even  in  the  taking  of  things  corporeal,  such 
as  animals,  the  alleged  criminal  offence  may  sometimes  be  justi- 
fied by  reason  of  the  worthlessness  of  the  thing  taken.^ 

§  91.     As  to  Husband's  Marital  Rights;  Chattels  Corporeal  and 
Incorporeal. 

Fifthly.  The  title  of  the  husband  to  his  wife's  personal  prop- 
erty, upon  marriage,  is  greatly  affected,  at  the  common  law,  by 
the  distinction  made  between  things  corporeal  and  thing  incor- 
poreal. All  of  the  wife's  corporeal  chattels  personal  —  that  is,  her 
choses  in  possession  —  vest  in  her  husband  absolutely ;  while  his 
right  to  her  choses  in  action,  or  incorporeal  chattels  personal,  is 
qualified  only;  marriage  operating  in  this  latter  case  somewhat  as 
a  gift,  upon  the  condition  that  the  husband  shall  do  some  act, 
while  the  matrimonial  state  lasts,  to  appropriate  such  choses  to 
himself,  or,  as  it  is  called,  "  reduce  them  to  possession."  ^  The 
technical  terms  applied  in  this  connection  would  lead  one  to  sup- 
pose that  "  reduction  into  possession  "  meant  nothing  more  nor 
less  than  to  turn  the  incorporeal  property  into  corporeal  property 

e.  Calye's    Case,    8    Co.    33;    4    Bl.  8.  See  supra,  §  50. 

Com.    234,   and   notes   by   Chitty  and  9.  See  Sehouler  Dom.   Eel.   5th  ed., 

others.  §§  82-85;  2  Swell's  Bl.  Com.  389,  396; 

7.  See  post,  vol.  ii.,  pt.  iv.  2  Kent  Com.  130  et  seq.,  351. 

128 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    92 

or  make  the  chose  in  action  a  chose  in  possession.  Many  of  the 
cases,  indeed,  support  such  a  belief,  so  far  as  money  debts  or  the 
old  choses  in  action  are  concerned ;  ^  and  yet,  if  this  were  in  truth 
the  ancient  theory,  it  is  found  too  narrow  to  fit  the  modern  prece- 
dents.^ As  to  chattels  real,  the  title  acquired  by  the  husband 
upon  marriage  is  of  a  somewhat  anomalous  nature.^ 

§  92.     As  to  Survival  of  Remedies. 

Sixthly.  While  the  corporeal  chattels  personal  of  a  deceased 
person  remain  in  specie  after  his  death,  and  (with  the  exception, 
perhaps,  of  such  things  as  heirlooms,  emblements,  and  fixtures,  of 
which  we  are  to  speak  hereafter)  go  into  the  hands  of  his  execu- 
tors or  administrators,  to  swell  the  assets  of  the  estate,  his  incor- 
poreal chattels  do  not  in  all  cases  even  survdve  him.  Thus,  it 
was  an  old  maxim  of  the  law  that  damages  for  injuries  to  one's 
person  or  property  died  with  the  person  to  whom  or  by  whom  the 
injury  was  done ;  and  hence  a  claim  for  damages,  though  it  might 
be  valuable  to  the  wronged  party  while  he  lived,  could  never  avail 
his  personal  representatives  after  his  death.  Statutes,  enacted 
from  time  to  time  since  the  reign  of  Edward  III.  of  England, 
have  gradually  modified  this  rule;  so  that  now,  in  various  cases, 
remedies  are  permitted  to  survive;  yet,  in  other  instances,  par- 
ticularly where  the  wrong  is  done  to  the  person  instead  of  the 
property,  and  local  legislation  affords  no  special  remedy,  executors 

1.  2  Kent  Com.  137,  138;  Schouler  ably;  their  policy  being  to  allow  the 
Dom.  Rel.  5th  ed.,  §§  82-85.  wife  to  keep  as  her  separate  property 

2.  lb.  See,  for  instance,  as  to  no-  whatever  she  has  at  tlie  time  of  mar- 
vating  a  debt  by  taking  a  new  security  riage  or  subsequently  acquires;  so 
to  himself,  Arnold  v.  Ruggles,  1  R.  I.  that  this  whole  doctrine  of  "  reduc- 
165 ;  Dodgson  v.  Bell,  3  E.  L.  &  Eq.  tion  into  possession "  seems  likely  to 
542.  See  also,  as  to  a  husband's  as-  pass  into  oblivion,  as  concerns  the 
signment  of  the  chose  by  way  of  re-  United  States,  at  no  very  distant  day. 
duction,  lb.  See    Schouler   Hus.    &,   Wife,    §§    162, 

3.  Schouler  Dom.  Rel.,  §§  87,  88;  2  Ac,  for  a  full  discussion  of  the  doc- 
Kent  Com.  134.  Tlie  married  Avomen's  trine  concerning  the  wife's  "separate 
acts,  now  constituting  a  prominent  estate,"  together  with  the  "mar- 
feature  of  English  and  American  ried  women's  acts"  of  the  Several 
legislation,      curtail      the     husband's  States. 

common-law  privileges  very  consider- 

9  120 


§  93  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

and  administrators  have  no  power  whatever  to  commence  a  new 
suit,  nor  to  carry  on  one  already  begun  to  final  judgment  and 
execution."^  But  for  debts  founded  upon  contract,  the  personal 
representative  may  generally  sue ;  and  these,  whether  resting  upon 
judgment,  specialty,  or  parol  agreement,  together  with  such  spe- 
cies of  incorporeal  property  representing  debts,  as  bills,  notes, 
certificates  of  stock,  coupon  bonds,  and  the  like,  go  in  with  cor- 
poreal chattels  as  part  of  the  assets  of  the  deceased  person's  estate. 
Accruing  rents,  annuities,  salaries,  and  the  like  all  of  which  are 
incorporeal,  may  be  lost  by  the  death  of  the  owner,  on  the  ground 
of  not  being  strictly  due  and  payable  at  the  time  of  his  death; 
but  these  are  now  frequently  saved  by  statutes  which  permit  of 
an  apportionment  up  to  the  date  of  the  owner's  death. ^ 

§  93.     As  to  Effect  of  Time  upon  Title ;    Statutes  of  Limitation. 

Seventhly.  We  are  to  notice,  as  a  final  distinction  between 
corporeal  and  incorporeal  chattels  personal,  that  while  one's  title 
in  those  of  the  former  kind  is  strengthened  by  lapse  of  time,  in 
many  of  those  of  the  latter  kind  it  becomes  rather  endangered. 
For  if  one  has  possession  of  a  corporeal  thing,  such  as  an  animal, 
money,  or  a  box  of  jewels,  the  longer  he  keeps  it,  the  stronger 
becomes  his  presumptive  title.  But  a  mere  money  right,  which 
must  be  eventually  enforced  by  collection  or  suit,  is  subject  to 
our  statutes  of  limitation ;  and  unless  the  creditor  sues  within  the 
period  which  the  law  permits,  he  loses  his  right  and  title  alto- 
gether.^ And  the  same  may  be  said  of  the  right  to  sue  upon  a 
bill  or  promissory  note,  or  any  other  instrument  which  promises 

4.  1  Wms.  Ex'rs,  10th  ed.  604-669 ;  Our  modern  statutes  of  limitations 
2  Schouler  Wills,  Ex'rs  and  Adm'rs,  put  bounds  to  all  private  litiga- 
§§  1279,  1280.  tion,    whether    by    real    or    personal 

5.  Wms.  Ex'rs,  10th  ed.  633;  action;  and  the  parent  act  on  this 
Schouler  Wills,  Ex'rs  and  Adm'rs,  subject  is  the  English  statute  of  James 
§  1277.  I.,   passed   in   1623,   whose   provisions 

6.  See  Wms.  Pers.  Prop.  17th  Eng.  have  been  extensively  copied  into  the 
ed.  597.  Upon  the  general  subject  American  codes.  The  statute  of  limi- 
of  limitations,  see  Wood  on  Limi-  tations  affects  quite  differently  corpo- 
tations,    4th    Edition,    1916,    2    vols.  real  chattels  and  those  incorporeal  or 

130 


CHAP.  IV.]  PERSONAL    CHATTELS    CONTRASTED.  §    93 

the  repayment  of  a  loan  at  some  future  time  certain  and  not 
far  distant. 

This  distinction  is  often  found,  however,  of  much  less  practical 
consequence  when  applied  to  some  species  of  incorporeal  chattels 
personal,  such  as  shares  in  joint-stock  companies  and  the  loans  of 
government  or  private  corporations,  where  not  only  the  written 
evidence  of  title  is  a  visible  and  tangible  thing,  easily  produced 
when  occasion  requires,  but  payment  of  the  debt  which  it  repre- 
sents is  postponed  indefinitely  or  for  a  very  long  period.  Yet  it 
is  important  even  here  to  remember,  in  connection  with  dividends, 
interest  instalments,  and  the  income  generally  of  personal  chat- 
tels incorporeal.'' 

Stock  certificates  may  continue  outstanding  until  the  company 
is  wound  up;  mortgages,  bonds,  and  long  loans,  until  a  future 
distant  date  specified ;  patent-rights  and  copyrights  during  the 
statute  period  conferring  the  monopoly;  insurance  policies  for  the 
stated  term  of  the  risk;  leases  so  long  as  they  run.  But  in  all 
kinds  of  incorporeal  personalty,  some  future  period  when  the 
money  right  or  valuable  thing  represented  will  mature  for  full 
collection  or  expire  altogothor  is  more  or  less  plainly  indicated. 

founded  in  a  right  to  enforce  some  rule  likewise,  and,  in  cases  within  its 

claim  for  money:    for,  in  the  former  own  jurisdiction,  applies  by  analogy 

instance,  lapse  of  time  aids  the  pos-  the  same  bar  which  would  have  pre- 

sessor   by    shutting   out   contestants;  vailed  in  a  common-law  action,  wher- 

while,    in    the    latter,    a    possessor's  ever    there    are    legal    and    equitable 

title,     though     strengthened     in    this  remedies     pertaining     to     the     Same 

sense,    is    certainly   weakened    in   an-  subject-matter ;    though,    in    cases    of 

other,  or  by  the  delay  to  pursue  his  exclusively       equitable       cognizance, 

debtor  and  realize  the  demand.  chancery  courts  may  not  allow  them- 

Concerning  the  general   purpose  of  selves  to  be  hampered, 

statutes  of  limitations,  judicial  opin-  7.  In  the  foregoing  chapter  we  have 

ion  has  varied ;    but,   at  the  present  touched    upon    many    doctrine    whose 

day,   the   legislative   policy   is   highly  full  treatment  must  be  postponed  for 

favored,  and  they  are  allowed  to  oper-  the   present ;     since  they  come  under 

ate,  not  because  affording  a  presump-  the    heading    of    "Title    to    Personal 

tion    of    payment   liable    to    rebuttal,  Property,"    an    extensive    subject,    to 

but    as    statutes    of    repose:      conse-  which  this  author's  later  volumes  are 

quently  the  legislative  intent  in  this  exclusively  devoted.     See  vol.  ii.,  Per- 

instance  is  not  to  be  evadnd  by  con-  sonal  Property,  Schoul.  Bailments,  etc. 
etruction.     Equity  adopts  the  statute 

181 


CHAPTER    V 


HEIRLOOMS    AISTD    EMBLEMENTS 


§  94.  Border  Line  between  Real  and  Personal;  Heirlooms, 
Emblements,  and  Fixtures. 
Among  chattels  personal  of  a  corporeal  nature  there  are  some 
which  form  an  exception  to  the  general  rule  of  transfer  and  aliena- 
tion noticed  in  the  last  chapter,  and  which,  indeed,  are  treated 
in  certain  respects  as  real  rather  than  personal  property.  Instead 
of  following  the  person  of  the  owner  wherever  he  goes,  thej  remain 
stationary;  and  instead  of  devolving,  after  he  dies,  upon  his 
executor  or  administrator,  in  the  first  instance,  like  other  per- 
sonal chattels,  they  are  permitted  to  descend  with  the  land  and 
vest  at  once  in  his  heirs  as  part  of  the  inheritance.  On  the  other 
hand,  there  are  certain  things  annexed  to  the  land,  which  become 
under  special  circumstances  capable  of  severance  and  removal 
like  ordinary  chattels  personal.  Here  we  find  ourselves  at  the 
border  line  which  separates  real  from  personal;  and  we  shall 
do  well  to  examine  these  special  kinds  of  property  somewhat  at 
length.  First,  then,  as  to  heirlooms;  next,  as  to  emblements;  and, 
lastly,  as  to  fixtures.  The  physical  nature  of  an  annexation,  cus- 
tom, the  presumed  or  the  express  mutual  understanding  of  the 
parties,  the  inherent  fitness  of  the  thing's  association  with  the 
land  or  the  unfitness,  are  all  found  elements  for  consideration  in 
such  a  discussion. 

§  95.     Heirlooms,  Their  Nature  and  Incidents. 

Heirlooms  are  such  personal  chattels  as  descend  to  the  heir 
along  with  the  inheritance,  contrary  to  the  usual  rule,  instead  of 
passing  to  the  executor  or  administrator  of  the  last  owner.  ^     The 

1.  S   Swell's  Bl.   Com.   427;    Wms.      Webster's  Diet.  ib. ;  Worcester's  Diet. 
Pers.  Prop.    17th  Eng.   ed.    141;    Co.       ib. 
Lit.  18  b;  Bouv.  Diet.  "Heirloom;" 

132 


CHAP,  v.]  HEIRLOOMS    AND    EMBLEMENTS.  §    95 

word  "  heirloom "  is  probably  compounded  of  ''  heir "  and  the 
Saxon  loma  or  geloma^  which  signifies  utensils  or  vessels  generally ; 
thus  indicating  simply  the  heir's  utensils  or  goods.  But  some 
prefer  the  word  "  heir  "  and  "  loom ;  "  that  is,  a  frame  to  weave 
in.  That  would  be  a  fanciful  derivation  enough;  but  Blackstone 
gives  one  which  is  even  more  so,  by  which  he  makes  out  an  heir- 
loom to  be  "  nothing  else  but  a  limb  or  member  of  the  inherit- 
ance." ^  "  In  some  places,"  says  Coke,  "  chattels,  as  heirlooms 
(as  the  best  bed,  table,  pot,  pan,  cart,  and  other  dead  chattels 
movable),  may  go  to  the  heir;"  and  he  further  adds  that  "the 
heirloom  is  due  by  custom  and  not  by  the  common  law."  ^  The 
ancient  jewels  of  the  British  crown  were  heirlooms  from  early 
times.  So,  it  would  seem,  are  public  documents  which  the  peers 
of  England  were  wont  to  receive  by  way  of  gratuitous  distribu- 
tion.'* In  short,  heirlooms,  wherever  found,  may  be  considered 
as  attending  the  inheritance,  not  because  of  any  inherent  char- 
acteristics which  likened  them  to  immovable  property  (as  some 
seem  to  have  supposed),  but  merely  because  some  local  custom 
favored  the  heir  rather  than  the  executor  in  this  respect.  Though 
not  by  nature  inheritable,  the  heritable  character  is  conferred  by 
law  upon  it.  And  we  all  know  that  law  and  custom  strongly 
foster  family  pride,  wherever  family  relics  are  the  subject  of 
dispute.  The  modern  tendency,  certainly  in  the  United  States,  is 
against  what  are,  strictly  speaking,  heirlooms;  we  do  not  prefer 
the  first-bom;  and  it  is  not  to  be  presumed  that  the  ordinary 
rules  which  regulate  the  transmission  of  personal  property  are 
to  be  thus  turned  aside  for  the  gratification  of  individuals,  where 

2.  2  Ewell's  Bl.  Com.  427.  And  see  upon  custom  as  the  basis  of  the  heir's 
Byng  V.  Byng,  10  H.  L.  183,  ■per  Lord  riglit  in  such  things ;  and  custom  im- 
Cranworth.  plies    an    original    intent    under    free 

3.  Co.  Lit.  18  b.  1  Wms.  Ex'rs,  contract  or  conformable  to  some  stat- 
661,  &c.,  cites  various  other  autliori-  ute. 

ties  which  define  heirloom, —  Brooke;  4.  Upton    v.    Lord    Ferrers,    5    Ves. 

Spelman's    Glossary;    Les   Termes   de       806. 
la  Ley,  &c., —  all  of  which  lay  stress 

133 


§  96  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

the   chattels   possess   an    intrinsic   vahie,    apart   from   that  which 
pride  or  affection  may  set  upon  them.^ 

Heirlooms,  it  is  held,  cannot  be  devised  or  bequeathed  by  will ; 
for  the  technical  reason  that  the  will  cannot  operate  until  after 
death,  whereas  the  ancient  custom  takes  effect  the  instant  one 
dies;  so  that,  the  law  preferring  custom  to  the  devise  or  bequest, 
they  vest  in  the  heir  at  once.^  But,  during  his  life,  the  owner 
may,  of  course,  sell  or  dispose  of  chattels  which  would  otherwise 
descend  as  heirlooms/ 

§  96.  Heirlooms,  Their  Nature  and  Incidents;  the  Subject 
Continued. 
There  are  some  kinds  of  chattels  which  are  treated  as  being 
in  the  nature  of  heirlooms,  and  which  accordingly  are  permitted 
to  pass  to  the  heir  with  the  inheritance.  Thus,  the  coat-armor 
of  an  ancestor  hung  in  a  church,  his  sword,  and  other  insignia 
of  rank;  ancient  portraits  and  family  pictures  in  a  house,  though 
not  fastened  to  the  walls, —  all  these  have  been  withheld  from  the 
executor;  and  although,  in  some  cases  of  this  sort,  annexation  to 
real  estate  might  seem  to  have  determined  the  decision  of  the 
court,  yet  we  are  reasonably  safe  in  supposing  that  the  executor 
was  required  to  leave  them  alone,  from  deference  rather  to  that 
custom  which  favored  the  heir,  by  permitting  the  family  dignities 
to  pass  unimpaired  so  far  as  was  possible.^ 

Some  who  have  failed  to  separate  these  two  distinct  elements 
for  consideration, —  local  custom  and  actual  annexation  to  the  free- 
hold,—  in  passing  upon  articles  which  are  in  controversy  between 
heir  and  executor,  say  that  heirlooms  are  in  general  such  things 
as  are  essential  to  the  enjoyment  of  the  realty ;  such  as  cannot  be 

5.  See  notes  of  Chitty  and  others,  pose  of  the  ancient  crown  jewels  dur- 
to  2  Bl.  Com.  427,  428.  ing  his  life.     Cro.  Car.  344. 

6.  Co.  Lit.  185  b;  1  Wms.  Ex'rs,  8.  See  Corven's  Case,  12  Co.  105; 
10th  Eng.  ed.  546;  Tipping  v.  Tip-  1  Wms.  Ex'rs.,  10th  Eng.  ed.  545. 
ping,  1  P.  Wms.  730.  Shroud    and    coffin,    gravestone,    &c., 

7.  1  Wms.  Ex'rs,  10th  ed.  547 :  2  Bl.  cannot  be  considered  as  heirlooms. 
Com.  429.     So  the  sovereign  may  dis-  See  Teager  v.  Bowie,  1  Add.  541. 

134 


CHAP,  v.]  HEIRLOOMS    AXD    EMBLEMENTS.  §     97 

taken  awaj  without  damaging  or  dismembering  ttie  freehold ;  and 
Lord  Holt  is  reported  to  have  said  that  a  jewel  cannot  be  an  heir- 
loom, but  only  "  things  ponderous."  ^  But  this  statement  of 
Lord  Holt  is  contradicted  by  what  we  have  just  said  of  crown 
jewels ;  ^  and  those  who  speak  thus  seem  to  have  fallen  upon  the 
doctrine  of  fixtures  (aside  from  custom  altogether),  which  would 
be  found  sufiicient  for  itself  in  determining  what  shall  go  as  real 
and  what  as  personal  property. 

And  yet  we  must  admit  that  a  local  custom  may  be  founded  to 
some  extent  upon  a  legal  principle;  and  certainly,  whether  this 
be  true  or  not  with  respect  to  chattels  in  the  nature  of  heirlooms, 
we  find  the  doctrine  of  things  incident  to  the  freehold  strangely 
blended  with  this  of  mere  custom ;  so  that  it  would  sometimes  be 
hard  to  say  whether  a  certain '  chattel  were  in  the  nature  of  an 
heirloom  or  of  a  fixture.^ 

§  97.     Heirlooms;   Doctrine  as  to  Wild  Animals. 

For  example,  there  are  some  curious  rules  concerning  the  trans- 
mission of  title  to  wild  animals,  upon  the  death  of  the  person  who 
had  them  in  his  enclosure.  These  are  said  to  pass  by  way  of 
incident  to  the  freehold  and  inheritance,  and  not  to  go  to  the 
executor  or  administrator.  Thus,  deer  in  what  the  law  considers 
a  park,  conies  in  a  warren,  and  doves  in  a  dove-house,  will  not 
come  to  the  executor  or  administrator  with  the  assets.  The  reason 
assigned  by  Coke  is,  that  without  them  the  inheritance  would  be 
incomplete ;  but  another  reason  mentioned  by  him,  and  one  per- 
haps equally  good  (since  an  inheritance  is  thought  to  be  complete 
without  the  dogs,  horses,  and  other  domestic  animals,  under  like 
circumstances),  is  that  the  deceased  had  no  transmissible  personal 
right  of  property  in  them.''  So,  if  a  man  buys  fish  and  puts  them 
into  a  pond,  and  dies,  they  pass  with  the  water  to  the  heir,  or  at 

9.  Lord    Petre    v.    Honeage,    1    Ld.  1.  Supra,  §  ffo  :  5  Vcs.  806. 

Raym.  728 ;   12  Mod.   520.     See  2  Bl.  2.  See  Johnson  Re,  87  Neb.  375,  127 

Com.    17,    427;    1    Wnis.    Ex'rs,    681;"       N.  W.  133. 

Wms.  Pers.  Prop.  17tli  Eng.  ed.  141;  3.  7    Co.    17   b;    §    50,   supra.      See 

Bouv.  Diet.  "Heirloom."  Went.  Off.  Ex.  127,  14th  ed. 

135 


§  98  THE  LAW  OF  rERSONAL  TROPERTY.        [pART  II. 

all  events,  they  do  not  go  to  the  executor  or  administrator. 
Though,  if  the  deceased  had  only  a  term  of  years  in  the  land,  it 
is  said  that  the  deer,  conies,  doves,  and  fish  will  go  to  the  executor 
or  administrator  as  accessory  chattels,  following  the  estate  of  the 
principal ;  '^  which  last  proposition  might  he  quite  true,  provided 
the  executor  caught  them  all  before  the  lease  under  his  control 
ran  out,  and  he  had  to  vacate  the  premises.  All  this  law  seems 
to  us  to  be  best  referred  to  that  special  or  qualified  right  of  prop- 
erty in  animals  remaining  in  an  unreclaimed  or  wild  state,  which 
we  have  discussed  in  a  former  chapter.^  And  it  is  now  the  settled 
rule  in  England,  and  we  doubt  not  in  this  country  too,  that  deer 
in  a  park,  or  other  animals  upon  private  premises,  when  tame 
and  reclaimed  from  their  wild  state,  Avill  pass  to  the  executors  or 
administrators,  like  any  other  domestic  animals  owned  by  the 
decedent.^ 

§  98.     Heirlooms;  Doctrine  as  to  Title-deeds,  Keys,  etc. 

But  there  is  another  example,  still  more  to  the  point, —  that  of 
title-deeds  and  other  muniments  of  the  inheritance.  It  is  an 
established  principle  that  whoever  is  entitled  to  land  is  entitled 
also  to  the  deeds  and  chattels  which  concern  that  land,  and  afford 
evidence  of  his  title.  They  have  been  called  the  sinews  of  the 
land ;  ''  and  so  closely  are  they  associated  with  real  estate,  that 
they  are  held  to  pass,  on  its  conveyance,  without  being  expressly 
mentioned;  the  property  in  these  instruments  passing  from  the 
vendor  to  the  purchaser  by  the  simple  grant  of  the  real  estate 
itself.^  Upon  the  grantee's  death,  his  heir,  and  not  the  personal 
representative,  takes  them ;  nay,  the  very  box  or  chest  which  has 
usually  been  employed  for  keeping  them  so  far  partakes  of  this 

4.  Com.  Dig.  Biens,  B;  Went.  Off.  150;  Morgan  v.  Abergavenny,  3  C.  B. 
Ex.   127.     For  use,  however,  and  not       768. 

for  waste.     See  1   Wms.   Ex'rs,   lOtli  7.  Co.  Lit.  6  a. 

ed.  &33;  Co.  Lit.  53  a.  8.  Harrington  v.  Price,  3   B.  &  A. 

5.  Supra,  §§  48-50.  170;  Philips  v.  Robinson,  4  Bing.  106; 

6.  Ford   V.   Tynte,    2    Johns.    &   H.  Wms.  Pers.  Prop.  17th  Eng.  ed.  141. 

136 


CilAP.  v.]  HEIRLOOMS    AND    EMBLEMENTS.  §    99 

nature  as  to  go  with  the  inheritance  in  like  manner.^  And  there 
are  modern  English  cases  which  discuss  the  respective  rights,  in 
this  respect,  of  tenants  in  fee-simple,  for  life  or  in  tail,  and  for 
terms  of  years ;  the  result  of  which  is  to  establish  that  those  who 
have  an  absolute  estate  of  freehold  may  destroy  the  title-deeds  at 
pleasure,  or  sell  them  for  old  parchment ;  that  freeholders  with  a 
qualified  estate  have  but  a  temporary  custody,  and  cannot  injure 
or  part  with  them;  and  that  tenants  for  terms  of  years  have  no 
right  to  deeds  which  relate  to  the  freehold.^ 

In  the  United  States  this  learning  is  of  very  little  importance; 
for  our  registration  acts  supersede  the  necessity  of  accumulating 
old  deeds  by  way  of  muniment;  and  a  grantee  is  generally  well 
satisfied  with  retaining  the  original  instrument  of  conveyance  to 
himself,  and  nothing  more,  provided  the  public  record  shows  that 
his  title  is  a  good  one.^ 

The  keys  of  a  house,  too,  are  sometimes  called  "  heirlooms," 
because  they  go  with  the  house  and  land  to  the  heir ;  and  a  great 
variety  of  articles,  besides,  are  enumerated  by  Blackstone  and 
some  other  writers  under  this  same  head.'' 

§  99.     Heirlooms;    Final  Observations. 

But  it  seems  to  us  that  many  things  classed  with  heirlooms  are 
more  properly  to  be  considered  as  in  the  nature  of  fixtures.  For, 
in  speaking  strictly  of  heirlooms,  we  would  naturally  be  supposed 
to  refer  to  questions  between  heir  and  executor  alone ;  whereas 
in  fixtures  the  controversy,  though  quite  commonly  between  them, 

9.  1    Wms.    Ex'rs,    10th    ed.    545 ;  with  the  inheritance.     Bac.  Abr.,  tit. 

Went.  Off.  Ex.  14th  ed.  156.  Ex'rs,  H.  3. 

1.  Allwood  V.  Heywood,  Ex.  11  W.  2.  See  4  Kent  Com.  456,  and  notes. 

R.   291;   Ford  v.  Peering,   1   Ves.   Jr.  3.  See    Bouv.     Diet.     "Heirloom;" 

76;    Davies  v.   Vernon,   6   Q.   B.    443.  3    Bl.     Com.     427-429,    and    Chittv's 

See  Wms.  Pers.   Prop.   17th  ed.   137;  note.       The     doctrine     of     heirlooms 

1  Washb.  Real  Prop.,  b.  1,  e.  1.  seems  to  be  supported   in   the  recent 

Deeds    and    writings    which    relate  case  of   Haven   v.   Haven,   181   Mass. 

not  to  the  freehold,  but  to  terms  for  573,  64  N.  E.  410.     See  also  Hill  v. 

years    and    other    chattel    property;  Hill,  (1897)   1  Q.  B.  483. 
also  letters  of  the  decedent ;  do  not  go 

137 


§  99  THE  LAW  OF  PERSONAL  PROPERTY.        [pART  II. 

is  often  between  other  parties  instead.  And  again,  the  question 
in  heirlooms  is  largely  that  of  local  custom ;  which  question  has 
only  a  slight  bearing  upon  the  doctrine  of  fixtures.  Yet,  for  want 
of  apt  terms  at  the  law,  we  may  well  distinguish  between  things 
in  the  nature  of  fixtures  (like  keys  or  title-deeds  under  some  cir- 
cumstances) and  fixtures  proper.  The  former  are  to  be  treated 
as  immovables  only  by  construction;  and  where  they  cease  to  be 
chattels,  it  is  rather  because  of  some  logical  connection  which  they 
bear  to  the  real  estate,  their  fitness,  or,  as  it  is  said,  their  use  or 
destination,  than  on  account  of  qualities  inherent  in  their  sub- 
stance."^ !N^ow,  it  is  otherwise  with  fixtures  proper.  These  are 
classed  with  more  especial  reference  to  their  physical  or  material 
qualities ;  and  to  them  may  be  applied  the  universal  principle  of 
law  that  movables  will  become  immovables,  by  reason  of  acces- 
sion, as  when  they  are  united  with,  or  affixed  to,  or  let  into  the 
house  or  land,  or  are  otherwise  annexed  to  that  which  is 
immovable.^ 

We  may  add,  in  passing,  that  the  term  "  heirloom  "  has  now 
come  to  be  popularly  applied,  in  England,  to  plate,  pictures,  or 
other  articles  of  property  which  have  been  assigned  by  deed  of 
settlement,  or  bequeathed  by  will  to  trustees,  in  trust,  to  permit 
the  same  to  be  used  and  enjoyed  by  the  persons  in  possession  for 
the  time  being,  under  such  settlement  or  will,  of  the  mansion- 
house  in  which  the  articles  may  be  placed.  If  a  will  requires 
articles  to  be  treated  as  heirlooms,  they  are  not  to  be  applied  to 
the  payment  of  the  decedent's  debts,  unless  in  an  extremity.^  We 
have  very  little  occasion  to  speak  of  heirlooms  at  all  in  the  United 
States  under  our  rules  of  descent  and  distribution. 

4.  See  P.  Voet  de  Reb.  Mdb.  et  Im-  R.  3  Ch.  564 ;  Duke  of  Newcastle  v. 
mob.,  c.  5,  n.  1,  p.  38.  See  1  Wasbb.  Lincoln,  12  Ves.  218;  31  Ch.  D.  466. 
Real  Prop.  5.  Lord   Eldon,    in    Clarke    v.   Lord    Or- 

5.  P.  Voet,  ib.,  n.  4,  p.  33 :  2  Burge  monde,  1  Jacob,  114,  speaks  favora- 
Col.  and  For.  Laws,  6;  also  next  c.  bly  of  permittinor  certain  portions  of 

6.  See  Wms.  Pers.  Prop.  17th  Eng.  the  effects  to  be  treated  as  heirlooms, 
ed.  141 ;  Harrington  v.  Harrington,  L.  the  will  so  providing. 

138 


CHAP,  v.]  HEIRLOOMS    AND    EMBLEMENTS.  §    100 

§  100.     Emblements;   Rule  as  to  Chattels  Vegetable. 

]!^ow  as  to  the  law  of  emblements.  The  right  to  emblements  is 
associated  with  chattels  vegetable,  whose  peculiar  characteristics 
have  already  received  some  attention.  Fruits,  so  long  as  thej 
are  hanging  on  the  trees,  the  crops  until  they  are  gathered,  and 
timber  trees  while  they  are  standing,  are  things  immovable,  or 
real  estate,  because  they  are  appropriately  attached  and  appendant 
to  the  ground.  But  when  the  fruit  or  crops  are  gathered,  or  the 
trees  cut  down  by  the  owaier,  as  they  then  cease  to  be  attached  to 
the  soil,  they  become  movables  or  chattels  personal.^  Rightful 
severance,  so  intended,  converts  the  thing  from  real  to  personal 
property. 

Yet  exceptions  are  admitted  from  deference  to  the  mutual 
intention  and  contract  of  the  parties  concerned.  Thus,  where 
trees  are  planted  by  the  owner  or  tenant  of  the  soil,  to  be  trans- 
planted and  sold,  they  may  be  treated  constructively  at  law  as 
personal  chattels ;  and  hence  a  gardener  or  nurseryman,  who 
occupies  premises  under  a  lease,  may,  at  the  end  of  his  term, 
remove  and  dispose  of  the  trees  and  shrubs  which  he  has  planted 
in  the  course  of  business.^  But  ordinarily  a  farmer  who  plants 
fruit-trees  cannot  sell  and  remove  them  against  his  landlord's 
consent.^  And,  of  course,  the  exception  is  to  be  reasonably  applied 
so  as  to  prevent  a  malicious  tenant  from  wantonly  committing 
waste ;  ^  and  so  as  neither  to  legalize  wrongful  severance  nor  to 
prejudice  the  rights  of  interested  parties.^ 

Again,  there  are  cases  where,  contrary  to  the  usual  rule,  grow- 
ing timber  has  been  considered  a  chattel  as  between  grantor  and 
grantee.     As,   for  instance,   where   the   owner  of  lands   granted 

7.  2  Burge  Col.  and  For.  Laws,  7;  Camp.  N.  P.  722,  per  Lord  EUenbor- 
S  Bl.   Com.   389;    1   Wms.   Ex'rs,   6th      ough. 

Eng.  ed.  668 ;  supra,  §§  3,  4.  2.  An     unsevercd     crop     sown     or 

8.  Miller  v.  Baker,  1  Met.  27;  Pen-  planted  by  a  trespasser  belongs  to  the 
ton  V.  Robart,  2  East,  88.  owner  of  the  land.     Heilwig  v.  Ny- 

9.  Lee  v.  Risdon,  7  Taunt.  191;  Doe  beck,  173  Mich.  292,  146  N.  W.  141. 
V.  Gunnis,  4  Taunt.  316.  And    see    Wattenbarger    v.    Hall,    26 

1.  See     Wetherell     v.     Howells,     1       Okla.   815,   110  Pac.   911;    Warner  v. 

Sohn,  86  Neb.  519,  125  N.  W.  1072. 

139 


§  100         THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

away  the  trees,  and  the  grantee  died  before  they  were  felled."^ 
Here  the  law  regards  the  intention  of  the  parties,  and  considers 
that,  as  concerns  themselves,  a  constructive  severance  has  taken 
place.  And  the  corresponding  rule  has  been  applied  to  the  case 
of  a  conveyance  of  lands  with  a  reservation  of  the  trees  to  the 
grantor."^ 

But  trees  and  vegetables,  or  vines,  bushes  or  shrubs,  growing 
upon  land  pass  presumably  by  a  mortgage  of  the  land  as  part  of 
the  realty,  and  consequently  of  the  security.^  And  nursery  trees 
planted  by  the  owner  of  the  land  would  pass  by  a  mortgage  of  the 
land,  though  he  mortgaged  first  and  planted  them  afterward.^ 
For  if  a  reservation  were  mutually  intended,  it  ought  to  have 
been  expressed  in  the  mortgage  deed.  So,  too,  as  between  vendor 
and  purchaser,  unsevered  trees  and  vegetables  or  vines,  bushes  and 
shrubs,  pass  as  part  of  the  land  on  which  they  grow,  under  a  con- 
veyance without  express  words  to  the  contrary ;  "^  and  one  entering 
into  possession  of  the  real  estate  by  title  paramount  would  pre- 
sumably be  preferred  to  any  tenant.^ 

3.  Stukeley  v.  Butler,  Hob.  173;  1  As  to  whether  the  mortgage  or 
Wms.  Ex'rs,  6th  Eng.  ed.  66S.  sale  of  a  crop  not  yet  sown  can  pass 

4.  Herlakenden's  Case,  4  Co.  63  b.  a  title,  cf.  Hutchinson  v.  Ford,  9 
And  see  supra,  §  53.  Bush,  318;  Argues  v.  Wasson,  51  Cal. 

Standing  timber  sold  with  a  right  to  620;  Apperson  v.  Moore,  30  Ark.  56. 
enter  and  remove  it,  becomes  per-  Under  a  lease,  a  lien  may  be  expressly 
sonal  property.  Montgomery  v.  Beach  reserved  on  the  annual  crops,  pro- 
River  Lumber  Co.,  54  Tex.  Civ.  App.  duce,  &c.,  of  the  land.  Everman  v. 
143,  117  S.  W.  1061;  Cullen  v.  Arm-  Eobb,  52  Miss.  653;  McCaffrey  v. 
strong,  209  Fed.  704  (Md.  D.  C.  Woodin,  65  N.  Y.  459.  And  see 
1913).  §  109. 

For  the  general  effect  of  severance  7.  1  Washb.  Real  Prop.  104;  Tripp 

from  the  soil  by  permission,  see  c.  VI  v.  Hasceig,  20  Mich.  254. 

on    Fixtures,    post;    Barry   v.    Wood-  8.  Batterman  v.  Albright,  122  N.  Y. 

bury,  205   Mass.   592,  91  N.   E.   902;  484,  25  K  E.  856,  11  L.  R.  A.  800,  n. 

Hood  V.  Whitwell,  140  App.  Div.  882,  A  sale   of  land   in  possession   of  a 

124  N.  Y.  S.  1117.  tenant   and  subject  accordingly,  does 

5.  Hutchins  v.  King,  1  Wall.  5?.  not  presumably  pass  the  growing  crop. 

6.  Maples  v.  Millon,  31  Conn.  598;  Williams  v.  \Y.  W.  Kimball  Co.,  188 
1  Washb.  Real  Prop.  3;  Price  v.  Mo.  App.  718,  176  S.  W.  468  (the 
Brayton,  19  Iowa,  309;  Adams  v.  transaction  indicating  the  parties' 
Beadle,  47  Iowa,  439.  knowledge    of     such    tenancy).      C£. 

140 


CHAP,  v.]  HEIELOOMS    AND    KAIBLEMENTS.  §    101 

§  101.  Diverse  Ownership  of  Soil  and  Products;  Statute  of 
Frauds  Applied  to  Chattels  Vegetable. 
We  see,  then,  that  growing  trees  maj  sometimes  acquire  the 
character  and  incidents  of  personal  property,  in  accordance  with 
the  mutual  intent  of  the  parties,  where  the  owner  of  the  soil  sells 
them  to  be  cut  and  removed,  and  the  purchaser  has  no  right  to 
occupy  the  soil  for  growing  or  supporting  them  there.^  A  diffi- 
culty here  arises  under  the  Statute  of  Frauds;  for  that  statute 
requires  the  sale  of  interests  in  lands  to  be  by  instrument  in  writ- 
ing; notwithstanding  which  rule,  some  cases  seem  to  have  treated 
a  sale  of  growing  trees  as  effectual  to  pass  the  title  in  them  before 
they  are  cut,  although  not  evidenced  by  deed ;  as  if,  indeed,  they 
were  chattels  within  contemplation  of  the  statute  itself.  Some 
writers  consider  that  the  doctrine  may  be  reconciled  by  treating 
a  sale  of  this  character,  if  by  parol,  as  a  license  rather  than  a 
grant  of  an  interest  in  real  estate ;  which  license,  though  revocable 
like  other  licenses,  carries,  if  executed,  the  property  in  such  trees 
as  shall  have  been  severed  from  the  freehold.  If,  therefore,  the 
purchaser  has  executed  the  license  by  which  he  was  permitted  to 
cut  the  trees,  the  license  becomes  irrevocable,  and  he  may  enter 
and  remove  them;  but  so  long  as  it  remains  executory  only,  no 
title  passes  to  him.^ 

Bjornson  v.  Rostad,  30  S.  D.  40,  137  105  Pac.  579   (one  sharer  of  crop  pro- 

N.    W.    567;    Kreisle   v,    Wilson,    148  tected  against  the  other's  mortgage)  ; 

S.   W.    113S    (Tex.   Civ.   App.    19'12)  ;  Cooper  v.  Kennedy,  86  Neb.  119,  124 

Tillman  v.  Bungenstock,  185  Mo.  App.  N.  W.  1131,  31  L.  R.  A.  N.  s.  7C1. 

66,  171  S.  W.  938 ;  Carpenter  v.  Car-  In  general,  the  occupier  of  land  is 

penter,  154  Mich.  100,  117  N.  W.  5'9'8;  owner  of  tJie  crop  harvested  during 

In-  re  Anderson's  Estate,  83  Neb.   8,  the  occupancy,   even   though   a   mere 

118  N.  W.  1108.  adverse    possessor.      Lynch   v.    Roller 

The    general    rule    is    that    a    deed  Mills,  51  Wash.  535,  99  Pac.  578.    See 

■whicli  conveys  land  without   reserva-  4  Chamberlayne  Evid.   §§  2143,  .214  5. 

tion  passes  the  growing  crop  therein.  9.  Claflin  v.  Carpenter,  4  Met.  580; 

And  so,  too,  when  a  mortgage  is  fore-  Stukeley     v.     Butler,     Hob.     173;     1 

closed  or  a  leaseliold  estate  forfeited.  Washb.    Real    Prop.    3;    Olmstoad    v. 

CSasea  supra;  Woody  v.  Wagner,  154  Niles,  7  N.  H.  522. 

Pac.  BID    (Wash.  Sup.  1916).  1.  1  Washb.  Real  Prop.  3.  and  cases 

Cf.  Dodson  V.  Covey,  81  Kan.  320,  cited;  Drake  v.  Wells,  11  Allen,  142; 

141 


§  102         THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

There  are  cases,  however,  which  hold  that  a  sale  of  such  trees 
is  within  the  Statute  of  Frauds  and  should  be  evidenced  by  writ- 
ing.^ And,  even  if  a  sale  by  parol  be  regarded  as  sufficient  to  vest 
an  interest  in  the  unsevered  trees,  so  far  as  concerned  the  parties 
themselves,  and  possibly  third  parties  with  notice,  it  cannot  avail 
against  the  purchaser  of  the  freehold  without  notice,  for  this  party 
would  take  the  premises  with  the  trees  and  crops  as  incident  to 
the  land.^  But  if  the  owner  of  the  freehold  conveys  growing 
trees,  as  such,  by  deed,  the  Statute  of  Frauds  is  satisfied,  and  a 
constructive  severance  takes  place  at  once,  in  accordance  with  the 
mutual  intention  of  the  parties,  so  that  the  vendee  may  afterwards 
pass   title   to   them   as   chattels,    without  waiting   for   an   actual 


§   102.     Emblements;   Title  in  Chattels  Vegetable  Transmissible 
by  Death. 

When  the  owner  of  real  estate  dies,  the  general  rule  is  that 
trees,  and  their  fruit  and  produce,  such  as  apples  and  pears,  if 
hanging  on  the  trees  at  the  time  of  his  death,  also  hedges  and 
bushes,  go  to  the  heirs,  and  not  to  the  executor  or  administrator; 
and  this  simply  because  they  are  part  of  the  real  estate,  and  not 
chattels.^     But  it  would  be  otherwise  with  severed  timber,  fallen 

Evans    v.    Roberts,    5    B.    &    C.    829;  naturales;    wliereby    tlie    for.mer    are 

Douglas  V.   Shumway,   13   Gray,  502;  admitted  to  be  chattels  and  not  gov- 

Purner  v.  Piercy,  40  Md.   212.  erned  hj  the  Statute  of  Frauds,  §  4, 

2.  McGregor  v.  Brown,  10  N.  Y.  whether  the  property  be  transferred 
117;  Carrington  v.  Roots,  2  M.  &  W.  before  or  after  severance;  but  other- 
248.  wise,  a»  to  the  latter.     But  the  rule 

3.  Wescott  V.  Delano,  20  Wis.  514;  preferred  is,  that  in  general,  if  the 
Drake  v.  Wells,  11  Allen,  144;  1  products  of  the  earth  be  sold  specifi- 
Washb.  Real  Prop.  3.  cally,  so  as  to  be  separately  delivered 

4.  Kingsley  v.  Holbrook,  45  N".  H.  by  the  terms  of  the  contract  as  ehat- 
319;  Warren  v.  Leland,  2  Barb.  613.  tels,  the  statute  does  not  operate, 
In  Purner  v.  Piercy,  40  Md.  212,  it  is  whether  as  to  fructus  industriales  or 
observed  that  a   distinction'  is   some-  fructus  naturales. 

times    taken    in    respect    of    growing  5.  Swinb.  pt.  7,  §  10,  pi.  8 ;  1  Wmg, 

crops  which  are  fructus  industriales       Ex'rs,  10th  ed.  537. 
and  growing  crops  which  are  fructus 

142 


CHAP,  v.]  HEIRLOOMS    AXD    EMBLEMENTS.  §    104 

fruit,  materials  piled  for  fuel,  and  the  like;    for  this  is  personal 
property.     A  similar  distinction  applies  generally  to  vegetables. 

§   103.     Emblements;    Annual  Crops  Fit  for  Harvest. 

Annual  crops  which  have  been  planted  by  the  owner  of  the  soil, 
if  fit  for  harvest,  may,  out  of  favor  to  mutual  intention,  acquire 
the  character  and  incidents  of  personal  chattels,  though  in  general 
they  should  first  be  severed.^  And  there  are  cases  which  make 
crops  the  subject  of  sale  as  chattels,  even  before  they  are  ripe  and 
ready  to  be  gathered.^  Such  crops,  in  favor  of  a  creditor,  may, 
under  like  circumstances,  be  levied  upon  as  personal  property.^ 

§  104.     Doctrine  of  Emblements  Strictly  So  Called. 

What  we  have  said  of  chattels  vegetable  may  prepare  the  reader 
to  understand  better  the  strict  doctrine  of  emblements,  which  will 
occupy  our  attention  for  the  remainder  of  this  chapter.  This 
doctrine,  which  concerns  growing  crops  still  unsevered,  bestows 
upon  certain  real  property,  by  legal  construction,  the  character 
and  incidents  of  chattels  personal,  by  applying  in  effect  a  sever- 
ance which  would  have  taken  place  but  for  unforeseen  contingen- 
cies beyond  the  control  of  a  person  w^ho  expected  to  sever,  and  to 
hold  the  severed  property  as  his  own.  Here  too,  as  it  seems  to  us, 
the  legal  purpose  is  that  of  liberally  and  beneficially  aiding  the 
reasonable  and  the  presumed  intention  of  the  parties  concerned, 
as  in  the  other  instances  already  noticed.     The  rule  is,  that  a 

6.  Evans  v.  Roberts,  5  B.  &  C.  823;  8.  Heard  v.  Fairbanks,  5  Met.  Ill; 
Jones  V.  Flint,  la  A.  &  E.  753.  See  Stambaugh  v.  Yatos,  2  Rawle,  161. 
Davis  V.  McFarlane,  37  Cal.  634;  Growing  crops  are  not  "personal 
Kingslej'  v.  Holbrook,  45  N.  H.  319.  chattels"  under  the  English  Bills  of 

7.  lb. ;  Sainsbury  v.  Matthews,  4  M.  Sale  Act.,  17  &■  18  Vict.,  c.  36.  Bran- 
&  W.  343;  Craddock  v.  Riddlesburger,  torn  v.  GrifTits,  2  C.  P.  D.  212;  s.  t., 
2    Dana,    206.      But   see   Emerson   v.  1  C.  P.  D.  34D. 

Heelis,    2    Taunt.    38.       See   Trip   v.  See,  further.  Meads  v.  Meads,  178 

Hasceig,  20  Mich,  154,  which  consid-  S.    W.    781     (Tex.    Civ.    App.    1915), 

era   the   ease   of   unsevered    crops   as  as  to  a  contract  for  sharing  the  crops 

affected  by  a  conveyance  of  the  prem-  of  two  farms, 
ises. 

143 


§  104  THE  LAW  OF  PERSONAL  PKOPERTY.        [PAET  II. 

tenant  for  life  has,  as  also  other  tenants  of  estates  of  uncertain 
duration,  the  right  of  emblements  or  profits  of  the  crop,  "  emhlav- 
ence  de  hied,"  which  he  takes  on  the  termination  of  his  estate,  or 
which,  if  he  is  dead,  his  executors  or  administrators  take ;  partly, 
perhaps,  "  to  compensate "  (as  they  say)  "  for  the  labor  and 
expense  of  tilling,  manuring,  and  sowing  the  land."  ^  The  doc- 
trine of  emblements  is  borrowed  from  the  feudal  law,  whereby, 
if  a  tenant  for  life  died  between  the  first  of  September  and  last 
of  February,  the  lord  took  the  profits  of  the  whole  year  with  the 
reversion;  while  if  he  died  between  the  first  of  March  and  the 
last  of  August,  the  heirs  of  the  tenant  received  the  whole.  ^  As 
the  common  law  strongly  encouraged  husbandry,  we  may  regard 
the  right  of  emblements  as  founded  upon  such  a  policy  (in  con- 
nection, as  we  have  intimated,  with  upholding  the  presumed 
mutual  intent  of  parties) ,  rather  than  the  rule  of  a  compensation, 
which,  one  readily  sees,  would  not  thus  be  measured  with 
exactness. 

The  doctrine  of  emblements  prevails  both  in  England  and  the 
United  States  at  this  day.  The  principle  is,  that  where  a  tenant 
sows  and  works  upon  the  land,  with  the  expectation  of  gathering 
the  harvest,  no  sudden  and  unlooked-for  termination  of  his  estate, 
either  by  the  act  of  God,  or  through  the  misconduct  of  his  lessor, 
should  deprive  him  or  his  representatives  of  the  fruits  of  his 
labor.^  It  follows  then,  that  to  bring  a  tenant  of  lands  within 
this  principle :  first,  he  should  have  expended  labor  upon  the  crop ; 
second,  his  estate  should  have  terminated  unexpectedly,  and 
without  fault  on  his  part.  Statutes  in  many  States  have  changed 
the  common-law  rule  in  regard  to  emblements  and  should  be 
carefully  studied.^ 

9.  1    Wms.    Pers.    Prop.    17    Eng.  2.  lb. 

ed.   130,  and   notes;    1   Washb.   Keal  3.  See,  for  example,  Devera  t.  May, 

Prop.  101  et  seq.:  2  Ewell's  Bl.  Com.  (Kt.),    99    S.    W.    255;     Gordon    v. 

122;    1    Wms.    Ex'rs,    lOtb    Eng.    ed.  James,    86    Miss.    719,    39    So.    18; 

537;  4  Kent  Com.  73,  110.  State    v.    Bell,     (N.    C.)     49    S.    E. 

1.  lb.  163. 

144 


CHAP,  v.]  HEIRLOOMS    AND    EMBLEMENTS.  §    105 

§  105.     Doctrine  of  Emblements;    Labor  upon  Crop  Required. 

As  to  the  first  point,  we  find  that  the  law  draws  a  distinction 
between  such  vegetable  products  as  are  the  annual  results  of  agri- 
cultural labor,  and  such  as  are  not.  Accordingly  crops  of  corn, 
peas,  beans,  tares,  hemp,  flax,  melons,  potatoes,  and  the  like,  are 
enumerated  as  among  the  subjects  of  emblements,  yielding  an 
annual  profit  produced  by  labor ;  whilst  timber,  fruit-trees,  grass, 
and  clover,  which  do  not  repay  within  a  single  year  the  labor  by 
which  they  are  produced,  are  excluded  from  the  operation  of  this 
rule.'*  Such  artificial  grasses  as  are  annually  renewed  seem  to 
fall  within  the  description  of  emblements.^  And,  by  way  of 
exception  to  the  general  rule,  hops  are  made  the  subject  of  emble- 
ments, because  though  produced  from  permanent  roots,  they  require 
yearly  culture  and  manuring  to  produce  at  all ;  ^  and  upon  the 
same  principle  other  kinds  of  crops  might  also  be  excepted  in 
these  days  of  scientific  farming.  The  general  rule  is,  that  emble- 
ments can  only  be  claimed  in  respect  of  crops  which  ordinarily 
repay  the  labor  by  which  they  are  produced  within  the  year  in 
which  the  labor  is  expended;  though  in  extraordinary  seasons 
they  may  be  delayed  beyond  that  period.^  And,  of  course,  these 
must  be  crops  which  grow  not  spontaneously,  but  by  the  industry 
of  man.^ 

To  illustrate  this  principle  somewhat  further:  If  I  plant  a 
fruit-tree,  neither  the  annual  fruit  nor  the  tree  itself  can  be  the 
subject  of  emblements.  For  the  fruit  is  usually  borne  without 
annual  labor;  and  when  I  planted  the  tree,  I  did  so  presumably, 
not  in  contemplation  of  present  profit,  but  for  future  enjoyment, 
that  the  labor  once  bestowed  might  benefit  others  if  not  myself.^ 

4.  Wms.  Pers.  Prop.   17th  ed.  151;  6.  Sparrow  v.  Pond,  49  Minn.  412. 

1  Waslib.  Real  Prop.   102 ;  Com.  Dig.  7.  Co.  Lit.  55  b. 

Biens,  G. ;  2  Bl.  Com.  123,  n.;   Evans  8.  Graves    v.    Weld,    2    Nov.    &.    M. 

V.  Roberts,  5  B.  &  C.  832,  per  Bayley,  725;   1  \Yms.  Ex'rs,  10th  ed.  536. 

J.;  Co.  Lit.  55b.  9.  2  Ewell's  BI.  Corn.  123;  1  Wms. 

5  2    Ewell's    Bl.    Com.    123,    Shars-  Ex'rs,  10th  ed.  536. 

wood's   n. ;    Graves  v.    Weld,   2    Nev.  The  lessee  is  entitled  to  the  fruit 
t  M.  725. 

10  145 


§  106         THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

Nor  can  timber  trees  be  grubbed  up  for  the  benefit  of  the  party 
whose  estate  terminated ;  for  the  year's  supply  does  not  correspond 
with  the  year's  industry.^  The  case  of  trees  planted  by  nursery- 
men with  an  express  view  to  chattel  sale  may  be  mentioned  as  an 
exception,  as  we  have  already  indicated.^  Grass  is  not  sown  every 
year,  and  as  the  improvement  cannot  be  distinguished  from  the 
natural  product,  neither  can  I  make  this  the  subject  of  emble- 
ments, although  the  supply  may  have  been  increased  by  my 
cultivation.^ 

Planting  is  an  essential  element  in  most  claims  of  emblements. 
The  crop  must  have  been  actually  planted  during  the  life  of  the 
tenant ;  and  no  degree  of  preparation  of  the  ground  will  give  to 
one  the  fruits  of  seed  which  another  has  planted  after  the  deter- 
mination of  his  tenancy."*  So  the  crop  claimed  must  be  the  crop 
which  was  growing  at  the  end  of  the  term,  and  only  that  one ; 
even  though  it  does  not  sufficiently  compensate  for  the  industry 
bestowed,  and  another  crop  springs  up  afterwards.^  But  the  right 
to  emblements  does  not  require  that  the  land  be  cultivated  accord- 
ing to  rules  of  good  husbandry;  for  any  loss  by  bad  cultivation 
would  be  the  tenant's  own.^ 

§  106.  Doctrine  of  Emblements;  Unexpected  Termination  of 
Tenancy  without  Fault. 
As  to  the  second  point :  namely,  that  the  tenant's  estate  should 
liave  terminated  unexpectedly  and  without  fault  on  his  part.  If 
a  tenant  were  allowed  to  take  the  crops  where  he  knew  before 
planting    that    the    estate    would    terminate    before    they    were 

of  the  trees  during  the  lease.     Quig-  case   where   new  grass   seed    is   sown 

gle  y.  Vining,  125  Ga.  98,  54  S.  E.  74.  and  some  special  outlay  in  ploughing, 

1.  lb. ;  Co.  Lit.  55  b.  manuring,  etc.,  is  made,  qticere. 

2.  Penton  v.  Robart,  2  East,  90;  4.  1  Washb.  Real  Prop.  103.  and 
Lee  V.  Risdon,  7  Taunt.  191;  supra;  cases  cited;  Stewart  v.  Doughty,  9 
§  100.  Johns.  108;   Price  v.  Pickett,  21  Ala. 

3.  Gilb.  Ev.  215,  216;  1  Wms.  Ex'rs,  741. 

10th  ed.   537;   Evarts  v.  Inglehart,  6  5.  Graves  v.  Weld,  5  B.  &  Ad.  105; 

Gill   &  J.    188;    Evans   v.   Hardy,   76       2   Nev.   &  M.  725. 

Ind.  527.    As  to  some  strong,  specific  6.  Bradley  v.  Bailey,  56  Conn.  374. 

146 


CHAP,  v.]  HEIRLOOMS    AND    EMBLEMENTS.  §    106 

ripened, —  the  general  rule  being,  that  control  of  the  incidents 
ceases  with  control  of  the  freehold, —  or  where  he  chose  to  termin- 
ate the  estate,  the  law  of  emblements  would  be  one  of  favor  instead 
of  fairness.  But  where  an  estate  is  suddenly  brought  to  an  end 
bj  the  act  of  God,  or  through  the  misconduct  of  the  lessor,  the 
lessee  or  his  legal  representatives  may  rightfully  claim  emble- 
ments.^ Xor  is  suddenness  and  unexpectedness  of  termination 
applied  in  any  such  sense  as  to  exclude  the  claim  where  the  land 
was  sowed  when  the  tenant  was  in  ill  health  and  his  early  death 
seemed  imminent.^  The  executor  or  administrator  of  a  tenant  for 
life  is  entitled  to  emblements.^  And  so  would  it  be  where  one  was 
virtually  tenant  at  another's  will.^ 

To  take  illustrations.  A  woman,  who  is  tenant  during  widow- 
hood, marries.  The  tenancy  is  terminated  by  her  own  act,  and 
she  has  no  right  to  emblements.^  So,  if  a  tenant  abandons  the 
premises,  or  voluntarily  puts  an  end  to  the  tenancy.^  And  these 
principles  apply  in  the  case  of  a  tenant  at  will,  who,  if  wrong- 
fully turned  out  by  his  landlord  before  harvest,  but  not  where  he 
abandons  his  tenancy,  is  entitled  to  emblements.'^  A  tenant  for  a 
term  of  years,  or  for  a  period  certain,  is  not,  under  ordinary 
circumstances,  entitled  to  emblements.^  !N^or  one  who  voluntarily 
surrenders  his  term.^  ISTor  a  joint  tenant  as  against  the  rights  of 
a  survivor.^  Nor  a  mere  tenant  at  sufferance,  nor  any  one  who 
occupies  the  lands  wrongfully.^ 

7.  1  Washb.  Real  Prop.  103;  1  4.  1  Washb.  Real  Prop.  103;  5  Rep. 
Wma.  Exrs.,  10th  ed.  537;  Debow  v.  116;  Chandler  v.  Thurston,  10  Pick: 
Colfax,  5  Halst.  128;  Chesley  v.  205 ;  1  Wms.  Ex'rs.  10th  ed.  537. 
Welch,  37  Me.  106;  Whitmarsh  v.  5.  Debow  v.  Colfax,  5  Halst.  128; 
Cutting,  10  Johns.  360;  Bouv.  Diet.  Whitmarsh  v.  Cutting,  10  Johns.  360 ; 
"  Emblements;  "  4  Kent  Com.  73,  110.  Chesley    v.    Welch,    37    Me.     106;     1 

8.  Bradley  v.  Bailey,  56  Conn.  374,  Washb.    Real   Prop.    103;    Gossett   v. 
15  Atl.  746,  1  L.  R.  A.  427.  Drydale,   48  Mo.  App.   430.     But  see 

9.  lb.  §   108,  post. 

1.  Towne  v.  Bowers,  81  Mo.  491.  6.  Carney  v.  Mosher,  97  Mich.  554, 

2.  Hawkins    v.    Skegg,    10    Humph.       56  N.  W.  935. 

31;  Debow  V.  Colfax,  5  Halst.  128.  7.  Owen,    102;     Rowney's    Case,    2 

3.  1    Washb.    Real   Prop.    103,    and       Vern.  323. 

cases  cited ;  Whitmarsh  v.  Cutting,  10  8.  Doe  v.  Turner,  7  M.  &  W.  226. 

Johns.  360.  In    case    of    ejectment,    the    question 

147 


§  106  THE  LAW  OF  PERSONAL  PROPERTY.        [pART  LI. 

The  riglit  of  emblements  applies  as  between  the  executor  or 
administrator  of  the  person  seised  of  the  inheritance  and  the  heir 
in  some  cases,  and  in  others,  between  the  executor  or  administrator 
of  the  tenant  for  life  and  the  remainderman  or  reversioner.  When 
the  occupier  of  the  land,  whether  he  be  owner  of  the  inheritance 
or  of  an  estate  for  life,  dies  after  sowing  and  before  harvest  time, 
his  personal  representatives  take  the  profits  of  the  crop  or  emble- 
ments.^ The  right  of  a  lessee  of  a  life  tenant  after  the  death  of 
the  life  tenant  is  not  to  keep  possession  but  onlj  to  enter  and 
cultivate  the  crops.  ^  This  right  extends  to  tenants  bj  the  curtesy, 
for  they  are  life-tenants.^  Before  the  statute  of  Merton,  it  was 
thought  that  a  dowress  could  neither  devise  her  growing  corn,  nor 
cause  the  crop  she  had  sown  to  go  to  her  executor  or  administrator, 
instead  of  the  reversioner ;  this  statute,  however,  places  her  on  the 
same  footing  as  to  emblements  with  other  life  tenants.''  The  rule 
extends  to  every  case  where  the  estate  determines  by  act  of  God, 
or  the  act  of  the  law.  This  distinction  between  the  rights  of  the 
heir  and  of  the  executor  is  of  less  practical  importance  now 
imder  modern  statutes. 

If  an  owner  sows  the  land  and  then  conveys  it  away,  he  passes 
the  title  to  the  crop,  as  well  as  the  soil;  and  his  executors  and 
administrators  have  no  concern  in  either."*  The  same  principle 
applies  to  the  conveyance  of  a  reversion  subject  to  an  existing 

whether  the  person  ejected  held  under  low   v.    Dwight,    7    Mass.    34;    Wads-" 
a  claim  of  title  appears  material.    See  worth  v.  Allcott,  6  N.  Y.  64 ;   Single- 
McLean  V.  Bovee,  24  Wis.  295;   Page  ton  v.  Singleton,  5  Dana,  92;  Bradley 
V.    Fowler,    39    Cal.    412;    Rowell    v.  v.  Bailey,  56  Conn.  374. 
Klein,   44  Ind.   290.     One  who  is  let  1.    Edghill      v.      Mankey,       (Neb.), 
into  possession  luider  a  parol  contract  112  N.  W.  570. 
to  purchase  is  a  tenant  at  will  so  far  2.  1  Wms'.  Ex'rs,  679. 
as    relates    to    emblements;     and,    if  3.  Stat.  20  Hen.  III.,  c.  2;   Co.  2d 
ejected  because  the  other  party  refuses  Inst.    80.       See    Haslett   v.    Glenn,    7 
to  carry  out  the  oral  contract,  he  is  H.   &  J.  17. 

entitled  to  his  crops.    Harris  v.  Frink,  4.  1    Washb.    Real    Prop.     104 ;     1 

49  N.  Y.  24.  .Wms.  Ex'rs,  674 ;  Brantom  v.  GrifSta, 

9.  Swinb.  pt.  7,  §   10,  pi.  8;  Evans  2  C.  P.  D.  212;  s.  e.  1  C.  P.  D.  349. 
V.  Inglehart,  6  G.  &  J.  173;  Penhal- 

148 


CHAP,  v.]  HEIRLOOMS    AXD    EMBLEMENTS.  §    106 

particular  estate.^  So,  too,  emblements  pass  by  a  devise  of  the 
land ;  partly  because,  being  a  grant,  the  devise  must  be  taken 
most  strongly  against  the  grantor.^  Why  should  the  devisee  stand 
on  a  better  footing  than  the  heir  ?  For,  as  against  the  heir  at  law, 
the  emblements  go  to  the  executor/  It  is,  after  all,  only  a  matter 
of  presumption;  and  the  presumption  may  be  rebutted  by  words 
in  the  will  that  show  an  intent  that  the  executors  or  some  legatee 
shall  have  the  emblements.^  Once  more,  if  a  tenant  plants  the 
crop,  sells  it  as  a  growing  crop,  and  then  terminates  the  estate  by 
his  own  act,  the  vendee  cannot  claim  the  crop  as  emblements,  for 
the  vendor  cannot  pass  a  title  greater  than  his  own.^ 

It  should  also  be  noticed  that  the  original  lessee  or  tenant  for 
life  may  pass  his  claim  for  emblements  to  his  assignee  or  sub- 
lessee ;  save  where  he  is  restricted  by  the  terms  of  his  lease  from 
assigning  or  underletting  his  term.^  Indeed,  in  some  cases  the 
assignee  or  sub-lessee  may  claim  emblements  where  the  original 
tenant  could  not  have  done  so.  As,  for  instance,  if  a  tenant  dur- 
ing widowhood  should  underlet  and  then  marry,  she  would  forfeit 
by  marriage  all  right  to  emblements;  but  the  law  does  not  place 
the  sub-lessee  in  the  same  predicament,  because  it  was  not  his  fault 
that  she  did  so.     The  under-lessee  or  assignee,  it  is  to  be  remem- 

5.  Foote   V.    Colvin,   3   Johns.    216;  Sneed,  34;   Latta  v.  Miller,   119   Ind. 

Burnside  v.  Weightman,  9  Watts,  46.  305,  10  N.  E.  100. 

e.  Spencer's      Case.      Winch,      51;  9.  Debow  v.   Colfax,   5   Halst.   128; 

Cooper  V.  Woolfitt,  2  Hurl.  &  N.  122 ;  1  Washb.  Real  Prop.  104. 

Dennett  v.  Hopkinson,  66  Me.  350.  Where     a     married     woman     died, 

7.  Dennett  v.  Hopkinson,  66  Me.  leaving  land  which  was  worked  by 
350.  A  deed  of  land  giving  posses-  her  surviving  husband  and  minor 
sion  expressly  at  the  grantor's  death,  children,  her  heirs  at  law,  there  he- 
gives  the  grantee  the  emblements  ing  at  the  time  no  administrator  ap- 
when  the  grantor  dios.  Waugh  v.  pointed,  it  was  held  that  the  crops 
Waugh,  84  Penn.  St.  350.  should  go  to  the  husband,  subject  to 

8,  1  Wms.  Ex'rs,  674 ;  West  v.  an  offsetting  charge  for  rent.  Gib- 
Moore,  8  East,  343;  Co.  Lit.  55  b,  .son  v.  Carraker,  82  Ga.  46,  9  S.  E. 
Hargrave,     n.      See     cases     cited     in  124. 

Cooper  V.   Woolfitt,  supra:  Rudge  v.  1.  Lessee  of  a  life-tenant  who  died 

Winnall.  12  Beav.  357;  Budd  v.  Hiler,  was  allowed  emblements  where  he  had 
3   Dutch.   43;    Shafner  v.    Shafner,   5       sowed.     Bradley  v.  Bailey,   56  Conn. 

374. 

14& 


§  108  THE  LAW  OF  PEKSONAL  PROPERTY.        [pART  II. 

bered,  cannot  in  general  be  prejudiced  by  the  subsequent  acts  of 
his  own  lessee.^ 

§   107.     Doctrine  of  Emblements;    Right  of  Taking,  How  Exer- 
cised, etc. 

When  there  is  a  right  to  emblements,  the  law  gives  a  free  entry, 
egress,  and  regress,  as  much  as  is  necessary,  in  order  to  cut  and 
carry  them  away.  The  extent  of  this  right  is  stated  by  writers 
on  real  property  to  be  this:  the  tenant  or  his  representative  may 
enter  upon  the  land,  cultivate  the  crop  if  a  growing  one,  and  cut 
and  harvest  it  when  fit ;  and  if  interfered  with,  in  the  reasonable 
exercise  of  this  right,  by  the  landlord  or  reversioner,  or  if  the  crop 
be  injured  by  him,  he  may  have  an  action  for  the  same.^  But 
the  landlord  or  reversioner  meantime  retains  exclusive  possession 
of  the  premises  for  all  other  purposes,  and  the  tenant's  right  of 
ingress  and  egress  is  strictly  limited  to  the  exigencies  of  the  situ- 
ation. Indeed,  some  writers  suggest  (though,  as  it  seems  to  us, 
without  good  reason)  that  possibly  the  tenant  or  his  executors 
might  be  forced  to  pay  rent  of  some  sort  until  the  crop  was 
gathered."^ 

§   108.     "Away-going  Crops"  of  Tenants  for  Years. 

We  have  thus  reviewed  the  common-law  doctrine  of  emblements, 
whereby  some  chattels  vegetable,  while  yet  unsevered  and  unripe, 
are  treated  as,  in  a  measure,  personal  and  not  real  property.  We 
have  seen  that  life-tenants  and  tenants  in  general  for  any  uncertain 
period  come  within  the  benefits  of  this  doctrine.  But,  following 
the  authorities,  we  have  spoken  rather  cautiously  of  tenants  for 
terms  of  years  whose  estates  happen  to  terminate  unexpectedly; 

2.  2  Ewell's  Bl.  Com.  124 ;  1  Washb.  See  Hayling  v.  Okey,  8  Ex.  531 ;  81 
Real    Prop.     104,     and     cases     cited;       Mo.  491. 

Buhver  v.  Bulwer,  2   B.   &  Aid.   470;  4.  Plowd.    Quccries,    239;     1    Wms. 

Bevans  v.  Briscoe,   4  Har.   &  J.   139.  Ex'rs,   10th   ed.    537;    1   Washb.   Real 

See  supra,  §  36.  Prop.    106.      And    see    Smith    Landl. 

3.  1    Washb.    Real    Prop.    105;    Co.  and  Ten.  256. 
Lit.  56  a;  1  Wms.  Ex'rs,  10th  ed.  537. 

150 


CHAP,  v.]  HEIRLOOMS    AND    EMBLEMENTS.  §    108 

and  with  reason,  since  such  an  estate  is  of  itself  one  for  a  period 
certain.  A  tenant  for  a  term  of  years  if  he  should  so  long  live, 
may  be  deemed  one  for  an  uncertain  period;  so  that  if  he  die 
before  the  lease  expires,  his  personal  representatives  are  entitled 
to  emblements.^  And,  under  anj  lease,  the  landlord  is  liable  for 
all  damages  which  ensue  from  his  wrongful  act  in  turning  out  the 
tenant.  But  the  covenants  of  a  lease  may  be  examined  in  order 
to  ascertain  the  mutual  intent;  and  where  a  tenant  stipulates 
that,  in  case  of  his  bankruptcy  or  insolvency,  the  landlord  may 
re-enter,  and  the  landlord  accordingly  does  so,  it  is  held  that  the 
tenant  cannot  recover  emblements;  for  he  himself,  and  not  the 
landlord,  was  at  fault.^  And  so  may  it  be  even  as  against  the 
assignee  of  a  lease  which  expressly  makes  the  right  to  such  crops 
depend  upon  the  performance  of  a  condition  which  has  not  been 
fulfilled.^ 

Custom,  however,  often  regulates  the  rights  of  landlord  and 
tenant,  under  a  term  for  years,  in  the  matter  of  emblements ;  thus 
establishing  a  rule  for  chattels  vegetable,  similar  to  what  we  have 
already  noticed  as  being  the  essence  of  the  law  of  heirlooms. 
And  upon  custom  is  founded  the  right  of  the  outgoing  tenant  of  a 
term  for  years  to  what  is  called,  in  the  English  courts,  his  "  away- 
going  crop."  ^ 

While,  too,  in  this  country,  the  tenant  under  a  lease  which  is 

5.  RoIIe  Abr.  727,  pi.  2 ;  Co.  Lit.  tenants  who  know  wlien  tlioir  term  is 
56  a.  to  cease ;  because  it  is  held  to  bo  their 

6.  Davis  V.  Eyton-,  7  Bing.  154;  fault  or  folly  to  have  sown,  when 
Smith  Land,  and  Ten.  252.  they  knew  their  interest  would  expire 

7.  Farnum  v.  Hefner,  79  Cal.  575,  before  they  could  reap.  But  the  cus- 
21  Pac.  955.  tomi  of  a  particular  place  may  rectify 

8.  Lord  Mansfield  says  of  the  cus-  what  otherwise  would  be  imprudence 
tom:  "We  have  thought  of  this  case,  or  folly.  The  lease  being  altered 
and  we  are  all  of  opinion  that  the  by  deed  docs  not  vary  the  ea&e.  The 
custom  is  good.  It  is  just,  for  he  custom  does  not  alter  or  contradict 
who  sows  ought  to  reap,  and  it  is  for  the  agreement  in  the  lease;  it  only 
the  benefit  and  encouragement  of  superadds  a  right  which  is  conse- 
agriculture.  Tt  is,  indeed,  against  quential  to  the  taking."  Wiggles- 
the  general  rule  of  law  concerning  worth  v.  Dallison,  1  Dougl.  201.  See 
emblements,  which  are  not  allowed  to  ib.,  1  Smith's  Lead.  Cas.  670. 

151 


§  109  TUE  LAW  OF    PEKSONAL  PROPERTY.        [PAKT  n. 

to  expire  at  a  fixed  time  is  not,  as  a  rule,  entitled  to  emblements, 
statutory  provisions  or  local  customs  are  sometimes  found  to  the 
contrary.  In  Pennsylvania,  New  Jersey,  and  Delaware,  for 
instance,  the  local  custom  is  declared  to  prevail  of  giving  the 
tenant  this  '^  away-going  crop ;  "  a  custom  which  seems  to  be 
somewhat  restricted,  however,  in  its  operation.^ 

A  modern  statute  in  England  affects  the  operation  of  the  doc- 
trine of  emblements  in  that  country,  taking  the  right  away  in 
certain  cases,  and  allowing  the  tenant,  by  way  of  equivalent,  to 
hold  until  the  expiration  of  the  current  year  of  his  term.^ 

§  109.  Emblements,  etc.,  as  Concerns  Mortgagees  and  Lien 
Claimants. 
But  the  right  of  the  tenant,  whether  for  a  term  of  years  or  a 
period  uncertain,  to  "  away-going  crops,"  or  to  emblements,  is  not 
so  extensive  where  the  lands  have  been  mortgaged.  And  it  has 
been  held  in  numerous  instances  by  our  courts  that  if  a  mort- 
gagee forecloses  his  mortgage,  whatever  crops  are  then  growing 
upon  the  mortgaged  premises,  if  planted  after  the  mortgage  is 
made,  become  the  mortgagee's,  whether  planted  by  the  mortgagor 
or  by  his  tenant,  free  from  any  claim  by  such  tenant.^  But  a 
foreclosure  after  the  crops  are  severed  carries  no  interest  to  the 
mortgagee  or  purchaser.''     And  the  right  to  growing  crops  is  so 

9.  Demi   v.   Bossier,    1   Penn.    224;  584;   Gillett  v.  Balcom,  6  Barb.  370; 

Clark    V.    Harvey,    54    Pa.    St.    142 ;  Jones  v.  Thomas,  8  Black,  428 ;  How- 

Howell  V.  Sehenck,  4  Zabr.  89;   Tem-  ell  v.   Schenck,  4  Zabr.   89. 
pieman    v.    Biddle,    1    Barring.    522;  3.  Buckout  v.   Swift,   27   Cal.    438; 

Clark    V.    Banks,    6    Houst.    584;     1  Codrington  v.  Johnstone,  1  Beav.  520; 

Washb.  Real  Prop.  106 ;  Smith  Landl.  Vogt    v.    Cunningham,    50    Mo.    App. 

and   Ten.    258,   notes   by   Maude   and  136.      Even  a  matured  crop  not  sev- 

Morris;    Taylor   Landl.    and    Ten.,    §  ered    has    in    special    instances    been 

538.     Abandonment   of  the   crop  and  protected  to  the  mortgagor  as  against 

violation    of    the    lease    preclude    the  the      purchaser      under      foreclosure, 

tenant's  right.     Fry  v.  Ford,  38  Ark.  Foss  v.  Marr,  40  Neb.  SSQ',  59  N.  W. 

246.  122.     As  to  attachment  of  a  debtor's 

1.  14  &  15  Vict.,  c.  25,  §  1  (1851)  ;  growing  crops  by  his  creditor,  see 
Wms.  Real  Prop..  22nd  ed.  130.  Policy   v.   Johnson,    52   Kan.   478,    23 

2.  1  Washb.  Real  Prop.  106,  and  L.  R.  N.  258  n.,  35  Pac.  8,  and  cita- 
cases  cited;   Lane  v.  King,   8   Wend.  tions. 

152 


CHAP,  v.]  HEIKLOOMS    AAD    EMBLEMENTS.  §    110 

broad  that  judgment  liens  are  not  permitted  to  interfere  with  a 
tenant's  emblements;  for  where  the  tenant  has  hired  land  subject 
to  such  a  lien,  and  planted  crops  upon  them  before  a  sale  of  the 
premises  is  made,  he  may  claim  them  against  a  purchaser  of  the 
land  under  the  sheriff's  sale.'^  It  is  held,  also,  that  the  mort- 
gagor's prior  sale  of  the  growing  crop  on  his  farm  gives  to  the 
purchaser  a  priority  over  the  mortgagee,  to  whom  he  afterwards 
surrenders  the  farm  before  a  harvest.^ 

§   110,     Emblements  in  the  Civil  Law. 

Chancellor  Kent  says  that  the  doctrine  of  emblements,  being 
founded  on  principles  so  very  reasonable,  must  have  existed  at  the 
Roman  law  in  tenancies  depending  on  uncertainty.^  And  he  men^ 
tions,  in  this  same  connection,  a  question  once  proposed  by  Mar- 
cellus,  whether  a  tenant  for  the  term  of  five  years  could  reap  the 
fruits  of  his  labor  which  arose  after  the  extinguishment  of  the 
lease.  This  question  was  correctly  answered  in  the  negative,  inas- 
much as  the  tenant  must  have  foreseen  the  termination  of  the 
lease.^  While  indeed,  as  we  may  add,  a  farmer,  at  the  civil  law, 
whose  lease  had  been  interrupted  by  some  event  which  he  ought 
to  have  foreseen,  was  treated  as  a  person  willing  to  run  the  hazard 
of  all  losses  thereby  suffered,  the  rule,  nevertheless,  prevailed, 
that  where  he  was  molested  by  or  through  the  proprietor,  the  latter 
should  make  good  all  damages  sustained  thereby,  as  well  as  the 
profits  which  might  have  accrued  had  the  lease  continued  un- 
broken.* The  law  of  Scotland  recognizes  the  doctrine  of  emble- 
ments, and,  like  the  common  law,  restricts  the  tenant's  right  to 
those  annual  fruits  which  require  yearly  seed  and  industry, 
accounting  them  to  be  movable  even  before  separation,  from  the 
moment  they  are  sown  or  planted. 


9 


4.  Bittinger  v.  Baker,  29  Penn.  St.  6.  4  Kent  Com.  110. 

66;    1   Washb.   Real   Prop.   106.      And  7.  Dig.   13,  2,  9,  cited  by  Kent.  ib. 

see  Jewett  v.  Keenbolts,  16  Barb.  193.  8.   1  Dom.  Civ.  Law.  §§  515,  517. 

5.  Sexton  v.  Breese,  135  N.  Y.  387,  9.  2  Burge  Col.  &  For.  Laws,  9. 

32  X.  E.  l.-^S. 

153 


CHAPTER  VI 


FIXTURES 


§   111.     Fixtures  the  Most  Important  of  Exceptional  Classes. 

The  remaining  species  of  personal  chattels  of  an  exceptional  or 
bordering  character  to  be  considered  is  that  of  fixtures.  This  is 
the  most  important  of  all;  for  while  heirlooms  and  emblements, 
or  chattels  vegetable,  give  rise  to  little  controversy  in  our  courts, 
the  law  of  fixtures  undergoes  a  constant  discussion.  So  numerous 
and  so  conflicting  are  the  cases  which  involve  disputed  points 
under  this  head,  that  we  shall  better  occupy  our  time  in  separating 
the  subject  into  its  proper  divisions,  and  studying  out  the  elemen- 
tary principles,  than  in  ranging  side  by  side  the  hundreds  of 
English  and  American  precedents,  seemingly  in  conflict,  which 
are  to  be  found  in  the  reports,  and  which  multiply  with  every 
year.  For  it  must  be  understood  at  the  outset  that  decisions  as  to 
fixtures,  applying,  as  they  do,  legal  principles  to  matters  of  science 
and  art,  blend  law  and  fact  in  close  proportions,  and  constitute  a 
collection  of  judicial  verdicts,  reaching  from  century  to  century, 
more  than  anything  else.  We  have  a  catalogue  of  miscellaneous 
things  —  machinery,  kettles,  furnaces,  salt-pans,  and  the  like  —  to 
attest  the  progress  of  architecture  and  the  useful  arts  rather  than 
of  jurisprudence. 

§   112.     Origin  of  Fixtures;    Definitions. 

The  very  word  "  fixtures  "  is  of  doubtful  meaning,  though  we 
use  it  constantly.  It  is  of  modern  origin,  and  not  to  be  found  in 
the  ancient  law-books  at  all.^  The  old  rule  was  that,  if  the  tenant 
or  occupier  of  a  house  or  land  annex  anything  to  the  freehold, 
neither  he  nor  his  representative  can  afterwards  take  it  away, 
upon  the  maxim   quicquid  plantatur  solo,   solo   cedit.^     But   as 

1.  See  Sheen  v.  Eickie,  5  M.  &  W.  2.  See   Lord   Hardwicke    in   Dudley 

175;  Wiltshear  v.  Cottrell,  1  E.  &  B."      v.  Warde,  Anibl.  113:  Lord  Ellenbor- 
674.  ough   in   Elwes  v.   Maw,   3   East,   51; 

Minshall  v.  Lloyd,  2  M.  &  W.  450. 

154 


CHAP.  VI.]  FIXTURES.  §    112 

society  progressed,  and  tenants  for  lives  or  for  terms  of  years 
began  to  affix  valuable  and  expensive  articles  to  the  freehold, 
either  for  their  more  convenient  or  luxurious  occupation,  or  for 
the  purposes  of  trade,  the  injustice  of  denying  to  the  tenant  or 
temporary  occupier  the  right  to  remove  them  at  his  pleasure,  and 
deeming  them  practically  forfeited  to  the  owner  of  the  fee  by  the 
mere  act  of  annexation,  became  apparent  to  all.  A  new  rule 
sprang  up,  which  both  courts  of  law  and  equity  treated  with  favor ; 
namely,  that  the  temporary  owner  or  occupier  of  real  property 
or  his  representative,  might,  as  against  the  permanent  owner  or 
successor  to  the  soil,  disannex  and  remove  certain  articles,  although 
annexed  by  himself  to  the  freehold.  These  articles  have  been 
denominated  "  fixtures,"  and  it  is  to  such  articles  that  the  word 
is  at  this  day  commonly  applied.^ 

Fixtures,  then,  are  frequently  defined  as  those  personal  chattels 
which  a  temporary  occupier  has  annexed  to  the  land,  and  which 
he  or  his  representatives  may  afterwards  sever  and  remove  against 
the  will  of  the  owner  or  successor  to  the  freehold.'*  And  the  prac- 
tical question  as  to  appendages  of  this  sort  is,  whether  they  are  to 
be  considered  as  in  this  respect  part  of  the  real  estate,  or  treated 
as  personal  property ;  for  the  latter  are  movable,  and  the  former 
are  not.  But  some,  with  a  nicer  regard  for  the  distinctions  of 
etymology,  apply  the  term  "fixtures"  quite  differently;  namely, 
to  those  articles  which,  by  being  annexed  to  the  real  estate,  become 
part  of  it,  so  as  to  be  incapable  of  removal  without  the  owner's 
permission.^  In  the  very  definition  of  this  word,  then,  is  found 
a  fruitful  source  of  confusion ;  and  we  must  try  to  distinguish, 
between  these  two  opposing  meanings  as  carefully  as  possible. 
Indeed,  we  think  it  would  be  as  well  to  designate  fixtures  simply 
as  those  chattels,   annexed  in  a  manner  to  tlio  land,  concerning 

3.  Prr  Martin,  B.,  Elliott  V.  Bishop,  Diet.  "Fixtures;"  Sheen  v.  Rickio, 
10  Ex.   508.  5  M.  &  W.  7.5. 

4.  Amos  &  Fer.  Fixtures,  2;  Ehves  5.  See  Hill  Fixtures,  2d  ed.  14,  15, 
V.  Maw,  3  East,  38;  s.  c.  2  Smith's  and  numerous  cases  cited,  chiefly 
Lead.  Cas.  Am.  Notes,  228 ;  Bouvicr's  American.     See,  also,  Ochs  v.  Tilton, 

181  Ind.  81,  103  N.  E.  837. 

155 


§  113  THE  LAW  OF  PERSONAL  PKOPERTY.        [PABT  II. 

which  the  right  to  remove  might  be  in  controversy  between  the 
temporary  occupier  or  his  representatives  and  the  owner  of  or 
successor  to  the  freehold. 

§   113.     Character  of  the  Annexation  to  Land. 

The  primary  consideration,  as  to  a  fixture,  is  that  of  the  physi- 
cal affixing  or  annexing  to  the  freehold.  What  is  an  annexation 
to  land  sufficient  to  bring  a  chattel  within  the  rule  of  fixtures? 
For,  manifestly,  if  I  as  a  tenant  set  tables  and  chairs  and  other 
furniture  in  a  house,  I  have  the  right  to  take  them  away  at  the 
end  of  my  term,  because  they  were  chattels  personal,  first,  last, 
and  always.  But  if  I  build  a  cooking-range,  or  insert  an  iron 
safe  into  the  walls,  it  is  otherwise ;  and  the  doctrine  of  fixtures 
may  be  invoked  to  determine  between  the  landlord's  rights  and 
my  own.  The  object  and  purpose  of  the  annexation  ought  to  be 
considered  in  all  cases  of  fixtures ;  and  we  shall  see  in  the  course 
of  our  present  investigation  that  the  law  is  more  or  less  liberal, 
according  as  it  appears  that  the  chattel  was  afiixed  for  purposes  of 
trade,  for  purposes  of  ornament,  for  domestic  purposes,  and  so  on ; 
mutual  intent  of  the  parties  concerned  applying  also. 

In  order  to  constitute  annexation,  within  the  rule  of  fixtures, 
it  is  necessary  that  the  article  in  question  be  let  into  or  united 
with  the  land,  or  to  substances  previously  connected  thereiwth. 
It  is  not  enough  that  it  has  been  laid  upon  the  land  and  brought 
in  contact  with  it ;  the  law  requires  more  than  mere  juxtaposition ; 
as,  that  the  soil  shall  have  been  displaced  for  the  purpose  of 
receiving  the  article,  or  that  the  article  shall  be  cemented  or  other- 
wise fastened  to  some  fabric  previously  attached  to  the  ground. 
Thus,  in  Culling  v.  Tuffnal,  a  tenant  had  erected  a  barn  upon  the 
premises,  and  put  it  upon  pattens  and  blocks  of  timber  lying  upon 
the  ground,  but  not  let  in;  and  Lord  Ellenborough,  commenting 
upon  the  case  afterwards,  observed  that  these  things  were  not  to 

6.  1    Wms.    Ex'rs,    10th    Eng.    ed.      wagon  in  a  sugar  mill  is  simply  per- 
552;     Amos     &     Fer.     Fixtures,     2;       sonal     property.       Winslow    v.     Bro- 
Mather  v.   Fraser,   2   Kay   &   J.    536;       mich,  54  Kan.  300.  38  Pac.  275. 
Cook  V.  Whiting,  16  111.  480.    A  large 

156 


CHAP.  VI.] 


FIXTURES. 


§  113 


be  considered  fixtures  at  all;  meaning,  of  course,  that  there  had 
been  no  original  annexation  to  the  soil.^  But  it  would  appear 
that  whenever  a  chattel  has  become  perfectly  connected  with  the 
freehold,  either  by  being  let  in,  or  cemented  or  otherwise  perma- 
nently united  to  some  erection,  it  becomes  part  of  the  freehold 
itself.^  To  apply  this  principle  to  any  particular  state  of  facts  is, 
however,  a  matter  of  some  difficulty.  Distillers'  vats,  supported 
upon  briokwark  and  timber,  but  not  let  into  the  ground,  and  vats 
standing  on  frames  of  wood,  have  been  pronounced  mere  chattels, 
by  courts  both  in  England  and  this  country,  while  stills  let  into 
the  ground  are  made  subject  to  the  law  of  fixtures.^  Cisterns, 
again,  though  standing  on  blocks  in  the  cellar,  or  resting  only 
against  the  walls,  have  been  subjected  to  the  law  of  fixtures;  yet 
they  are  sometimes  permitted  to  be  carried  away.'     Portableness 


7.  Elwes  T.  Maw,  3  East,  51;  com- 
menting upon  Culling  v.  Tuffnal,  Bull. 
N.  P.  34. 

8.  3  Smith  Lead.  Cas.  241  et  seq., 
and  American  notes;  Hill  Fixtures, 
2d  ed.  22-24. 

9.  Horn  v.  Baker,  9  East,  215 ;  Rey- 
nolds V.  Shuler,  5  Cow.  323 ;  Burk  v. 
Baxter,  3  Mo.  207. 

1.  Blethen  v.  Towle,  40  Me.  310; 
Bainway  v.  Cobb,  99  Mass.  457;  Wall 
V.  Hinds,  4  Gray,  256.  And  as  to 
a  heavy  carding  machine,  see  Deal  v. 
Palmer,  72  N.  C.  582. 

Portable  hot-air  furnaces  set  in  pits 
prepared  for  them  in  the  cellar,  as 
though  placed  permanently,  are  part 
of  the  realty;  so,  also,  pipes  leading 
from  the  furnaces  to  the  chimney. 
Stoclnvell  v.  Campbell,  39  Conn.  362; 
Thielman  v.  Carr,  75  111.  385.  Cotton- 
gin  stands,  put  up  after  the  usual 
manner,  pass  as  realty.  Eichardson 
V.  Borden,  42  Miss.  71;  Smith  v. 
Odom,  63  Ga.  439.  So  with  water- 
wheel  and  gearing  put  into  a  mill  for 
permanent    use,    Lapham    v.    Norton, 


71  Me.  83;  or  the  essential  ma- 
chinery of  an  ore-bank,  Ege  v.  Kille, 
84  Penn.  St.  333;  cf.  Dobscheutz  v. 
Hollidaj^  82  111.  371;  or  any  ma- 
cliinery  permanent  in  character  and 
essential  to-  the  purposes  of  the  prem- 
ises, Green  v.  Phillips,  26  Gratt.  752; 
McConnell-  v.  Blood,  123  Mass.  47; 
127  Mass.  542;  Stokoe  v.  Upton,  40 
Mich.  581;  38  Mich.  30;  Lyle  v. 
Palmer,  42  Mich.  314;  Kansas  City 
Southern  R.  Co.  v.  Anderson,  88  Ark. 
129,  113  S.  W.  1030,  16  Ann.  Cas. 
784.  See  In  re  Richards,  L.  R.  4 
Ch.  630;  Longbottom  v.  Berry,  L.  R. 
5  Q.  B.  123;  7  C.  P.  D.  328.  This 
maj^  include  a  gas-manufacturing 
machine,  Morrison  v.  Berry  42  Mich. 
389;  Johnson  v.  Wiseman,  4  Met. 
(Ky.)  357:  Hays  v.  Doane,  11  N.  J. 
Eq.  84 ;  or  fixed  and  permanent  plat- 
form scales,  Arnold  v.  Crowder,  81 
111.  56.  The  manner  of  attachment 
and  fastening  is  not  always  decisive 
in  such  cases.  Snedeker  v.  Warring, 
12  X.  Y.   170;   TO  Mass.   457. 

But    "  gas-fixtures "    screwed    upon 


157 


§  113 


THE  LAW  OP"  PERSONAL  PROPERTY. 


[part  II. 


and  the  ready  capability  of  being  taken  away  without  injury  favor 


gas-pipes,  mirrors,  pictures,  &c.,  are 
movables.  Jarechi  v.  Philharmonic 
Society,  79  Penn.  ^t.  403;  McKeage 
V.  Hanover  Fire  Ins.  Co.,  81  N.  Y. 
38;  Towne  v.  Fiske,  127  Mass.  125; 
10  Rich.  135;  33  Penn.  St.  522;  §  122. 
See  Connor  v.  Squiers,  50  Vt.  680. 
So  are  electric  light  fixtures  in  a 
hotel.  Canning  v.. Owen,  22  R.  I.  624, 
48  Atl.  1033,  84  Am.  St.  Rep.  858, 
A  statue  in  the  lawn  as  a  fixture. 
Book  3,  N.  Y.  Rpts,;  Bender  ed. 
n.,  p.  33.  Machinery  as  a  fixture, 
Book  4,  N.  Y.  Rpts.  Bender  ed.  n.,  p. 
370.  So  may  be  a  portable  hot-air 
furnace,  with  its  pipes,  under  cir- 
cumstanes;  as  where  resting  by  its 
own  weight  on  the  ground,  Towne  v. 
Fiske,  127  Mass.  125;  or  a  light  or 
heavy  machine,  temporarily  placed 
and  removable  without  injury, 
Wlieeler  v.  Bedell,  40  Mich.  693;  41 
Mich.  625 ;  26  N.  J.  Eq.  563 ;  Pope  v. 
Jackson,  65  Me.  162.  As  to  a  ferry- 
'boat,  chain  and  'buoyS,  see  Cowart  v. 
Cowart,   3   Lea,   57. 

Much  difficulty  is  experienced  in 
determining  the  character  of  articles 
of  machinery,  whose  removal  is  sought 
on  principles  pertaining  to  the  law 
of  fixtures;  and  while  the  doctrines 
noticed  in  this  chapter  are  held  to 
apply  in  such  cases,  yet  the  decisions 
Sometimes  appear  to  conflict  with 
one  another.  Machinery  whose  per- 
manency is'  subject  to  the  fluctuating 
conditions  of  business,  and  which  may 
be  removed  without  causing  sub- 
stantial injury,  though  securely  fast- 
ened, is  usually  regarded,  both  in 
England  and  in  this  country,  as  per- 
sonal property.  See  Hellawell  v. 
Eastwood,  6  Ex.  295;  Hill  Fixtures, 
31,   63-67;    25   N.   J.   Eq.    496;    In    re 


Richards,  L.  R.  4  Cli.  630;  Murdock 
V.  GifTord,  18  N.  Y.  28;  Crane  v. 
Brigham,  3  Stockt.  29 ;  Hill  v.  Sewald, 
53  Penn.  St.  274;  2  Kent  Com*.  344 
and  n.;  1  Washb.  Real  Prop.  8; 
Swift  V.  Thompson,  9  Conn.  63 ;  Wade 
V.  Johnson,  25  Ga.  331;  35  Minn. 
543;  Fifield  v.  Farmers'  Bank,  148 
111.  163,  35  N.  E.  802.  See  also  cases 
supra.  But  steam-engines  which  sup- 
ply the  motive  power  of  machinery, 
and  boilers,  being  permanent  and  es- 
sential, are  rather  to  be  deemed  fixed 
in  most  cases ;  and  such  articles  pass 
as  part  of  the  realty  when  the  owner 
sells  or  mortgages  the  premises.  lb. ; 
Mather  v.  Eraser,  2  K.  &  J.  536; 
Climie  v.  Wood,  L.  R.  3  Ex.  257; 
Walmsley  v.  Milne,  7  C.  B.  N.  s.  115; 
Sweetzer  v.  Jones,  35  Vt.  317;  Rich- 
ardson V.  Copeland,  6  Gray,  536.  So 
Avith  a  water-wheel  and  the  main 
gearing  of  a  factory;  a  cotton-gin; 
and  the  saws  and  cranks  of  a  saw- 
mill; all  of  which  are  held  in  nu- 
merous instances  to  be  realty  fixtures, 
and  not  personal  chattels.  Linton  v. 
Wilson,  1  Kerr  (N.  B.)  223;  Trull  v. 
Fuller,  28  Me.  545;  Powell  v.  Mon- 
son,  &e.,  Co.,  3  Mason,  459';  Bratton 
V.  Clawson,  2  Strobh.  478;  Degraf- 
fenreid  v.  Scruggs,  4  Humph.   451. 

A  wooden  building  standing  with- 
out cellar  on-  another's  land,  so  tlrat 
it  could  be  removed  without  seriously 
disturbing  the  freehold,  and  which 
was  built  with  the  purpose  of  a 
potential  removal,  may  be  treated  by 
the  parties  and  those  affected  by 
notice  as  personal  property.  O'Don- 
nell  V.  Hitchcock,  118  Mass.  401; 
Central  Branch  v.  Fritz,  20  Kan.  430 ; 
Fuller  V.  Taylor,  39  Me.  519;  67  Mo. 
632;    Pennybecker    v.    McDougal,    48 


158 


CHAP.  VI.] 


FIXTUKES. 


113 


a  disannexation.     Trade  fixtures  need  not  be  removable  without 


Cal.  160,  A  mutual  intent  in  this 
respect  receives  much  favor.  Young 
V.  Baxter,  55  Ind.  188 ;  Meigs's  Ap- 
peal, 62  Penn.  St.  28;  Linahan  v. 
Barr,  41  Conn.  471;  Comrs.  of  Rush 
Co.  V.  Stubbs,  43  Iowa,  466;  Corwin 
Town  V.  Moorhead,  25  Kan.  322; 
Western  N.  C.  R.  R.  v.  Deal,  90 
2Sr.  C.  110.  But  a  mill  or  other 
structure,  built  upon  land  without 
the  purpose  of  such  removal  or  proper 
mutual  assent,  becomes  realty,  espe- 
cially if  of  a  permanent  character 
and  imbedded  in  the  soil.  Lapham 
V.  Norton,  71  Me.  83 ;  Westgate  v. 
Wixon,  128  Mass.  304;  Nat.  Pember- 
ton  Bank  v.  Lougee,  108  Mass.  371. 
And  see  State  Sav.  Bank  v.  Kerch  eeval, 
65  Mo.  682;  Tison  v.  Taniehill,  28 
La.  Ann.  793;  Taylor  v.  Collins,  51 
Wis.  123;  Kinsell  v.  Billings,  33 
Iowa,  154 ;  Lipsky  v.  Borgmann,  53 
Wis.  256;  Kinkhead  v.  United  States, 
150  U.  S.  483.  As  to  an  ice-house,  see 
Ham  V.  Kendall,  111  Mass.  297;  Hart- 
well  v.  Kelly,  117  Mass.  235,  471. 
Prima  facie  all  buildings  belong  to 
the  owner  of  the  land  on  wliich  they 
stand, —  dwelling-houses  especially, 
Howard  v.  Fessenden,  14  Allen,  128 ; 
but  an  agreement  giving  the  right  to 
remove  may  be  express  or  implied 
from  circumstances.  Wilgus  v.  Get- 
tings,  21  Iowa,  177 ;  O'Donnell  v. 
Hitchcock,  and  otlier  cases  supra. 
Fencing  in  place  is  a  fixture  of  the 
freehold,  Emrich  v.  Ireland,  55  Mis-s. 
390;  Russ  v.  Barker,  4  Pick,  239; 
Glidden  v.  Bennett,  43  N.  H.  306; 
Ripley  v.  Page,  12  Vt.  353;  Goodrich 
V.  Jones,  2  Hill,  142 ;  but  stone,  brick, 
lumber,  and  other  materials  for  build- 
ing, lying  about  loose  or  in  piles,  re- 
main   personal    property    until    more 

1 


completely  annexed  to  the  land. 
Woodman  v.  Pease,  17  N.  H.  282; 
Wing  V.  Gray,  36  Vt.  261;  Cook  v. 
Whiting,  16  111.  480;  Ralston  v.  Wood, 
15  111.  162;  3  Iowa,  220.  Manure 
scattered  about  or  heaped  in-  the 
course  of  husibandry  is  usually  treated 
as  part  of  the  soil  by  the  modern 
cases.  Cf.  Aleyn,  32,  with  Fay  v. 
Muzzey,  13  Gray,  53;  Plumer  v. 
Plumer,  30  N.  H.  558';  Parsons  v. 
Camp,  11  Conn.  525;  White  v.  Story, 
2  Hill  (N.  Y.),  143;  1  Washb.  Real 
Prop.  6.  But  while  shavings,  &c., 
used  or  intended  for  use  to  fill  up 
marshy  ground  may  be  a  part  of  the 
realty,  shavings  and  slabs  suitable 
for  kindling,  and  intended  to  be  uSed 
and  removed  as  such,  remain  per- 
sonal property.  Jenkins  v.  McCurdy, 
48-  Wis.  628. 

The  general  rule  is,  that  things 
personal  in  their  nature,  which  are 
fitted  and  prepared  to  be  used  with 
real  estate,  and  are  essential  to  its 
beneficial  enjoyment,  become  part  of 
the  soil  and  pass  with  it  under  a  deed 
of  conveyance,  provided  they  were 
once  annexed  to  the  laTid,  and  con- 
tinue to  be  so  used.  But  a  different 
principle  applies  where  the  parties 
had  agreed  that  such  things  shouhl 
remain  the  property  of  the  party  an- 
nexing them.  See  1  Greenl.  Cruise, 
46,  and  cases  cited ;  1  Washb.  Real 
Prop.  3,  4,  where  the  doctrine  is  fully 
discussed.  Hence,  on  the  one  hand, 
buildings  erected  on  the  real  estate 
of  another,  without  his  permission, 
become  part  of  such  real  estate ;  and 
if  erected  by  the  husband  on  his  wife's 
lands,  they  become  hers.  Washburn 
V.  Sproat,  16  Mass.  449.  But,  on  the 
other  hand,   if  I  build  on    another's 


59 


§  113 


THE  LAW  OF  PERSONAL  PEOPEKTY. 


[part  II. 


injury  to  the  fixtures,  but  the  true  test  is  whether  they  can  be 
removed  without  injury  to  the  freehold.^ 


lands  nnder  an  agreement  that  the 
house  shall  remain  my  personal  prop- 
erty, the  law  gives  effect  to  the  agree- 
ment. 1  Greenl.  Cruise,  46,  and  cases 
cited;  Sudbury  v.  Jones,  8  Cush.  189; 
Dame  v.  Dame,  38-  N.  H.  429 ;  Bearly 
V.  Cox,  4  Zabr.  287;  McCracken  v. 
Hall,  7  Ind.  30.  Even  the  subse- 
quent assent  of  the  owner  to  such 
erection  is  ield  sufficient  for  this 
purpose.  Fuller  v.  Tabor,  39  Me. 
519.  And  see  Mott  v.  Palmer,  1 
Comst.  564;  1  Washb.  Real  Prop.  3, 
and  cases  cited.  But  the  title  to 
house  and  land  becoming  united  in 
one  and  the  same  person,  the  whole 
property  is  real  estate.  See  Burk  v. 
HolliS,  98  Mass.  55.  And  it  may  be 
remarked  in-  general,  that  the  mere 
annexation  of  an  article  of  the  char- 
acter of  a  fixture  to  the  freehold  of 
another  does  not  necessarily  make  it 
the  property  of  the  latter,  or  subject 
it  to  the  riile  of  fixtures;  for,  if  done 
by  his  consent,  the  owner  may  re- 
move it  at  any  time.  Wood  v.  Hew- 
ett,  8  Q.  B.  913.  A  temporary  build- 
ing may  be  taxed  as  part  of  the  real 
estate.  Milligan  v.  Drury,  130  Mass. 
428. 

Engines,  ears,  and  rolling-stock 
generally  of  a  railroad,  continue  chat- 
tels, though  used  in  connection  with 
the  land,  according  to  the  better  opin- 
ion, Williamson  v.  New  Jersey  R.,  29 
N,  J.  Eq.  311;  cf.  ib.  610;  Randall 
V.  Elwell,  52  N.  Y.  521;  Hoy  v. 
Plattsburg  R.,  54  K  Y.  314;  but  the 
railroad  track  permanently  laid  is 
part  of  the  realty.  Van  Keuren  v. 
Central    R.,    38   N.    J.   L.    165.     The 


rails,  spikes,  and  other  materials 
used  in  the  construction  of  a  railway 
become  annexed  to  ^the  soil,  in  the 
process  of  such  construction;  and  to 
these  are  applied  the  doctrines  of 
fixtures.  Turner  v.  Cameron,  L.  R. 
5  Q.  B.  306;  Northern  Central  R.  Co. 
V.  Canton  Co.,  30  Md.  347;  25  Barb. 
488;  Strickland  v.  Parker,  54  Me. 
263;  Galveston  R.  v.  Cowdry,  11 
Wall.  464;  Hunt  v.  Bay  State  Iron 
Co.,  9'7  Mass.  279.  See  §  56  supra; 
Woodward  v.  Ry.  Co.,  39  La.  Ann. 
566.  As  to  the  rolling-stock,  there 
are  some  American  cases  which  ap- 
plied rather  artificial  rules  of  con- 
struction. See  Hunt  v.  Bay  State 
Iron  Co.,  97  Mass.  279 ;  Farmers' 
Loan,  &c.,  Co.  v.  Hendrickson,  25 
Barb,  supra;  Palmer  v.  Forbes,  23 
111.  300 ;  Pennock  v.  Coe,  23  How.  117. 
But  see  n.  by  Redfield,  C.  J.,  in  3 
Redf.  Railw.  3d  ed.  533;  Strickland 
V.  Parker,  54  Me.  263;  Titus  v.  Ma- 
bee,  25  111.  257;  Farmers'  Loan,  &c., 
Co.  V.  Commercial  Bank,  11  Wis. 
207;  1  Washb.  Real  Prop.  4,  5,  and 
cases  cited;  Minnesota  Co.  v.  St. 
Paul  Co.,  2  Wall.  644,  645-649;  Wil- 
liamson V.  New  Jersey  R.,  and  other 
cases  supra.  As  to  piers  and  abut- 
ments, see  Wagner  v.  Cleveland  R., 
22  Ohio  St.  563.  Cf.  §  122  as  to 
steam-heating  fixtures.  As  to  electric 
plant,  see  Vail  v.  Weaver,  132  Penn. 
St.  363;  Capehart  v.  Foster,  61  Minn. 
132,  63  N.  W.  287. 

2.  In  re  New  York.  192  N.  Y.  295, 
84  N.  E.  1105,  18  L.  R.  A.  N.  8. 
423,  127  Am.  St.  Rep.  903. 


160 


CHAP.  VI.]  FIXTURES,  §    114 

§  114.     Modern  Tests  with  Reference  to  Fixtures. 

But  this  incident  of  annexation  to  the  freehold  cannot  serve  as 
the  conclusive  test  of  a  fixture ;  nor  can  we  thus  hope  to  reconcile 
those  numerous  cases  which  proceed  upon  different  meanings 
attached  to  the  word  "  fixture  "  itself.  The  question  whether  a 
thing  is  a  fixture  or  not  comes  up  when  some  estate  or  term  has 
ended  and  the  right  of  taking  away  is  at  issue  between  parties; 
and,  whatever  the  language  of  the  courts,  we  find  that  one  article 
is  allowed  to  be  taken  away  because  it  is  an  annexed  thing  which 
under  the  circumstances  should  be  favored,  while  another  may  be 
taken  because  (there  never  having  been  annexation  at  all)  it  was 
always  as  much  a  personal  chattel  as  the  hat  which  you  lay  upon 
the  floor  and  then  pick  up  again. 

The  modern  tendency  is  to  get  rid  of  all  precise  definitions 
which  would  restrain  the  word  "  fixtures  "  to  things  actually  or 
firmly  affixed  to  the  freehold.^  And  in  the  United  States,  the 
favored  doctrine  of  late  years  is,  that  whether  chattels  are  fixtures 
depends  less  upon  the  manner  of  their  physical  annexation  to  the 
freehold,  than  upon  their  own  adaptation  to  the  purpose  for  which 
they  may  have  been  used  in  connection  with  the  realty ;  '*  and 
furthermore  upon  the  actual  and  permissible  intention,  real  or 
presumed,  of  their  annexation.^  For,  after  all,  the  intention, 
whether  express  or  inferable  with  reference  to  some  custom  or  the 
common  sense  of  the  situation,  is  here  an  important  element,  as 

3.  Thus,  Baron  Parke  says  that  492;  Wadleigh  v.  Janvriii.  41  N.  H. 
fixtures  is  "a  very  modern  word,  and  503.  See  also  Shaw,  C.  J.,  in  Wins- 
is  generally  understood  to  compre-  low  v.  Merchants^  Ins.  Co.,  4  Met. 
hend  any  article  which  a  tenant  has  314;  1  Wms.  Ex'rs,  10th  Eng.  ed. 
the    power    of    removing."       Slieen    v.  552. 

Rickie,    5    M.    &    W.    175.       And    see  5.  McRea  v.  Central  Nat.  Bank,  66 

Coleridge,  J.,  in  Wiltshear  V.  Cottrell,  X.    Y.    489;    Hutchins    v.    Masterson, 

1  E.  &  B.  690.     But  of.  §  112.  46   Tex.    551 ;    Wheeler   v.    Bedell,    40 

4.  2  Smith  Lead.  Cas.  239,  251,  Mich.  693;  Aldine  Mfg.  Co.  v.  Barn- 
Hare  &  Wall,  notes;  Buckley  v.  Buck-  ard,  84  Mich.  632,  48  N.  W.  280. 
ley,  11  Bari).  43;  Davis  v.  Moss,  30  Intention  an  important  element  in 
Penn.  St.  3f46;  Trull  v.  Fuller.  28  determining  fixture.  Book  3,  N.  Y. 
Me.  545;   HarknesS  v.  Sears,  26  Ala.  Rpts.,  Bender  Ed.,  n.,  p.  33. 

11  161 


§  115  THE  LAW  OF  PEKSONAL  PROPERTY.        [  PART  II. 

in  the  emblements  we  have  been  considering,  if  not  in  heirlooms 
too. 

§  115.     Slight  or  Constructive  Annexation. 

And,  in  regard  to  the  method  of  annexation,  we  may  observe 
further,  that  some  things  which  come  within  the  rule  of  fixtures 
are  but  very  slightly  annexed  to  the  freehold.  Thus  the  doors, 
windows,  blinds,  and  shutters,  the  locks,  bolts,  and  bars  of  a  house 
can  generally  be  removed  at  any  time  without  the  slightest  damage 
to  the  freehold ;  and  yet  these  usually  pass  with  the  land,  so  that 
the  occupier  cannot  remove  them  against  the  owner's  consent.^ 
Their  fit  connection  as  an  incident  to  the  enjoyment  of  the  house 
comes  doubtless  into  great  consideration.  Certain  heavy  articles, 
on  the  other  hand,  like  mirrors,  pictures,  bookcases,  and  ward- 
robes, though  strongly  fastened  to  the  wall  by  screws,  are  usually 
mere  chattels.''  "  The  difficulty  is  somewhat  increased,"  says 
Chief  Justice  Shaw,  "  when  the  question  arises  in  respect  to  a  mill 
or  manufactory,  where  the  parts  are  often  so  arranged  and 
adapted,  so  ingeniously  combined,  as  to  be  occasionally  connected 
or  disengaged  as  the  objects  to  be  accomplished  may  require."  ^ 

Instances  of  slight  annexation  to  the  freehold  come  very  closely 
to  what  has  long  been  styled  constructive  annexation,  of  which  an 
instance  given  in  the  old  reports  is  that  of  a  man  who  has  a  mill, 
and  the  miller  takes  the  stone  out  of  the  mill  to  pick  it,  in  order 

6.  But  doors,  mantels  and  other  erence  to  the  pedestal  rather  than  to 
things  purchased  for  a  building  and  the  statue  itself.  Snedeker  v.  War- 
placed  in  it,  but  not  yet  affixed  to  it,  ring,  2  Kern.  170.  See  also  Oakland 
are  not  fixtures.  Blue  v.  Gunn,  114  Cemetery  Co.  v.  Bancroft,  161  Penn. 
Tenn.  414,  87  S.  W.  408,  69  L.  R.  A.  St.  197,  28  Atl.  1021,  as  to  a  monu- 
892,  108  Am.  St.  Rep.  912,  4  Ann.  ment  erected  on  a  cemetery  lot.  The 
Cas.  1157.  rule    of    adaptation    or    fitness    here 

7.  Park  v.  Baker,  7  Allen,  78  ;  Mc-  applies. 

Keage   v.   Hanover   Fire   Ins.   Co.,   81  8.  Winslow  v.  Merchants'  Ins.  Co., 

N.  Y.  38.    But  a  colossal  statue,  rest-  4  Met.  314.     Supra,  note,  p.  160.     See 

ing  by   its   own   weight   on   a   perma-  1  Wms.  Ex'rs.,  10th  ed.  566;  Walms- 

nent  pedestal,  has  been  treated  as  a  ley  v.  Milne,  7  C.  B.  N.  s.   138. 
fixture  irremovable,  perhaps  with  ref- 

162 


CHAP.  VI.]  FliXTURES.  §    116 

to  make  it  grind  better;  here,  although  the  stone  is  severed  from 
the  mill,  yet  it  remains  parcel  of  the  mill,  and  is  treated  accord- 
ingly.^ This  is  analogous  to  the  doctrine  of  constructive  sever- 
ance, of  which  we  have  already  spoken  at  some  length.^ 

§  115a.  Purposes  cf  Improvement;  Pecuniary  Considerations, 
etc. 
In  considering,  las  we  should,  the  intent  with  which  a  chattel 
was  annexed  to  the  realty,  pecuniary  estimates  may  aid  the 
criterion.  If  the  annexation  was  made  for  the  purpose  of  per- 
manently improving  the  realty  and  enhancing  its  value,  the  subse- 
quent removal  of  the  thing  is  not  to  be  favored ;  ^  and  such  a 
purpose  may  be  readily  raised  against  the  owner  of  land,  who 
increases  or  enlarges  the  buildings  on  his  premises,  or  places 
machinery  and  appliances  in  his  own  mill  to  carry  out  better  the 
obvious  objects  of  its  erection."'  If,  again,  the  worth  of  the  realty 
at  the  date  of  annexation  will  be  sensibly  lessened  by  removing 
the  thing,  as  by  badly  disfiguring  the  building  or  injuring  the 
soil,  this  bears  against  the  right  of  taking  away  the  annexation, 
and  even  against  a  mutual  consent  to  its  removal.  But  portable- 
ness,  on  the  other  hand,  fitness  for  a  ready  and  beneficial  use  else- 
where, and  the  fact  that  the  thing  may  be  taken  away  without 
impairing  sensibly  the  value  of  the  realty,  all  favor  the  theory  that 
the  parties  thus  mutually  consented,  as  numerous  cases  show. 

§   116.     Assent  to  the  Annexation;    Act  of  Severance. 

Chattels  affixed  to  the  realty  without  the  consent,  actual,  im- 

9.  Liford's  Case,  11  Co.  50  b.    And  1  S.  E.  525;  Atchison  R.  v.  Morgan, 

see   Wadleigh    v.    Janvrin,    41    N.    H.  43  Kan.  23,  21  Pac.  809,  4  L.  R.  A. 

503 ;   Mott  V.  Palmer,   1  Comst.   564 ;  284,  and  cases  cited. 
Patton  V.  Moore,  16  W.  Va.  428.     So  3.  Fificld    v.    Farmers'    Bank,    148 

cars  used  in  connection  with  a  brick-  111.  163,  35  N.  E.  802.     The  rights  of 

yard  are  constructively  annexed  to  it,  one    ^vho    improved,    not    being    the 

Curran  v.  Smith,  37  111.  App.  69.  owner   of   the   land,   should   be   more 

1.  See  supra,  §§  4,  100;  also  §  116  favorably  regarded  than  in  case  of  the 
post.  owner.       See    Atchison,    &c.,    Ry.    v. 

2.  Foote  V.   Gooch,   96   N.   C.   265;  Morgan,  42  Kan.  23,  4  L.  R.  A.  284. 

163 


§  116  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

plied,  or  constructive  of  their  owner,  we  may  here  add,  do  not  by 
their  annexation  become  part  of  the  realty  so  as  to  divest  him  of 
his  title.'^  Things  otherwise  annexed  may,  however,  acquire  the 
nature  of  removable  fixtures,  or  may  become  jper  se  part  of  the 
realty  instead.  Manifest  intention  of  the  parties  may  give  them 
the  one  or  the  other  character  decisively.^  But  all  the  parties 
concerned  may  expressly  agree  that  things  originally  personal  in 
their  nature  shall  remain  subject  to  removal  where  they  are  so 
attached  to  the  realty  as  to  be  fairly  capable  of  subsequent  detach- 
ment, and  this  notwithstanding  the  detachment  be  more  or  less 
injurious  to  the  thing  or  to  the  freehold.^  Either  an  express 
agreement  of  the  parties  to  this  eifect,  or  attendant  circumstances 
which  make  their  mutual  intention  thus  evident,  may  be  held 
binding  upon  all  who  come  within  scope  of  the  agreement.^  A 
fixture  may  by  rightful  severance  become  a  chattel  once  more ;  ^ 
but  a  purely  temporary  or  accidental  severance,  not  intended  to 
be  permanent,  or  the  wrongful  severance  by  another,  will  not 
divest  the  thing  of  its  former  legal  character.^     Of  course,  fixtures, 

4.  Cochran  v.  Flint,  57  N.  H.  514;  8.  Sampson  v.  Graham,  96  Penn. 
Globe  Mills  v.  Quinn,  76  N.  Y.  23;  St.  405.  As,  e.  g.,  stoves  put  away 
Shoemaker  v.  Simpson,  16  Kan.  43.  for  the  summer.  Blethen  v.  Towle, 
And    see    D'Eyncourt   v.    Gregory,    L.  40  Me.  310. 

E.  3  Eq.  382.  9.  Williamson    v.    New    Jersey    R., 

5.  See  14  IST.  J.  L.  395;  Wall  v.  29  K  J.  Eq.  311;  Patton  v.  Moore, 
Hinds,  4  Gray,  256;  Strickland  v.  16  W.  Va.  428.  And  see  swpra,  §  115, 
Parker,  54  Me.  266;  Perkins  v.  as  to  constructive  severance.  Fenc- 
Swank,  43  Miss.  349 ;  Ford  v.  Cobb,  ing  materials,  accidentally  detached 
20  N.  Y.  344.  While  there  is  a  doubt,  from  the  rence  to  whchi  they  be- 
the  presumption  is  that  the  article  longed,  held  a  part  still  of  the  free- 
remains  personal  property.  Hill  v.  hold.  Goodrich  v.  Jones,  2  Hill 
Wentworth,  28  Vt.  428.  (N.    Y.),    142.       And    see    Bishop    v. 

6.  Warner  v.  Kenning,  25  Minn.  Bishop,  11  N".  Y.  123;  9  C.  E.  Green, 
173;  Smith  V.  Waggoner,  50  Wis.  155 ;  260:  Wadleigh  v.  Janvrin,  41  X.  H. 
Tifft  V.  Horton,  53  N.  Y.  377;  Eaves  503. 

V.   Estes,   10   Kan.   314;    Meigs's   Ap-  As   to   the  rights  -where   an   owner 

peal,   62   Penn.    St.   28 ;    Kinkhead  v.  consents  to  the   annexation,   but  not 

United  States,  150  U.  S.  483.  to    the    change    of    property,    quaere. 

7.  Sword  V.  Low,  122  111.  487,  13  But  while  in  such  a  case,  supposing 
N.  E.  286;  Tyson  v.  Post,  108  N.  Y.  no  change  of  property  takes  place 
217,  15  N.  E.  316.    See  §  124  a.  as  between  the  owner  and  the  person 

164 


CHAP.  VI.]  FIXTURES.  §    117 

under  any  such  rule  of  intention  in  the  annexation,  are  distin- 
guishable from  such  closer  things  as  enter  into  and  form  parts  of 
a  structure  upon  the  land,  such  as  lumber,  stone,  shingles,  and 
brick,  which  are  fully  incorporated  with  a  building  and  make  an 
integral  part  of  it. 

I  117.  General  Conclusion  as  to  Determining  the  Right  to  Take 
Away. 
Various  considerations,  then,  are  to  be  applied  in  determining 
whether  the  right  to  take  away,  under  the  law  of  fixtures,  shall  or 
shall  not  be  granted  in  a  particular  case.  Thus,  the  nature  of 
the  thing  in  question ;  the  use  to  which  it  is  put ;  its  adaptiveness 
to  a  temporary  or  permanent  enjoyment  of  the  freehold;  the 
situation  of  the  party  making  the  annexation;  the  intention  of 
such  party,  and  to  some  extent  that  of  the  owner  of  the  land,  too ; 
an  intention  which  is  either  fairly  mutual  or  sustained  by  the 
character  of  the  annexation.  The  contract  of  these  parties  may 
sometimes  aid  in  solving  difficulties  of  this  sort;  so  may  a  local 
custom  which  both  are  presumed  to  have  regarded.  The  probable 
injury  to  the  freehold  in  case  of  a  removal,  and,  on  the  other 
hand,  the  advantages  likely  to  accrue  if  the  thing  is  suffered  to 
remain,  enter  also  as  proper  elements  into  consideration.  And, 
finally,  the  specific  purpose  or  object  of  the  annexation  must  be 
regarded;  whether  for  the  purpose  of  trade,  or  for  agriculture, 
or  for  ornament  and  convenience,  or  for  the  general  improvement 
of  the  estate;  or,  as  sometimes  happens,  for  all  these  combined. 
Few  decisions,  therefore,  can  be  considered  of  absolute  authority 
in  succeeding  cases,  even  where  the  fixtures  are  of  a  similar  denom- 
ination. Every  case  depends,  more  or  less,  upon  its  ovsti  special 
and  peculiar  circumstances.^ 

affixing  them,   still,   as   to  third   per-  soil    as   realty    is   don  led    in    "55    Ind. 

sons,    and    for    particular    purposes,'  470. 

the    usual    consequences   may    follow.  1.  See  Walmsley  v.  Milne,  7  C.  B. 

See  57  N.  H.  544,  with  citations.    The  n.   s.   115;    1  Wms.   Ex'rs,   10th  Enfr. 

right  to  reple\'y  as   personal   chattels  ed.    552;    Wood   v.    Hewott,    8    Q.    B. 

what  a  wrong-doer  has  affixed  to  the  913;   Mather  v.   Frascr,  2  Kay  &  J. 

165 


§  119         THE  LAW  OF  PERSONAL  PEOPEETY.       [PAET  II. 

§  118.     Situation  of  Contending  Parties;    Various  Classes, 

The  leading  principles  which  relate  to  the  law  of  fixtures  are 
usually  classified  according  to  the  situation  of  the  contending 
parties.  And  Lord  Ellenborough,  in  the  important  case  of  Elwes 
V.  Maw,  mentions  three  classes  of  cases,  where  disputes  may  arise : 
first,  between  heir  and  executor;  second,  between  life-tenant  and 
the  remainderman  or  reversioner;  third,  between  landlord  and 
tenant.^  Let  us  consider  these  classes  in  order.  But  questions 
of  this  same  sort  arise  in  other  instances :  as  between  vendor  and 
vendee,  mortgagor  and  mortgagee,  and  personal  representative  and 
devisee. 

§   119.     Right    to    Remove    Fixtures    as    Between    Heir    and 
Executor. 

And,  first,  of  the  right  to  remove  fixtures,  as  between  heir  and 
executor;  presuming  that  the  person  who  owned  and  annexed  the 
chattels  has  meantime  died.  Here  the  rule  obtains  with  the 
utmost  rigor  in  favor  of  the  soil,  and  against  the  right  to  disannex 
and  carry  away.^  The  heir  has  been  a  great  favorite  of  the  com- 
mon law  from  the  earliest  times.  And  Sheppard's  Touchstone, 
one  of  the  most  accurate  of  the  old  treatises,  lays  it  down  that 

536;  Grady  Fixtures,  12-14;  Hill  Fix-  Corcoran    v.    Webster,    50    Wis.    125; 

tures,  20-29,  and  cases  cited,  passim;  Griffin  v.  Ransdell,  71  Ind.  440. 

Crippen    v.    Morrison,    13    Mich.    23;  Things  fixed  in  the  ground  are  not 

Walker   v.    Sherman,    20   Wend.   639;  personalty    in    the   sense    of    being   a 

3  Dane  Abr.  156;  2  Smith  Lead.  Cas.  subject   of   larceny.      It    is   necessary 

217.        Long-continued        localization  that  the   act  of  taking  away  should 

alone  does  not  make  a  personal  chat-  not  be   one   continuous   act   with   the 

tel  become  realty.     Keeler  v.  Keeler,  act  of  severance  or  other  act  by  which 

31  N.  J.   Eq.   181.     As  to  permitting  the  thing  becomes  a  chattel.     Bovill, 

oral   statements  to  modify  a  written  c.  J.,  in  L.  R.  1  C.  C.  315.     And  see 

contract    in    determining    whether    a  supra,  §  100. 
thing  was  understood  to  be  a  fixture, 
see  Taylor   v.    Collins,    51    Wis.    123. 
One  may  by  acts  and  conduct   estop 

himself  from  asserting  that  the  things  3.  See  Morrison  v.  Berry,  42  Mich, 

are    part    of   the    real    estate,    as   by  389,   4   N.   W.   731.   36   Am.   St.   Rep. 

executing  a  chattel  mortgage  thereof.  446. 

166 


2.  3  East,  38.      See  2   Smith  Lead. 
Cas.  240. 


CHAP.  VI.]  FIXTURES.  §    119 

"  an  executor  or  administrator  shall  not  have  the  incidents  of  a 
house,  as  glass,  doors,  wainscot,  and  the  like,  no  more  than  the 
house  itself;"  and  among  such  incidents  it  enumerates  "glass 
windows  annexed  with  nails  or  otherwise  to  the  windows,  the 
wainscot  fixed  bj  nails,  screws,  or  irons  put  through  the  posts  or 
walls,  tables  dormant,  furnaces  of  lead  and  brass,  and  vats  in  a 
brew  and  dye  house,  standing  and  fastened  to  the  walls,  or  stand- 
ing in  and  fastened  to  the  ground  in  the  middle  of  the  house 
(though  fastened  to  no  wall),  a  copper  or  lead  fixed  to  the  house, 
the  doors  within  and  without  that  are  hanging  and  serving  to  any 
part  of  the  house."  '^  But  if  the  glass  be  out  of  the  windows,  or 
there  is  loose  wainscot,  or  doors  more  than  are  used  that  are  not 
hanging,  or  the  like,  these  things  go  to  the  executor  or  adminis- 
trator.^ 

The  strictness  of  the  ancient  rule  in  this  respect  was  afterwards 
modified  to  some  extent  in  the  case  of  fixtures  wholly  or  in  part 
essential  to  trade.  The  earliest  mentioned  instance  of  this  sort  is 
the  celebrated  but  somewhat  apocryphal  case  of  the  cider-mill, 
tried  before  Chief  Baron  Comyns ;  nowhere  reported,  though  fre- 
quently alluded  to  in  later  years.  Here  it  would  seem  that  the 
mill  was  deep  in  the  ground  and  fastened  to  the  freehold ;  yet  it 
was  held  to  be  personal  property;  probably  because  it  was  a 
species  of  trade  fixture.  Hardwicke,  Kenyon,  Ellenborough,  and 
Buller  afterwards  lent,  as  it  would  seem,  the  additional  weight  of 
their  names  to  authority  so  weighty.^  But  Lord  Mansfield,  in 
the  case  of  certain  vessels  which  were  used  in  salt-works,  and 
known  as  salt-pans,  decided  in  favor  of  the  heir  "  on  the  reason 
of  the  thing  and  the  intention  of  the  testator."  By  this  decision 
the  cider-mill  precedent  received  a  great  shock.  But  a  still  more 
fatal  blow  came  when  the  House  of  Lords  decided  the  case  of 

4.  Shep.  Touch.  469,  470.  Bill.   N.   P.    34;    Dean   v.    Allalley,   3 

5.  lb.  470;  Amos.  &  Fer.  Fixtures,  Esp.  N.  P.  11.  Tubs  and  vats  used  in 
154  ct  seq.;  Wentw.  Ex'rs,  62.  a  brewery  have  been  held  to  be  real 

6.  See  Lawton  v.  Lawton,  3  Atk.  state,  however,  Equitable  Trust  Co. 
14:     Lord    Dudley    v.    Tx)rd    Warde,  v.  Christ,  47  Fed.  756. 

Ambl.    114;    Elwes    v.    Maw,    supra; 

1G7 


§  119         THE  LAW  OF  PEESONAL  PROPERTY.       [PABT  H. 

Fisher  v.  Dixon,  which  went  up  on  final  appeal  within  the  recol- 
lection of  lawyers  lately  living.  Here  the  deceased,  who  had  been 
engaged  in.  working  mines,  left  at  his  death  a  valuable  property, 
consisting  of  engines,  colliery  utensils,  rails,  &c.,  employed  in  his 
business.  Upon  full  argument  it  was  decided  that  the  property 
went  to  the  heir  and  not  the  executor.^  Lords  Brougham,  Cot- 
tenham,  and  Campbell,  all  of  whom  delivered  opinions  in  this 
case,  alluded  to  the  cider-mill  precedent,  but  only  to  show  their 
contempt  for  its  authority.  And  the  doctrine  they  laid  down  was 
that  the  encouragement  to  trade  is  not  applicable  to  questions 
ordinarily  arising  between  heir  and  executor  with  respect  to  fix- 
tures.^ And  such  may  be  pronounced  the  latest  English  rule  for 
all  cases  of  this  nature.  In  this  country  the  rule  is  by  no  means 
so  definitely  settled ;  but  the  law  in  this  respect  is  doubtless  quite 
strict,  save  where,  as  in  Xew  York,  the  legislature  has  interposed 
on  behalf  of  the  executor.^ 

Concerning  ornamental  fixtures,  as  between  heir  and  executor, 
the  rule,  though  anciently  strict,  has  varied  somewhat ;  with, 
perhaps,  an  increasing  liberality  towards  the  executor.  A  dis- 
tinction appears  to  have  been  early  taken  in  chancery  between 
pictures  and  mirrors  fastened  in  the  ordinary  manner,  and  such 
as  were  so  let  into  the  wainscot  that  the  house  must  come  to  the 
heir  "maimed  and  disfigured"  by  their  removal.^  Furnaces, 
though  purchased  with  the  house,  and  hangings,  though  nailed  to 
the  wall,  were  allowed  to  be  taken  away  in  cases  decided  as  long 
ago  as  the  beginning  of  the  eighteenth  century.^  And  Lord  Hard- 
wicke  and  others  relaxed  in  favor  of  ornamental  chimney-pieces, 
tapestry,  iron  backs  to  chimneys,  and  the  like,  which  might  be 
taken  without  injuring  the  fabric  of  the  house. ^     But  contrary 

7.  Fisher  v.   Dixon,   12   CI.   &   Fin.       Muzzey,  13  Gray,  56;   Tuttle  v.  Rob- 
312.    And  see  Wood,  V.  C,  in  Mather       inson,  33  N.  H.  104. 

V.  Fraser,  2  Kay  &  J.  536.  1.  Cf.   Cave  v.   Cave,   2   Vern.   508, 

8.  lb.  and  Beck  v.   Rebow,   1   P.   Wms.   94; 
».  See   2   Kent   Com.    345    and   n.;       1  Wms.  Ex'rs,  10th  ed.  552. 

House    V.    House,    10    Paige,    157;    2  2.  Squier  v.  Mayer,   2   Freem.   249. 

N.   Y.    Rev.    Stats.,    §§    6-8;    Fay   v.  3.  See  Dudley  v.  Warde,  Ambl.  113; 

168 


CHAP,  VI.] 


riXTUEES. 


§  121 


dicta  are  to  be  foimd  in  several  modern  instances;  and  the  com- 
mon-law courts  seem  to  have  favored  the  inheritance  more  than 
the  courts  of  chancery.'* 

§  120.  Right  to  Remove  Fixtures  as  Between  Life-tenant  and 
Remainderman,  etc. 
!N^ext,  of  the  right  to  remove  fixtures  as  between  life-tenant  and 
the  remainderman  or  reversioner.  Here  the  law  favors  the  soil 
rather  less,  and  the  representative  desiring  to  disannex  rather 
more.^  Yet  there  is  little  authority  for  our  guidance  here,  save 
so  far  as  analogy  furnishes  the  rule.^ 

§   121.     Right  to  Remove  Fixtures  as  Between  Landlord  and 
Tenant. 
As  between  landlord  and  tenant,  the  right  to  remove  fixtures  is 


Harvey  v.   Han-ey,    2    Stra.    1141;    1 
Wms.  Ex'rs,  10th  Eng.  ed.  552. 

4.  See  2  Smith  Lead.  Cas.  246,  247; 
Winn  V.  Ingilby,  5  B.  &  Aid.  625; 
Colegrave  v.  Dios  Santos,  2  B.  &  C. 
76.  A  heavy  stove  connected  with 
brickwork,  held  to  pass  to  the  heir. 
Tuttle  v.  Robinson,  33  N.  H.  104. 
As  to  manure  produced  on  the  prem- 
ises and  fit  for  use  in  the  course  of 
husbandry,  the  heir  is  favored  against 
the  executor,  even  though  the  manure 
be  piled  and  not  incorporated  with 
the  soil.  Fay  v.  Muzzey,  13  Gray,  53. 
But  the  manure  of  a  livery  stable  is 
rather  to  be  treated  as  assets,  being 
more  in  the  nature  of  merchandise. 
Fay  V.  Muzzey,  lb.  See  also  Snow  v7 
Perkins,  60  N.  H.  493. 

5.  Harkness  v.  Sears,  26  Ala.  493, 
62  Am.  Dec.  742. 

6.  Two  cases  of  this  sort  came  be- 
fore Lord  Chancellor  Hardwicko;  and 
in  both  of  them  he  permitted  a  steam 
or  fire  engine,  erected  in  a  colliery,  to 


go  as  assets  to  the  executor  of  a  life- 
tenant.  The  "  case,"  he  observes, 
"  being  between  executor  of  tenant 
for  life  or  in  tail  and  a  remainder- 
man, is  not  quite  so  strong  as  be- 
tween landlord  and  tenant,  yet  the 
same  reason  governs  it,  if  tenant  for 
life  erects  such  an  engine."  Dudley  v. 
Warde,  Ambl.  113.  And  see  Lawton 
V.  Lawton,  3  Atk.  13.  This  doctrine 
has  since  been  commended  as  Sound 
by  Lord  Mansfield  and  others.  See 
Lawton  v.  Salmon,  1  H.  Bl.  260,  n.; 
Elwes  V.  Maw,  3  East,  54;  2  Smith 
Lead.  Cas.  245 ;  Amos  &  Fer.  Fixtures, 
128.  But  where  articles,  such  as 
tapestry  and  marbles,  belonging  to 
one  tenant  for  life,  remain  on  the 
premises  detached  at  his  death,  the 
next  tenant  for  life  cannot,  by  at- 
taching them  to  the  freehold,  preju- 
dice or  affect  the  rights  of  his  suc- 
cessors. D'Eyncourt  v.  Gregory,  L. 
R.  3  Eq.  382. 


169 


§  121  THE  LAW  OF  PERSONAL  PROPEETY.       [PART  IL 

still  further  relaxed ;  and  the  old  rule,  that  whatever  is  affixed  to 
the  soil  belongs  to  the  soil,  here  admits  of  numerous  exceptions. 
It  is  observable  that,  unlike  the  former  instances,  a  tenant  pays  for 
his  occupation  and  has  himself  put  in  the  fixtures/  Whatever 
the  law  allows  to  be  removed  in  the  two  former  classes  of  cases 
may  unquestionably  be  removed  in  the  present  class ;  and  now  let 
us  see  how  much  more  liberally  the  tenant's  right  is  regarded. 

The  tenant's  right  to  remove  articles  annexed  for  trade  pur- 
poses was  asserted  as  early  as  the  time  of  the  Year  Books.^  But 
the  earliest  positive  authority  in  point  is  Poole's  Case^  decided 
before  Lord  Holt  in  Queen  Anne's  reign;  which  has  since  been 
recognized  in  a  series  of  modern  decisions.  Here  a  soap-boiler 
had  set  up  certain  vats,  &c.,  upon  the  premises  occupied  by  him; 
and  it  was  held  that  during  the  term  he  might  well  remove  such 
as  he  had  set  up  in  relation  to  trade,  and  this,  too,  by  the  common 
law  (and  not  by  virtue  of  any  special  custom)  in  favor  of  trade 
and  to  encourage  industry;  further,  that  there  was  a  difference 
between  what  the  soap-boiler  erected  to  carry  on  his  trade,  and 
what  for  completing  the  house,  as  hearths  and  chimney-pieces, 
which  last  were  not  removable.^  This  case  was  followed  by  many 
others,  which  asserted  the  same  general  policy  in  favor  of  trade, 
and  applied  it  in  a  similar  manner.^  Among  the  later  adjudica- 
tions, in  England  and  this  country,  to  a  like  result,  are  to  be  found 
those  of  a  baker's  oven  ;  salt-pans ;  factory  machines ;  cider-mills ; 
steam-engines  ;  calenders ;  platform-scales ;  a  hydraulic  press ; 
copper  stills  erected  to  carry  on  the  business  of  a  distillery,  though 
fixed  to  the  building;  a  stone  for  grinding  bark,  affixed  to  a  bark 
mill;  iron  boilers  and  tanks  upon  a  brick  foundation;  and 
machinery  in  general  which  is  useful  to  the  tenant  elsewhere,  and 

7.  Gray,  J.,  in  Bainway  v.  Cobb,  1.  See  Lawton  v.  Salmon,  1  H.  Bl. 
gg  Mass.  459.  260,  n. ;   Ehves  v.   Maw,   3   East,   54; 

8.  See  2  Smith  Lead.  Cas.  240,  eit-  Dean  v.  Allalley,  3  Esp.  N.  P.  11; 
ing  42  E.  III.,  fo.  6;  20  H.  VII.,  fo.  Fitzherbert  v.  Shaw.  1  H.  Bl.  528; 
13.  Penton  v.  Robart,  2  East,  90 ;  2  Smith 

9.  1  Salk.  368,  2  Anne.  Lead.     Cas.  241;   Amos.  &  Fer.  Fix- 

tures, 37  et  seq. 

170 


CHAP.  VI.] 


FIXTURES. 


§  121 


may  be  removed  witiiout  serious  injury  to  the  premises.  And  as 
to  buildings,  Dutch  barns,  standing  on  a  foundation  of  brickwork 
in  the  ground;  a  varnish-house  for  carrying  on  a  varnish-manu- 
factory, built  on  a  brick  foundation,  with  a  chimney ;  a  dye-house 
bolted  into  the  ground ;  and  even  a  ball-room  resting  upon  stone 
posts  slightly  imbedded  in  the  soil.^  All  these  furnish  examples 
of  articles  well  annexed  to  the  freehold,  which  a  tenant  has  been 
allowed  to  carry  away,  as  his  trade  fixtures  (or,  as  it  is  sometimes 
said,  his  personal  property),  rather  than  leave  them  for  his  land- 
lord to  enjoy.  Intention,  nevertheless,  express  or  implied,  is  of 
the  essence  of  all  such  cases,  as  elsewhere  with  reference  to 
fixtures,  wherever  it  is  apparent."' 


2.  See  Taylor  Landl.  and  Ten.,  5th 
ed.,  §  545,  where  authorities  are  fully 
cited;  Taylor  v.  Townsend,  8  Mass. 
416;  Talbot  v.  Whipple,  14  Allen, 
177;  Holmes  v.  Tremper,  20  Johns. 
29;  Swift  V.  Thompson,  9  Conn.  63; 
R.  V.  Otley,  1  B.  &  Ad.  161;  Taffe  v. 
Warniek,  3  Blackf.  111.  And  see 
Walker  v.  Sherman,  20  Wend.  636, 
passim.  See  also  Hill  Fixtures,  2d 
ed.  30-34;  Finney  v.  Watkins,  13 
Miss.  291;  Harlan  v.  Harlan,  15  Penn. 
St.  507;  Brown  v.  Wallis,  115  Mass. 
156;  Cooper  v.  Johnson,  143  Mass. 
108.  Steam-engine,  machinery,  &c., 
for  hauling  coal  from  mines,  allowed 
to  be  taken  away.  Dobschuetz  v. 
Holliday,  82  111.  371.  And  see  Hol- 
brook  V.  Chamberlin,  116  Mass.  155, 
where  the  lessee  was  permitted  to  re- 
move counter-shafting,  pulleys,  hang- 
ers', belts,  a  portable  boiler,  steam- 
pipes  supported  by  hooks,  &c.  Ac- 
cessories to  mining  operations,  in- 
cluding cheap  dwellings  for  the  min- 
ers, as  well  as  engines,  &c.,  are  al- 
lowed to  be  removed  as  trade  fix- 
tures in  Conrad  v.  Saginaw  Co.,  54 
Mich.  249;  20  N.  W.  39.  See  also 
Walker  v.  Grand  Rapids  Flour  Mills, 


70  Wis.  92,  35  N.  W.  332.  Whether 
an  article  has  been  affixed  to  a  build- 
ing so  as  to  become  a  part  of  it  is  a 
mixed  question  of  law  and  fact. 
Houle  V.  Abramson,  210  Mass.  83, 
96  N.  E.  77.  Even  rails,  buildings  or 
stone  piers  may  belong  to  tlie  tenant 
who  placed  them  on  the  premises. 
Wiggins  Ferry  Co.  v.  R.  Co.,  142  U.  S. 
396,  12  Sup.  Ct.  188,  35  L.  Ed.  1055. 
A  ventilator  may  be  ruled  to  be  part 
of  the  real  estate  even  as  between 
landlord  and  tenant.  Natural  Auto- 
force  Co.  v.  Winslow,  215  Mass.  462, 
102  N.  E.  705.  Heavy  looms  and 
other  machinery  used  in  a  worsted 
mill  may  be  either  real  estate  or  per- 
sonal property  and  this  is  a  question 
of  fact.  Stone  v.  Livingston,  222 
Mass.  192,  110  N.  E.  297. 

3.  See  Linahan  v.  Barr,  41  Conn. 
471. 

"  It  is  clear  that  the  decisions  fall 
into  some  one  of  three  classes: 

1.  Those  where  the  chattel  has  been 
so  afiixcd  that  its  identity  is  lost  or 
.so  annexed  that  it  cannot  be  removed 
without  material  injury  to  the  real' 
estate   or  to   itself. 

2.  Those   articles   which   are  man!- 


171 


§  121 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  II. 


But  while  the  tenant  may  carry  away  such  trade  fixtures  as  are 
removable  without  material  injury  to  the  freehold,  he  cannot  avail 
himself  of  this  right  so  far  as  to  be  permitted  to  restore  the  prem- 
ises in  a  dilapidated  and  damaged  condition.  It  cannot  be  "  for 
the  benefit  of  trade"  that  landlords  should  be  despoiled  by  their 
tenants.  Lord  Hardwicke  suggests  two  maxims:  (1)  that  the 
principal  thing  shall  not  be  destroyed  by  taking  away  the  acces- 
sory; (2)  that  an  article  must  be  deemed  part  of  the  premises 
where  the  premises  cannot  subsist  without  it."*  If,  then,  a  trade 
fixture  cannot  be  removed  by  the  tenant  without  the  destruction 
or  perhaps  only  the  serious  mutilation  of  some  important  building 
which  is  itself  part  of  the  freehold,  it  is  held  irremovable.^ 

Trade  fixtures  are  not  in  all  cases  easily  distinguished  from 
agricultural  fixtures.  Where  husbandry  is  pursued  as  a  business 
occupation  there  are  several  important  cases  which  recognize  the 
exclusive  right  of  the  tenant  to  carry  away  what  he  has  set  into 
the  soil.^     The  case  of  nurserymen  and  gardeners  we  have  else- 


festly  furniture  as  distinguished  from 
improvements. 

As  regards  these  two  classes  the 
facts  rebut  all  other  evidence  of  in- 
tention to  the  contrary. 

3.  Those  cases  where  intention  is 
the  controlling  fact  and  where  such 
fact  is'  to  be  determined  upon  consid- 
eration of  all  the  circumstonces,  in- 
eluding  therein  the  adaptation  to  the 
end  sought  to  be  accomplished,  and 
the  means,  form  and  degree  of  an- 
nexation." Per  Pierce,  J.,  in  Stone 
V.  Livingston,  222  Mass.  192,  110  N.  E. 
2ff7. 

4.  See  Lawton  v.  Lawton,  3  Atk. 
15.  And  see  Elwes  v.  Maw,  3  East, 
38. 

5.  See  2  Smith  Lead.  Cas.  241; 
Wall  v.  Hinds,  4  Gray,  270;  Taylor 
Landl.  and  Ten.,  5th  ed.,  §  544.  See 
Foley  v.  Addenbrooke,  13  M.  &  W. 
174;    Beers    v.    St.    John,    16    Conn. 


322.  It  seems  a  fairer  rule  that  the 
tenant  might  remove  the  thing  in 
such  a  case,  provided  he  indemnified 
the  landlord  against  the  damage.  The 
fact  that  he  can  use  the  thing  advan- 
tageously elsewhere  favors  the  right 
to  remove.     §  115  a. 

6.  Thus,  it  was  decided  in  the  Su- 
preme Court  of  the  United  States,  in 
1829,  that  a  wooden  building  erected 
by  a  tenant  with  a  view  to  carry  on 
the  business  of  dairyman  might  be 
removed  by  him  during  the  term, 
although  it  was  two  stories  high  in 
front,  with  a  shed  of  one  story,  a 
cellar  of  stone  or  brick  foundation, 
and  a  brick  chimney,  and  was  occu- 
pied by  his  family  and  servants  en- 
gaged in  the  dairy  business.  Van 
Ness  V.  Pacard,  2  Pet.  140.  pei-  Story, 
J.  There  was  some  evidence  in  this 
case  to  prove  usage  and  custom,  whioK 
may  have  influenced  the  result. 


172 


CHAP.  VI.]  FIXTURES.  §    122 

where  considered.^  But  Lord  Ellenborongli,  disregarding:  the 
dicta  of  L'ord  Kenyon,  his  predecessor,  refused  to  allow  a  tenant 
to  take  away  his  farm  erections,  for  the  reason  that  annexations 
for  the  purposes  of  trade  should  be  distinguished  from  annexations 
for  the  benefit  of  agriculture.^  The  law  of  -agricultural  fixtures 
is  therefore  left  in  uncertainty;  though  we  have  some  aid  from 
legislation,  which-  favors  the  tillage  of  land  and  tends  to  establish 
the  law  of  the  tenant's  trade  and  agricultural  fixtures  on  a  like 
liberal  footing.^ 

Manure  made  upon  a  farm  from  the  consumption  of  its  products 
and  in  the  course  of  husbandry  is.  we  have  seen,  usually  regarded 
in  this  country  as  real  estate.^  But  in  England,  and  in  some  of 
the  United  States,  the  outgoing  tenant  may  carry  away  manure 
like  any  removable  fixture.^  And  manure  made  in  a  livery-stable 
belongs  to  the  lessee,  and  not  to  the  owner  of  the  premises.^ 
Manure  not  made  on  land  in  the  course  of  husbandry  but  as  part 
of  a  cattle-raising  business  is  personalty."^ 

§   122.     The  Same  Subject. 

In  some  of  the  old  cases  the  right  of  a  tenant  to  remove  articles 
set  up  by  him  for  ornament  or  convenience  is  denied.^     But  such 

7.  Supra,  §  100.  Goodrich  v.  Jones,  2  Hill,  N.  Y.  142; 

8.  Elwes  V.  :Ma\v,  3  East,  38.  And  Kittredge  v.  Woods,  3  N.  H.  503; 
see  Buckland  v.  Butterfiold,  2  B.  &  Lassell  v.  Reed,  6  Greenl.  222;  Mid- 
B.  58.  dlebrook   v.    Corwin,    15    Wend.    169; 

9.  See  Story,  J.,  in  Van  Ness  v.  Parsons  v.  Camp,  11  Conn.  525 ; 
Pacard,  2  Pet.  137;  Whiting  v.  Bras-  Lewis  v.  Jones,  17  Penn.  St.  262;  1 
tow,  4  Pick.  310;  Taylor  Landl.  and  Washb.  Real  Prop.  6.  See  Gallagher 
Ten.,  §  548;   14  &  15  Vict.,  c.  25,  §  3  v.  Shipley,  24  Md.  418. 

(1851)  ;  2  Smith  Lead.  Cas.  242.  2.  Ruckman  v.  Outwater.  4  Dutch. 

Agricultural  fixtures  are  treated  as  581;  1  Wms.  Ex'rs,  10th  Eng.  od.  554; 

personalty   and   the  tenant  given  the  Roberts  v.   Barker,  1   Cr.   &   M.   809 ; 

right  to   remove    them    in    Sassen   v.  Smithwick  v.  Ellison,  2  Ire.  326. 

Haegle,  165  Minn.  441,  147  N.  W.  445,  3.  Plumer  v.  Plumer,  10  Fost.  558. 

52  L.  R.  A.    (N.  S.)    1176.  4.  Snow  v.  Perkins,  60  N.  H.  493. 

1.  Fay  V.  Muzzey,  13  Gray,  53 ;   2  5.  4  Co.  64;   Poole's  CaSe,  1   Salk. 

Kent  Com.   346,  347,  and  n.;   supra,  368.       But   see    Squier    v.    Mayer,    2 

p.  160 ;  Daniels  v.  Pond,  21  Pick.  367 ;  Freem.  249. 

173 


§  122  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

.fixtures  are  now  clearly  removable.  Thus,  hangings,  tapestry, 
wainscot,  chimney-pieces,  beds  fastened  to  the  ceiling,  furnaces, 
coppers,  window  blinds  and  curtains,  stoves,  cupboards,  pumps, 
temporary  partitions,  cisterns,  sheds,  grates,  door-plates,  coffee- 
mills,  and  bells,  all  these  things  being  useful  to  the  tenant  else- 
where, placed  on  the  premises  as  his  own  things,  and  severable 
with  no  great  diflSculty  or  damage,  have  been  taken  by  an  outgoing 
tenant  with  the  asnction  of  the  courts.^  "  Gas-fixtures,"  as  they 
are  called,  and  chandeliers,  may  be  removed-  likewise.^  Steam 
radiators  and  their  valves,  connecting  with  and  detachable  from 
the  general  steam-heating  apparatus  of  a  building,  follow  a  similar 
rule.^  But  as  to  substantial  additions  to  the  house  and  permanent 
erections,  it  is  quite  different ;  and  even  water  and  gas-  pipes  laid 
in  the  ground,  or  in  the  walls ;  and  sometimes  fk»ors,  doors,  and 
windows, — these  being  peculiarly  adapted  to  the  house  and  going 
towards  its  completion,  while  of  little  use  elsewhere,  compared 
with  the  damage  which  must  ensue  from  their  removal, —  are 
withheld  from  the  tenant  and  remain  with  the  owner  of  the  soil.^ 
Sometimes  the  articles  annexed  are  themselves  of  a  mixed 
nature,  and  may  be  regarded  as  combining  the  qualities  of  both 
domestic   and   trade   fixtures.^     We   have   already  seen   that   the 

6.  See  Amos  &  Fer.  Fixtures,  71-  Eich.  135 ;  McKeage  v.  Hanover  Fire 
93,  and  cases  cited;  2  Smith  Lead.  Ins.  Co.,  81  N.  Y.  38;  Vaughen  v.  Hal- 
Cas.  242,  243;  Taylor  Landl.  and  Ten.,  deman,  33  Penn.  St.  522;  supra,  §  113. 
§  547,  «and  cases  cited;  Penry  v.  8.  Bank  v.  North,  160  Penn.  St. 
Brown,  2  Stark.  N.  P.  403;   R.  v.  -St.  303,  28  Atl.  694. 

Dunstan,  4  B.  &  C.  686 ;  Wansbrough  9.  See  Philbrick  v.  Ewing,  97  Mass. 

V.  Maton,  4  Ad.  &  E.  884;   Ex  parte  133;   Gas  Co.  v.  Thurber,  2  R.  I.  15. 

Quincy,  1  Atk.  477 ;  Lyde  v.  Russell,  As  to  electric  arrangements,  se€   132 

1  B.  &  Ad.  39'4;   Peck  v.  Batchelder,  Penn.    St.    363;    Capehart   v.    Foster, 

40  Vt.  233;   Wall  v.  Hinds,   4  Gray,  61  Minn.  13-2,  61  N.  W.  257. 

256;  Hill  Fixtures,  2d  ed.  41-45;  Cub-  Plate    glass    windows    and    marble 

bins  V.  Ayres,  4  Lea,  329.  trimmings  attached  by  screws  cannot 

Tenant    allowed     to    remove     coal-  be  removed  by  the  tenant.     Alden  v. 

bin,    stairway,    banisters,    closet,    &c.,  Mayfield,   166   Cal.   793,   127   Pac.   44. 

placed  by  him  on  the  premises.     See-  1.  As  where  one  who  leases  a  build- 

ger  V.  Pettit,  77  Penn.  St.  437.  ing    for    a    hotel    and    boarding-house 

7.  Wall  V.  Hinds,  4  Gray,  256 ;  79  puts  in  a  cistern  and  sinks,  fastened 
Penn.  St.  40&;  Montague  v.  Dent,  10  by  nails,  or  set  into  the  floor  by  cut- 

174 


CHAP.  VI.]  FIXTURES.  §    122 

executor  is  privileged  in  respect  of  ornamental  fixtures  as  against 
the  heir;  much  more,  then,  is  a  lessee  for  years  as  against  his 
own  landlord.  But  fixtures  which  do  not  fall  within  the  fore- 
going classes,  and  which  the  tenant  has  erected  for  the  manifest 
purpose  of  the  perm'anent  general  improvement  of  the  premises 
he  occupies,  cannot  be  removed ;  ^  as  where  he  replaces  erections."' 
Furthermore,  the  right  of  removing  fixtures  may  be  controlled 
by  local  custom  or  the  express  contract  of  the  parties.'*  And 
where  the  question  is  between  landlord  and  tenant,  we  must  see 
whether  they  have  executed  a  lease,  with  covenants  concerning 
fixtures.^  Thus  a  veranda  erected  by  the  lessee  was  held  to  be 
irremovable,  because  of  the  covenant  on  his  part  to  keep  in  order 
buildings  and  improvements,  and  yield  up  the  same  in  good  repair 
at  the  end  of  the  term.^  And  there  are  other  decisions  of  a  simi- 
lar character.''  The  landlord  sometimes  covenants  to  take  fixtures 
at  a  valuation  at  the  end  of  the  term.^  Of  course,  the  stipulations 
of  leases  greatly  vary;  and  with  them  the  tenant's  right  to  fix- 
tures.^    In  New  York  it  is  considered  that  the  acceptance  of  an 

ting  away  the  boards;  and  water  and  versy.      Buckland     v.     Butterfield,     2' 

gas    pipes    fastened    to    the    walls    by  Brod.  &  B.  54. 

hooks  and  bands,  and  passing  through  3.  Felcher   v.   McMillan,    103    Mich. 

holes  cut  in  the  floor  and  partitions.  494,  61  N.  \V.   791. 

See  Wall  v.  Hinds,  4  Gray,  256;  Tay-  4.  Supra,  §  32. 

lor  Landl.  and  Ten.,  §   547;   Ombony  5.  Taylor   Landl.   and  Ten..   §   549; 

V.  Jones,  19  N.  Y.  234.  Lawton    v.    Lawton,    3    Atk.    14,    n.; 

2.  Thus,  in  an  English  case,  where  Amos  &  Fer.  Fixtures-,  92. 

a    tenant    for    years    ^ad    put    up    a  6.  Penry  v.  Brown,  2  Stark.  N.  P. 

conservatory  on  a  brick   foundation,  355. 

attached     to    a    dwelling-house,     and  7.  Naylor  v.  Collinge,  1  Taunt.  19; 

communicating   with    it    by    windows  Mansfield    v.     Blackburne,     8*    Scott, 

opening  into  the  conservatory   and  a  720;    Bishop   v.   Dlliott,   11    Ex.    113;' 

flue  passing  into  the  parlor  chimney,  Dumergue  v.  Rumfeey,  2  Hurl.  &  Colt, 

it  was  held  that  the  building  belonged  777. 

to  the  freehold.     Here  the  tenant  for  8.  Fairburn   v.    Eastwood,    6    M.    & 

years  had  a  remainder  for  life  after  W.     679 ;     Stansfield    v.    Portsmouth 

the  death  of  the  lessor,  which  perhaps  Mayor,  6  W.  R.  296;  2  Col.  7,  273. 

accounts  for  so  singular  an  expondi-  9.  See  West  v.  Blakoway,  2   M.  A 

ture  on  his  part ;  but  he  unfortunately  Gr.   729;    Burt  v.   Haslett,    18    C.    B. 

became  a  bankrupt,  and  his  assignees  893;    Bishop  v.   Elliott,   11   Ex.    113; 

carried    off    the   buildings    in    contro-  Foley   v.    Addenbrooke,    13    M.    &   W. 

175 


§  122  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  H. 

under-lease  of  land  "  with  all  the  privileges  belonging  thereto  as 
enjoyed  hj  the  outgoing  tenant,"  does  not  subject  the  sub-lessee 
to  the  obligation  of  a  covenant,  in  the  original  lease,  to  leave  all 
buildings  which  the  lessee  might  erect  during  the  tenancy.^  In 
the  absence  of  special  contract  the  tenant  cannot  remove  fixtures 
after  the  termination  of  the  lease  by  breach  of  condition  and  re- 
entry.^    A  tenant  at  will  may  assert  a  right  to  remove  fixtures.^ 

It  should  be  borne  in  mind  that  chattels  on  the  premises  do 
not  pass  by  a  lease  of  the  realty  alone ;  -and  that  the  covenant  for 
delivering  up  premises^  in  good  condition  at  the  end  of  the  term 
has  no  application  to  personal  property.'*  Where  the  parties  to 
the  lease  agree  that  certain  articles  shall  be  removable  fixtures, 
their  intention  takes  effect.^ 

There  is  much  conflict  of  authority  where  the  tenant  takes  a 
new  lease  containing  a  covenant  to  yield  up  the  premises  in  as 
good  condition  as  when  taken,  where  the  tenant  had  previously 
installed  fixtures  under  an  agreement  that  he  should  have  the 
right  to  remove  them.  The  more  modern  doctrine,  influenced 
doubtless  by  the  injustice  of  the  opposite  rule,  is  that  the  tenant 
may  in  that  case  remove  the  fixtures.^     The  same  rule  is  always 

174;    Boyd   v.    Sliorrock,   L.   E.    5   Eq.  2.  Pugh  v.  Arton,  L.  R.  8  Eq.  626. 

72.  3.  Cooppr    V.    Johnson,    143    Mass. 

As  to  rule  of  damages  for   remov-  108,  9  N.  E.  33. 

ing  fixtures,  under  a  covenant  to  keep  4.  Holbrook     v.     Chamberlin,     116 

in   repair,   see  Watriss  v.   Cambridge  Mass.  155. 

Bank,    130   Mass.    343.      See   also,   as  6.  Booth  v.  Oliver,  67  Mich.  664,  35 

to  right  of  removal  of  trade  fixtures  N.  W.  793. 

Tinder    proviso    in    lease,    Ex    parte  Shelving    put    up   by    an    intended 

Glegg,  19  Ch.  D.  7 ;  9  111.  App.  495 ;  lessee,     pending    negotiations     for     a 

4  Lea,  329,  676;   130  Mass.  255.  lease  which   afterwards  fell   through. 

The   right   of   removing   machinery  may  be  removed  by  him.     30  Minn.  56. 

from  a  mill  at  the  end  of  the  term,  6.  Sassen  v.  Haegle,  125  Minn.  441, 

expressly    given    by    the    lease,    may  147    N.    W.    445,    32    L.    R.    A.    N.    s. 

imply  a  right  of  doing  some  damage  1176;    Kerr   v.   Kingsbury.    39    Mich, 

to  the  building.     Hunt  v.   Potter,   13  150,    33    Am.   Rep.    362 :    Second   Na- 

Rep.  176.  tional  Bank  v.   Merrill,  69  Wis.   501, 

1.  Om:bony  v.  Jones,  19  N.  Y.  234.  50  N.  W.  503,  505. 
See  §  127,  post,  as  to  time  of  remov- 
ing fixtures. 

176 


CHAP.  VI.] 


FIXTURES. 


§  123 


applied  in  the  case  of  a  tenant  holding  over  under  an  informal 
agreement.^  Many  cases  hold,  however,  that  the  taking  of  a  new 
lease  without  reserving  a  right  of  removal,  conclusively  shows  an 
abandonment  of  the  right.^  The  matter  should  depend  on  the 
intention  of  the  parties  in  each  case.^ 

§  123.     Right    to    Remove    Fixtures    as    between    Vendor    and 
Vendee. 

Questions  concerning  the  right  to  fixtures  come  up  very  fre- 
quently in  these  days  between  vendor  and  vendee,  mortgagor  and 
mortgagee,  and  personal  representative  and  devisee.  The  rule 
is  a  general  one,  that,  upon  a  sale  of  the  freehold,  any  and  all 
fixtures  attached  to  it  will  pass  as  between  vendor  and  vendee, 
unless  there  is  some  express  provision  to  the  contrary.^  For 
here  the  presumption  is  strongly  against  the  vendor,  who  should 


7.  Crandall   Investment  Co.   v.   Ul-      between  vendor  and  vendee,  see  Junkin 


yatt,  40  Col.  35,  90  Pac.  59. 

8.  Sanitary  District  v.  Cook,  169 
111.  184,  48  N.  E.  461,  39  L.  R.  A. 
369-;  Carlin  v.  Eitler,  68  Ind.  418,  13 
Atl.  370;  Watriss  v.  First  Bank  of 
Cambridge,  124  Mass.  571. 

9.  Wright  V.  MacDonnell,  88  Tex. 
140,  30  S.  W.  907. 

1.  2  Smith  Lead.  Cas.  247;  Hitch- 
man  V.  Walton,  4  M.  &  W.  409;  2 
Kent  Com.  441;  1  Washb.  Real 
Prop.  7 ;  Farrar  v.  Stackpole,  6 
Greenl.  157;  Walker  v.  Sherman,  20 
Wend.  636;  Kennard  v.  Brough,  64 
Ind.  23 ;  Sehemm«r  v.  North,  32  Mo. 
206;  Laphami  v.  Norton,  71  Me.  83; 
Connor  v.  Sqniers,  50  Vt.  680.  See 
Brannon  v.  Vauglian,  66  Ark.  87,  48 
S.  W.  909.  A  factoiy  being  sold,  its 
necessary  machinery  passes  too.  Green 
V.  Phillips,  26  Gratt.  752.  See  Cole- 
grave  v.  Dios  Santos,  2  B.  &  C.  76, 
per  Bayley,  J.;  Farrant  v.  Thomp- 
son, 5  B.  &  A.  826;  Wood  v.  Whelen, 
93    111.    153.     As   to    cotton-gin,    &c.. 


V.  Dupree,  44  Tex.  500;  Smith  v. 
Odom,  63  Ga.  499'.  For  a  case  where 
an  estate  for  years  was,  by  a  convey- 
ance to  the  lessee,  as  provided  in  the 
lease,  merged  in  the  fee,  see  Globe 
Marble  Mills  Co.  v.  Quinn,  76  N.  Y. 
23.  Machinery  put  up  for  a  terapo^ 
rary  purpose  by  another,  and  easily 
removable,  held  not  to  pass  by  a  con- 
veyance of  the  land,  but  to  remain 
a  chattel.  BeAvick  v.  Fletcher,  41 
Mich.  625.  So  with  shelving  and 
counters  long  used  in  a  store.  John- 
son V.  Mosher,  S2  Iowa,  29.  Or  plat- 
form weighing  scales  in  front  of  the 
store.  O'Donnell  v.  Burroughs,  55 
Minn.  91,  56  N.  W.  579. 

That  a  purchaser  who  is  merely  in 
possession  under  an  agreement  for  a 
deed  should  take  heed  about  annex- 
ing fixtures,  see  Moore  v.  Vallentine, 
77  N.  C.  188;  TowTie  v.  Fiske,  127 
Mass.  125;  Lapham  v.  Norton,  71 
Me.  83;  Westgate  v.  Wi.xon,  128 
Mass.  304. 


12 


177 


§  124  THE  LAW  OF  PERSONAL  PROPERTY.        [pART  II. 

expressly  reserve  from  sale  such  articles  set  up  in  the  freehold 
as  he  wishes  to  remove  for  himself;  since  a  vendee  is  not  asked 
to  make  a  purchase  of  lands  blindfold.  But  in  a  purchase  of 
premises  used  for  business  purposes,  express  reservation  as  to 
fixtures  will  protect  the  right  to  remove  them.^  And  mutual 
intention  of  the  parties  maj  conclude  any  controversy  of  this 
kind. 

§  124.     Right  to  Remove  Fixtures  as  between  Mortgagor  and 
Mortgagee. 

As  to  mortgages,  the  prevailing  rule  is,  that  they  pass  a  similar 
right  to  fixtures  as  in  the  sale  of  the  land;  in  either  of  which 
cases  there  is  a  conveyance  executed  by  the  owner  of  the  soil 
which  ought  to  state  excepted  articles.^  Hence  trade  fixtures 
which  were  upon  the  freehold  at  the  time  of  the  mortgage  pass 
with  the  land  to  the  mortgagee.'*  And  even  those  put  up  after- 
wards have  been  brought  within  the  same  rule.^  At  the  same 
time  the  language  of  the  conveyance,  whether  absolute  or  in  mort- 
gage, may  be  such,  that  upon  its  true  construction  the  vendor  or 
mortgagor  will  be   allowed  to   remove,   mortgage,   or  dispose  of 

2.  Kirch  v.  Davies,  55  Wis.  287.  ley,  44  Iowa,  57;  Coleman  v.  Stearns 
As  to  conditions  of  sale,  whereby  the  Mfg.  Co.,  38  Mich.  30 ;  Lynde  v, 
title  has  not  yet  passed,  see  Water-  Rowe,  13  Allen,  100;  Winslow  v.' 
town  Co.  V.  Davis,  5  Houst.  (Del.)  Merchants'  Ins.  Co.,  4  Met.  306; 
192;  Gill  V.  De  Arman,  90  Mich.  425,  Wood  v.  Whelen,  93  111.  153;  State 
51  N.  W.  527.  Savings   Bank   v.   Kercheval,    65    Mo. 

3.  Gawan  v.  Barclay,  4  W^  R.  81;  682;  McFadden  v.  Allen,  134  N.  Y. 
Longstaflf  v.  Meagoe,  2  Ad.  &  E.  167 ;  489,  32  N.  E.  21,  19  L.  R.  A.  446. 
W^almsley  v.  Milne,  7  C.  B.  N.  s.  115;  But  see  Hill  v.  Sewald,  53  Penn.  St. 
Amos  &  Fer.  Fixtures,  219.  But  see  271;  Roberts  v.  Dauphin  Bank,  19 
Ex  parte  Quiney,  1  Atk.  477.  Penn.   St.  71.     Cf.  42  N.  J.  Eq.  218, 

4.  Climie  v.  Wood,  L.  R.  3  Ex.  257,  700.  Appliances  of  a  permanent  char- 
and  cases  cited,  Law  Rep.  4  Ex.  328.  acter  in  a  soap  and  candle  factory  are 
See  Mather  v.  Eraser,  2  Kay  &  J.  536  ;  presumed  to  pass  under  a  mortgage 
Longbottom  v.  Berry,  L.  R.  5  Q.  B.  of  the  premises.  Lavenson  v.  Stand- 
123.  ard   Soap  Co..   80  Gal.   245,   22   Pae.' 

5.  Cullwick  V.  Swindell,  L.  R.  3  Eq.  184.  See  Seedhouse  v.  Broward,  34 
249';    Ottumwa  Woolen  Mill  v.   Haw-  Fla.  509. 

178 


CHAP.  VI.] 


FIXTURES. 


124 


articles  set  up  for  trade  or  other  purposes.^  And  he  may  treat 
as  chattels  things  placed  upon  the  premises  which  are  clearly  such 
and  things  which  there  is  no  reason  to  suppose  come  within  the 
fair  intendment  of  the  real-estate  mortgage.^  Upon  the  whole, 
evident  intention  of  the  parties  is  regarded,  with  an  inclination 
to  favor  a  bond  fide  mortgagee  of  the  land  in  cases  of  doubtful 
intention.  But  a  mortgage  of  fixtures  already  on  the  premises 
as  personal  property,  while  perhaps  operating  as  a  constructive 
severance  as  between  the  parties  thereto,  is  held  to  be  of  no  force 
against  a  subsequent  purchaser  of  the  realty  without  notice  of  its 
existence;  and  such  a  purchaser  will  take  the  land  free  from  the 
incumbrance  created  by  such  chattel  mortgage.^ 


6.  Waterfall  v.  Penistone,  6  E.  &  B. 
866.  See,  further,  1  Washb.  Real 
Prop.  7,  542,  and  cases  cited;  Walms- 
ley  V.  Milne,  7  C.  B.  N.  s.  115;  Burn- 
side  V.  Turchell,  43  N.  H.  390;  Crane 
V.  Brigham,  3  Stockt.  Ch.  30. 

7.  McConnell  v.  Blood,  123  Mass. 
47;  Wheeler  v.  Bedell,  40  Mich.  G93; 
16  Hun,  239;  Blancke  v.  Rogers,  26 
N.  J.  Eq.  563. 

8.  Bringholff  v.  Munzenmaier,  20 
Iowa,  513;  Tibbetts  v.  Home,  65  N. 
H.  242,  23  Atl.  145,  15  L.  R.  A. 
86,  n.;  Sawyer  v.  Long,  86  Me.  541, 
30  Atl.  111. 

In  the  case  of  a  sale  of  realty  with 
a  mortgage  back  by  way  of  giving  the 
vendor  a  lien  for  deferred  pajments, 
the  judicial  disposition  appears  to  be 
to  favor  annexations  as  existing  for 
the  vendor's  better  securitj';  Morris's 
Appeal,  88  Penn.  St.  368;  Central 
Branch  R.  v.  Fritz,  20  Kan.  430 ;  but 
it  is  highly  proper  in  all  such  trans- 
actions to  make  both  a  real  and  a 
chattel  mortgage  by  way  of  full  secu- 
rity for  fixtures.  See  Zcller  v. 
Adams,  30  N.  J.  Eq.  421;  Merrill  v. 
Wyman,  80  Me.  491. 


Title  to  the  realty  and  fixtures 
may  become  united  in  one  person  by 
a  purchase  subject  to  an  existing 
mortgage.  Jones  v.  Chair  Co.,  38 
Mich.  92. 

Among  articles  which  have  been  re- 
garded as  fixtures  belonging  to  the 
realty  for  the  mortgagee's  security, 
unless  reserved  in  the  mortgage,  are 
the  following:  platform  scales  fas- 
tened to  sills,  &c.,  Arnold  v.  Crowder, 
81  111.  56;  machinery,  apparatus,  &c., 
of  a  mortgaged  brick-yard  and  saw- 
mill, New  Orleans  v.  Globe  Ins.  Co., 
27  La.  Ann.  657 ;  machinery  added 
under  an  option  to  purchase  not  com- 
plied with,  Hamilton  v.  Huntley,  78 
Ind.  521;  a  pump  planted  in  the 
ground  and  connected  to  pipes,  Goss 
V.  Helbing,  77  Cal.  190,  19  Pac.  277; 
the  fastened  bar  of  a  saloon,  Wood- 
ham  V.  First  Nat.  Bank,  48  Minn.  67, 
50  N.  W.  1015.  See  also  Smith  v. 
Blake,  96  Mich.  542,  55  N.  W.  978. 
But  not  an  embossing  press  owned 
and  put  in  by  a  lessee  of  the  mort- 
gagor, Pope  V.  Jackson,  65  Me.  162T 
nor  machinery  carefully  kept  apart 
as  personal  property,  for  the  security 


179 


124a 


THE  LAW  OF  PEKSONAL  PROPERTY. 


[part  II. 


§  124a.     Secret     Arrangements:     Subsequent     Parties    without 
Notice. 

As  to  subsequent  purchasers  or  mortgagees  of  land  to  which 
another's  chattels  have  been  annexed,  the  rule  is  that  seasonable 
notice  of  arrangements  which  had  previously  existed  for  regarding 
such  chattels  as  removable  fixtures,  affect  them  accordingly;  for 
the  incumbrance  has  here  entered  into  their  own  arrangements.^ 
But  without  seasonable  or  prior  notice  such  hond  fide  parties  for 
value  are  protected;  and  no  private  arrangement  between  the 
owner  of  such  realty  and  one  who  has  permitted  his  chattel  to  be 
so  annexed  as  to  appear  physically  a  part  of  it,  that  the  thing 
shall  remain  the  seller's  personal  property  until  paid  for,  can  prej- 
udice the  subsequent  purchaser  or  mortgagee  of  the  premises 
unaware  of  it.^     But  purchasers  at  a  judicial  sale  stand  in  the 


of  the  chattel  seller  or  mortgagee, 
TifFt  V.  Horton,  53  N.  Y.  377;  Eaves 
V.  Estes,  10  Kan.  314;  nor  unfastened 
casks,  hogsheads,  fermenting  tubs, 
and  a  copper  cooler,  used  in  a  brew- 
ery. Wolford  V.  Baxter,  33  Minn.  12. 
And  see  Early  v.  Burtis,  40  N.  J.  Eq' 
501;  Maguire  v.  Park,  140  Mass.  21; 
Carpenter  v.  Walker,  140  Mass.  416; 
Huston  V.  Clark,  162  Penn.  St.  435. 
A  mortgage  of  a  machine  shop  covers 
machines,  pulleys,  and  shafting, 
ibolted  or  screwed  to  the  building  or 
to  blocks  bolted  to  the  building ;  also 
essential  parts  of  the  machinery,  al- 
though they  can  be  detached  there- 
from without  injury.  But  it  does  not 
cover  machines  which  are  not  fas- 
tened to  the  floor,  but  are  supported 
by  their  own  weight;  nor  machines 
which  are  fastened  to  benches,  al- 
though run  from  the  shafting;  nor 
vises  screwed  to  benches,  although  the 
benches  are  nailed  to  the  building. 
Pierce  v.  George,  108  Mass.  78.  And 
see  Ottumwa  Co.  v.  Hawley,  44  Iowa, 
57.     Upon  the  usual  principle  as  be- 


tween mortgagor  and  mortgagee,  it  is 
held  that  an  engine  and  boiler,  put 
up  after  a  mortgage  of  the  premises 
was  given,  constitute  part  of  the 
mortgage  security,  and  cannot  be 
afterwards  removed  by  the  mortgagor 
or  his  assigns,  to  the  mortgagee's  in- 
jury. Roberts  v.  Dauphin  Deposite 
Bank,  19  Penn.  St.  71.  As  to  an  ele- 
vator, see  McGorrish  v.  Dwyer,  78 
Iowa,  2:9',  43  N.  W.  215,  5  L.  R.  A. 
294,  n. 

9.  Walker  v.  Schindel,  58  Md.  360; 
Ingersoll  v.  Barnes,  47  Mich.  104; 
Hawkins  v.  Hersey,  86  Me.  394. 

1.  Southbridge  Savings  Bank  v. 
Exeter  Machine  Works,  127  Mass. 
542;  Fifield  v.  Farmers'  Bank,  148 
111.  163,  35  N.  E.  802.  A  chattel 
mortgage,  semble,  does  not  affect  the 
case.  148  111.  163;  Cochrane  v.  Mc- 
Demiott  Advertising  Agency,  6  Ala. 
App.  121,  60  So.  421:  Thompson  v. 
Smith,  111  Iowa,  718,  83  N.  W.  789; 
Wickes  Bros.  v.  Hill,  115  Mich.  333, 
73  K  W.  375.  The  same  result  is 
reached  where  a  chattel  mortgage  is 


180 


CTIAP,  VI.J  FIXTURES.  §    125- 

stead  of  the  judgment  debtors  and  become  affected  by  intervening 
rights  without  notice  at  all.^  What  appears  physically  to  be 
personal  property,  however,  may  well  be  protected  to  the  true 
owner,  and  a  subsequent  mortgagee  or  purchaser  of  the  land  has 
notice  from  that  very  circumstance.^ 

Manifestly,  in  many  cases  it  may  depend  altogether  upon  the 
agreement  or  the  special  relation  of  the  parties  to  the  annexation 
whether  or  not  a  chattel  detachable  from  the  realty  has  become 
an  immovable  fixture.'*  But  while  they  themselves  become 
estopped  in  such  a  case  to  deny  that  the  property  was  what  they 
agreed  it  should  be,  third  parties  without  notice  or  assent  stand 
unaffected.^ 

§  125.     Right  of  Fixtures  as  between  Personal  Representative 
and  Devisee. 

As  between  personal  representative  and  devisee,  the  rule  is 
that  a  testator  may  devise  such  fixtures  as  are  severable  from  the 
freehold,  and  which  would  go  to  his  personal  representative  to 
the  exclusion  of  the  heir ;  but  if  the  estate  itself  be  not  devisable, 
things  which  are  attached  to  it  will  not  pass  under  a  devise  of 
them.  Hence,  it  is  held  that  if  a  tenant  for  life  or  in  tail  devise 
fixtures,  his  devise  is  void,  for  he  had  no  power  to  devise  the 
real  estate  to  which  they  are  incident.^  It  would  seem,  however, 
that  where  a  testator  had  a  devisable  interest,  a  devise  of  the 
house  would  pass  the  fixtures,  although  not  expressly  named ; 
unless,  indeed,  things  could  be  readily  considered  personal  estate, 

recorded,  as  a  purcliaser  of  land  can-  nell    v.    Burroughs,    55    Minn.    91,    56 

not  be  expected  to  search  for  personal  N.  W.  579. 

j)roperty  liens.    Bringholff  v.  Mungur-  4.  See     Warner     v.     Kenning,     25 

niaier,     20    loAva,     513;     Tibbetts    v.  Minn.   173;    Robertson  v.   Corsett,   39 

Home,    65    N.    H.    242,    23    Atl.    145;  Mich.     777;     Booraem    v.     Wood,     27 

Fifield   V.    Farmers'   Nat'l   Bank,    148  N.  J.  Eq.   371;    Tillman  v.   De   Lacy, 

III.  163,  35  N.  E.  802.  SO  Ala.   103. 

2.  Manwaring  v.  Jenison,  Gl   Mich.  5.  Cross  v.  Weare  Co.,  153  III.  499, 
120,  27  N.  W.  899.  38  N.  E.   1038. 

3.  See  Case  Mfg.  Co.  v.  Garven,  45  6.  Shep.  Touch.  469,  470:  4  Co.  62. 
Ohio  St.   289,   13  N.   E.   4ff3 ;   O'Don- 

181 


§  126  THE  LAW  OF  PEKSONAL  PROPERTY.        [pART  II. 

SO  as  to  go  to  the  executor.^  The  rights  of  the  devisee  of  lands 
against  the  executor  of  the  devisor  would  seem,  on  principle, 
to  be  the  same  as  those  of  the  heir  in  whose  place  the  devisee 
stands.^  The  intention  of  the  will  is  to  prevail,  however,  as  in 
other  cases.^ 

§  126.     Right  of   Fixtures  in  Miscellaneous  Instances. 

Questions  respecting  the  right  to  fixtures  have  also  arisen 
between  the  assignees  of  bankrupts  and  mortgagees,  or  other  par- 
ties. Bankruptcy  statutes  may  differ,  and  decisions  of  the  courts 
with  them.  But,  generally  speaking,  the  assignees  of  a  bankrupt 
tenant  would  be  entitled  to  whatever  interest  in  the  fixtures  the 
bankrupt  himself  possessed.^ 

The  same  strict  rule  which  holds  true  as  between  heir  and 
executor,  vendor  and  vendee,  mortgagor  and  mortgagee,  has  been 
applied  as  between  tenants  in  common  on  a  division.^  Also 
between  heir  or  vendee  of  husband  and  his  widow  in  respect  to 
the  dower  premises.^  Also  between  debtor  and  creditor,  where 
the  latter  levies  for  debt  upon  the  land  of  the  former."^  One's 
rights  to  remove  things  annexed  to  land  which  he  had  good  reason 
to  suppose  his  own,  but  of  which  he  was  dispossessed  afterwards, 

7.  See  Colegrave  v,  Dios  Santos,  2  a  lease  vested  in  the  bankrupt.  Ex 
B.  &  C.  80;  2  Smith  Lead.  Cas.  248.  parte   Stephens,    7    Ch.   D.    127.      See 

8.  2  Smith  Lead.  Cas.  248.  See  also  Collier  on  Bankruptcy,  11th  Ed. 
Stuart  V.  Bute,  3  Ves.  212.  2.  Parsons  v.  Copeland,  38  Me.  537. 

9.  See  Wood  v.  Gaynon,  1  Ambl.  A  joint  ownership  of  a  chattel  pro- 
395;  Lushington  v.  Sewell,  1  Sim.  tected,  notwithstanding  annexation  to 
435.  We  have  seen  that,  in  the  case  the  soil  of  one  of  them;  their  inten- 
of  emblements,  a  devisee's  right  is  tion  being  upheld.  Young  v.  Baxter, 
quite  favorably  regarded,  upon  the  55  Ind.  188.  See,  as  to  treatment  of 
presumed  intention  of  the  testator  to  fixtures  on  dissolution  of  a  partner- 
give  the  land  and  all  incidental  bene-  ship,  Seeger  v.  Pettit,  77  Penn.  St. 
fits.     Supra,  §  106.  437. 

1.  See  Trappes  v.  Harter,  3   Tyrw.  3.  Powell  v.  Monson  Co..   3  Mason, 

603;  Horn  v.  Baker,  9  East,  215;  Ex  459;  1  Washb.  Real  Prop.  7. 

parte  Cotton,  2  M.  D.  &  De  G.  725;  4.  Goddard  v.  Chase,  7  Mass.  432; 

In    re    Richards,    L.    R.    4    Ch.    630.  Farrar  v.  Chauffetete,  5  Denio,  527. 
Trustee  in  bankruptcy  may  disclaim 

182 


I 


CHAP.  VI.] 


FIXTURES. 


§  126a 


bj  one  with  superior  title,  deserve  indulgence.^  And  so,  too, 
when,  pending  some  negotiation  or  honest  dispute  of  title,  one 
annexes  his  personalty  to  the  other's  land,  with  the  latter's 
acquiescence.^ 

§  126a.     Latest  Test  of  Fixtures;   General  Conclusion. 

Our  latest  cases  incline  to  make  contemporaneous  intent  of  the 
parties  in  an  annexation  the  most  important  test  of  a  fixture,  and, 
wherever  such  intent  was  clear,  to  consider  it  conclusive  as  be- 
tween themselves.'^  The  same  test  may  apply  to  heirlooms  and 
emblements,  as  already  shown ;  ^  and  custom  and  statute  defini- 
tion become  ingredients  of  intention.  Where  the  mutual  inten- 
tion was  not  clear,  however,  presumptions  apply;  and  here 
circumstances  and  external  indications  are  resorted  to,  such  as 


5.  See  Atchison,  &c.,  R.  R.  v.  Mor- 
gan, 42  Kan.  23,  22  Pac.  995,  4  L.  R. 
A.   2S4. 

6.  Brown  v.  Baldwin,  121  Mo.  126, 
25  S.  \V.  863;  Stout  v.  Stoppel,  30 
Minn.  56.  See  as  to  a  trespasser's 
annexation,  Hatton  v.  Kansas  City 
R.,  253  Mo.  660,  162  S.  W.  227. 

7.  Portland  v.  N.  E.  T.  &  T.  Co., 
103  Me.  240,  68  Atl.  1040;  Niagara 
Falls  Co.  V.  Schermerhorn,  60  Misc. 
209,  111  N.  Y.  S.  576;  Crocker- 
Wheeler  Co  V.  Genessee  Recreation 
Co.,  160  App.  Div.  373,  145  N.  Y.  S. 
477;  Mercantile  Co.  v.  Winer,  94 
Kan.  573,  146  Pac.  1162 ;  Saye  v.  Hill, 
100  S.  C.  21,  84  S.  E.  307;  E.  Af 
Kinsey  Co.  v.  Heckermann,  224  Fed. 
308,  139  C.  C.  A.  544;  Melton  v. 
Fullerton  Co.,  214  N.  Y.  571,  108  N. 
E.  849.  (Agreement  as  to  perma- 
nent erections)  Ferguson  v.  O'Brien, 
76  N.  H.  192,  81  Atl.  479;  Hatton  v. 
Kansas  City  R.,  253  Mo.  660,  162  S. 
W.  227;  Daniel  v.  Streeby,  77  Wash. 
414,  137  Pac.  1025.  L.  R.  A.  1915  F. 
634,  n.;    Saye  v.  Hill,   100  S.  C.  21, 


84  S.  E.  307;  Fred  W.  Wolf  Co.  v. 
Hermann  Sav.  Bank,  108  Mo.  App. 
549,  153  S.  W.  1094  Earle  v.  Kelly, 
21  Cal.  App.  480,  132  Pac.  262;  Red 
Diamond  Clothing  Co.  v.  Steidemann, 
169  Mo.  App.  306,  152  S.  W.  609 
(lessor's  oral  consent)  ;  Radigan  v. 
Hughes,  86  Conn.  536,  86  Atl.  220 
(heirs  or  devisees)  ;  Bannerot  v. 
Bannerot,  238  Pa.  606,  86  Atl.  489; 
Valdes  v.  Altapacia,  225  U.  S.  58,  32 
Sup.  Ct.  664;  Roderick  v.  Sanborn,- 
106  Me.  159,  76  Atl.  263,  30  L.  R.  A. 
N.  s.  1189,  n.;  In  re  Hawkslone  Street, 
137  App.  Div.  630,  122  N.  Y.  S.  316;' 
Matthews  v.  Hanson,  19  N.  D.  692, 
124  N.  W.  1116. 

In  general  the  transitory  occupier 
of  premises  is  favored  in  trade  or 
domestic  removable  fixtures  beyond 
such  other  as  vendor  or  mortgagor. 
Armstrong  Co.  v.  Refrigerating  Co., 
184  Fed.  199,  107  C.  C.  A.  93  ;  Forbes 
V.  Alabama  Machinery  Co.,  176  Ala. 
423,  58  So.  398;  Excelsior  Co.  v. 
Smith.  108  N.  Y.  510,  92  N.  E.  1084. 

8.  Supra,  c.  5. 


183 


§  12Ga 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  TI. 


the  adaptation  of  the  thing  annexed  to  the  ordinary  use  of  the 
land,  the  purpose  of  annexation,  and  the  readiness  of  a  removal 
without  substantial  injury  to  the  freehold.^  If  the  parties  con- 
cerned hold  a  simple  contract  relation  together  —  'as  in  the  case 
of  lessor  and  lessee  —  the  rule  is  readily  applied  for  the  most 
part ;  but  where  exterrial  rights  are  to  be  considered,  presumptions 
must  be  less  favorable  to  the  annexor,  unless  the  third  person 
actually  assented,  or  at  least  had  due  notice  of  fixture  claims, 
before  being  prejudiced  in  his  own  interests;  or  where  the  thing 
to  be  removed  remained  clearly  a  chattel  still.  ^     And  in  any  case 


9.  In  re  Craig  Co.,  201  Fed.  548; 
Ochs  V.  Tilton,  181  Ind.  81,  103  N.  E. 
837 ;  Squire  v.  Portland,  106  Me.  234, 
76  Atl.  679,  30  L.  R.  A.  N.  s.  576,  n,;' 
Hoover  Co.  v.  City  of  Atlantic,  163 
Iowa,  380,  144  N.  W.  635;  North- 
western Lumber  Co.  v.  Parker,  135 
Minn.  107,  145  N.  W.  964;  New 
Castle  Theater  Co.  v.  Ward,  57  Ind. 
App.  473,  104  N.  E.  526  (as  to  theat- 
rical settings)  ;  Red  Diamond  Cloth- 
ing Co.  V.  Steidemann,  169  Mo.  App. 
306,  152  S.  W.  609  (effect  of  renew- 
ing lease)  ;  Spalding  v.  Columbia 
Theater  Co.,  189  Mo.  App.  629,  175 
S.  W.  269;  Robinson  v.  Harrison,  237 
Pa.  135,  85  Atl.  879;  Clark  Co.  v. 
Shelton,  208  Mass.  284,  94  N.  E.  399 
(rightful  occupier  of  premises)  ;  Kil- 
gore  V.  Lyle,  30  Okla.  596,  120  Pac. 
626   (fences,  gutters,  etc.). 

1.  Hook  V.  Bolton,  199  Mass.  244, 
85  N.  E.  175,  17  L.  R.  A..N.  s.  699,  n. 
(gas  stove  easily  removable)  ;  Crowell 
V.  Jones,  167  N,  C.  386,  83  S.  E.  557; 
Shiels  V.  Byrd,  108  App.  Div.  112, 
153  N.  Y.  S.  728  (purchaser  at  fore- 
closure sale)  ;  New  Jersey  v.  Cruse, 
90  Atl.  673  (N.  J.  Ch.)  (mortgagee 
of  land  and  mortgagee  of  machinery)  ; 
Northwestern  Lumber  Co.  v.  Parker, 
125  Minn.  107,  145  N.  W.  964   (Min- 


nesota rule  as  to  vendor  and  vendee)  ; 
Hanson  v.  Kelly,  156  \\'is.  509,  146 
N.  W.  512;  Wolf  v.  Hermann  Sav. 
Bank,  168  Mo.  App.  549,  153  S.  W. 
1094  (conditional  sale)  ;  Horn  v. 
Clark  Hardware  Co.,  54  Col.  522,  101 
N.  E.  152  (third  person's  rights); 
Merrell  v.  Garver,  54  Ind.  App.  514, 
101  N.  E.  152  (life  tenant  and  re- 
mainderman) ;  Detroit  Steel  Co.  v. 
Sistersville  Co.,  195  Fed.  447,  118  C. 
C.  A.  664;  Crocker-Wheeler  Co.  v. 
Grenessee  Recreation  Co.,  134  N.  Y.  S." 
61  (Sup.  Ct.  S.  T.  1912);  McFeron 
V.  Doyens,  59'  Ore.  366,  IIG  Pac.  1063; 
Detroit  Steel  Co.  v.  Sistersville  Co., 
195  Fed.  447,  118  C.  C.  A.  664  (steel 
tanks  in  brewery)  ;  Arctic  Ice  Mach. 
Co.  v.  Armstrong  County  Trust  Co., 
192  Fed.  114,  112  C.  C.  A.  458  (ice 
machine)  ;  Igoe  v.  Hansen,  238  Pa. 
144,  85  Atl.  1131,  29  L.  R.  A.  N.  S. 
958  (timely  notice  to  purchaser  of 
land)  ;  Robinson  Codfish  Co.  v.  Porter 
Fish  Co.,  75  Wash.  181,  134  Pac.  811; 
Kirke  v.  Crystal,  193  N.  Y.  622,  86 
N.  E.  1126. 

Record  of  a  chattel  mortgage  no 
constructive  notice  as  against  mort- 
gagee of  land.  Elliott  v.  Hudson,  18 
Cal.  App.  642,  124  Pac.  108. 

Agreement  to  remove  fixtures  i&  a 


184 


CHAP.  VI,] 


FIXTURES. 


§   127 


law  and  facts  are  blended  in  all  questions  of  fixtures  and  tem- 
porary or  permanent  annexation.^ 

§  127.     Time  Within  Which  Fixtures  Should  be  Removed. 

Two  important  points  are  observable  with  regard  to  the  right 
of  removal  of  fixtures:  first,  the  time  within  which  they  should 
be  removed;  second,  the  liability  to  repair  all  injuries  caused  by 
their  removal.  As  to  the  first  point,  the  common  period  of  limi- 
tation was  established  as  early  as  the  time  of  Henry  VII.,  so  far 
as  concerns  landlord  and  tenant:  namely,  before  the  tenant's  term 
expires.  So  long  as  the  term  lasts,  or  at  least  before  the  tenant 
quits  possession,  he  may  take  away  the  fixtures ;  but  if  he  suffers 
them  to  remain  on  the  premises  afterwards,  they  become  the 
property  of  the  landlord  or  reversioner.^     Down  to  Lord  Kenyon's 


personal  covenant  merely.  Dunavant 
V.  Fields,  68  Ark.  534,  60  S.  W.  421. 
2.  Henry  Clay  Co.  v.  Barkley,  160 
Ky.  153,  169  S.  W.  747;  Triumph  Co. 
V.  Patterson,  211  Fed.  244,  127  C.  C. 
A.  612  {machinery  for  manufacture)  ; 
Saye  v.  Hill,  100  S.  C.  21,  84  S.  E. 
307  (mere  rest  of  a  structure  upon 
foundation)  ;  Geppelt  v.  Middle  West 
Stone  Co.,  94  Kan.  560,  146  Pac. 
1157;  Power  v.  Garrison,  141  Ga. 
429,  81  S.  E.  225  (vendor  and  ven- 
dee) ;  New  Castle  Theater  Co.  v. 
Ward,  57  Ind.  App.  473,  104  N.  E. 
526  (forfeiture  of  case)  ;  Ochs  v.  Til- 
ton,  181  Ind.  81,  103  N.  E.  837;  Hick- 
man V.  Booth,  131  Tenn.  32,  173  S.  W. 
438  (Tennessee,  as  to  a  telephone)  ; 
Red  Diamond  Clothing  Co.  v.  Steide- 
mann,  IGff  Mo.  App.  306,  152  S.  W. 
609;  Earle  v.  Kelly,  21  Cal.  App.  480, 
132  Pac.  262  (agricultural  fixtures)  ; 
McOwen  v.  Zimmerman,  133  N.  Y.  S. 
461  (App.  T.  1912)  (steam  heating 
plant)  ;  Hook  v.  Bolton,  199  Mass. 
244,  85  N.  E.  175,  17  L.  R.  A.  N.  s. 


699,  n.  (question  of  gas  fixtures  left 
to  jury)  ;  Barry  v.  Woodbury,  205 
Mass.  592,  81  N.  E.  902;  Cornell- 
Andrews  Smelting  Co.  v.  Boston  &  P. 
R.  Corporation,  209  Mass.  298,  95 
N.  E.  887;  In  re  Williamsburg  Knit- 
ting Mill,  190  Fed.  871,  113  C.  C.  A. 
87  (permanency  of  attachment)  ; 
Natural  Ventilator  Co.  v.  Winslow, 
215  Mass.  462,  102  N.  E.  705;  Hurst 
V.  J.  D.  Craig  Furniture  Co.,  95  C.  C. 
221,  78  S.  E.  960. 

3.  Year  Book,  20  Henry  VII.,  fo. 
13.  pi.  24.  See  Taylor  Landl.  and 
Ten.  5th  ed.,  §  551,  and  notes;  Lee  v. 
Risdon,  7  Taunt.  191;  Ehves  v.  :Maw, 
3  East,  38;  Lyde  v.  Russell,  1  B.  & 
Ad.  394;  Pemberton  v.  King,  2  Dev. 
376;  Gaffield  v.  Hapgood,  17  Pick. 
192;  Preston  v.  Briggs,  16  Vt.  124; 
Beers  v.  St.  John,  16  Conn.  322; 
Haflick  V.  Stobcr,  11  Ohio  St.  482; 
Hill  Fixtures,  2d  ed.  50-59;  Dubois  v. 
Kelloy.  10  Barb.  406:  Sampson  v. 
Camperdown  Mills,   64   Fed.  939. 


185 


§  127  THE  LAW  OF  PEESONAL  PROPERTY.        [pART  II. 

time,  the  tenant's  right  was  considered  to  be  strictly  limited  to 
his  term.  But  Lord  Kenyon  suggested  that  this  rule  had  its 
foundation  in  a  presumed  abandonment  on  the  tenant's  part; 
which  presumption  might  be  overthrown  by  the  fact  that  he 
remained  beyond  the  expiration  of  his  term  instead  of  quitting 
and  leaving  the  fixtures  behind  him.'*  The  rule  therefore,  as 
afterwards  modified,  became,  that  the  tenant  might  remove  fixtures 
for  his  term,  and  for  such  further  period  of  possession  as  he  held 
the  premises  under  a  right  still  to  consider  himself  as  tenant.^ 
The  exact  meaning  of  this  expression  is  not  quite  clear ;  one  may 
remain  over  as  a  tenant  at  will  after  his  lease  expires  and  thus 
prolong  his  right;  but  certainly  an  outgoing  tenant  cannot  enter 
for  the  purpose  of  severance  and  removal  after  his  term  has 
expired,  and  a  new  tenant  is  let  into  possession  besides.*^  It 
behooves  one  who  holds  under  a  term  of  years,  therefore,  to  use 
caution,  lest  he  become  deprived  of  his  privilege  through  his  own 
default;  and  whether  he  means  to  renew  the  lease  and  acquire  a 
fresh  interest  in  the  premises,  or  to  leave  his  fixtures  behind,  to 
be  bought  by  the  incoming  tenant,  after  he  has  quitted  possession, 
prudence  suggests  that  he  comes  seasonably  to  a  distinct  written 
understanding  with  his  landlord,  unless  custom  gives  him  the 
right.^  For  the  rule  appears  to  be  that  the  lessor  takes  title  to 
all  fixtures  which  an  outgoing  tenant  leaves  without  reserving  the 
right  of  removal.^ 

4.  Penton  v.  Robart,  2  East,  88.  Thresher  v.   East  London   W.   \V.,   2 

5.  lb.;   Weeton  v.  Woodcock,  7   M.       B.  &  C.  608. 

&   W.    14;    Lewas   v.    Ocean    Co.,    125  8.  See,  for  an   instance  where  this 

N.   Y.   341,   26   N.   E.   301 ;    Morey  v.  rule  was  applied  notwithstanding  the 

Hoyt,  62  Conn.  542,  26  Atl.  127.     See  lessor's  apparent  permission,  Josslyn 

Eoffey  V.  Henderson,  17  Q.  B.  574.  v.   McCabe,   46   Wis.    591.      It   is  not 

6.  Leader  v.  Homewood,  5  C.  B.  enough  to  have  merely  detached  the 
N.  s.  546.  See  Taylor  Landl.  and  thing  before  the  term  ends.  Stokoe 
Ten.,  §  551;  Mason  v.  Fenn,  13  111.  v.  Upton,  40  Mich.  581.  See  Clarke 
525;    Merritt   v.    Judd,    14    Cal.    59;  v.  Rowland,  85  N.  Y.  204. 

Davis    V.    Moss,    38    Penn.    St.    346 ;  But  while  the  tenant's  right  to  re- 

Burk  V.  Hollis,  98  Mass.  55.  move  a   fixture  does   not  usually  ex- 

7.  See  Taylor  Landl.  and  Ten.,  §§  tend  beyond  his  term  or  possession, 
552,  553;  Miller  v.  Baker,  1  Met.  27;  the  right  may  be  extended  by  agree- 

186 


CHAP.  VI.] 


FIXTURES. 


§    128 


But  where  the  tenant  holds  under  an  uncertain  term  or  con- 
tingency, as  for  life  or  at  will,  or  upon  the  happening  of  a  par- 
ticular event,  he  or  his  representative  may  exercise  the  privilege 
of  removing  fixtures  within  a  reasonable  time  after  his  term  has 
ended.^ 

§  128.  Liability  to  Repair  Damages  Caused  by  Removing 
Fixtures. 
As  to  the  second  point,  namely,  the  tenant's  liability  to  repair 
all  injuries  caused  by  the  removal  of  his  fixtures,  the  court 
observes  in  Foley  v.  Addenhroohe :  "  The  only  rule  we  can  lay 
down  is,  that  these  lessees  had  a  right  to  remove  them,  doing  as 
little  damage  as  possible,  and  leaving  the  premises  in  a  state  fit 
to  be  used  for  a  similar  purpose  by  another  tenant."  '     Not  only 


ment  with  his  landlord.  Torrey  v. 
Burnett,  38  N.  J.  L.  457,  20  Am.  Rep. 
421.  And  if  the  landlord  agrees  to 
sell  the  fixture  for  tlie  tenant's  ben- 
efit, but  fails'  to  do  so,  the  tenant  has 
a  reasonable  time  to  remove  it  after 
possession  is  surrendered.     lb. 

Where  a  new  lease  is  accepted  with 
covenants  to  deliver  up  in  as  good 
condition  "  as  the  same  now  are," 
&c.,  the  lessee  should  be  careful  to 
have  an  express  reservation  as  to  fix- 
tures already  on  the  premisos.  Wat- 
riss  V.  Cambridge  Bank,  124  Mass. 
571;  Loughran  v.  Ross,  45  N.  Y.  792. 
As  to  a  trustee  in  bankruptcy  dis- 
claiming a  lease,  see  Ex  parte  Ste- 
phens, 7  Ch.  D.  127.  See  also  Collier 
on   Bankruptcy,    11th   Ed. 

See  Phelps  v.  Ayres,  142  Wis.  442, 
125  N.  W.  919  (surrender  before  re- 
moving fixture  withoui  express  reser- 
vation) ;  Walker  v.  Tillis,  ISS  Ala. 
313,  66  So.  54;  Fellows  v.  Johnson, 
183  111.  App.  42;  Sassen  v.  ITaegle, 
125  Minn.  441,  147  N.  W.  445,  52  L. 


R.  A.  N.  s.  1176;  Saye  v.  Hill,  100 
S.  C.  21,  84  S.  E.  307;  Melton  v.  Ful- 
lerton  Co.,  214  N.  Y.  571,  108  X.  E. 
849  (as  to  contractor)  ;  Barle  v. 
Kelly,  21  Cal.  App.  480,  132  Pac.  262; 
Robbinson  v.  Harrison,  237  Pa.  613, 
85  Atl.  879  (lease  renewed)  ;  Idalia 
Realty  Co.  v.  Norman,  183  S.  W.  348 
(Mo.  App.  1916)  ;  Ray  v.  Young,  160 
Iowa,  613,  142  N.  W.  393  (lessee  of 
a  tenant  for  life  after  the  latter's 
death ) . 

9.  Weeton  v.  Woodcock,  7  IM.  &  W. 
14;  Haflick  v.  Stober,  11  Ohio  St. 
482;  Lawton  v.  Lawton,  3  Atk.  13. 
And  see,  as  to  bankrupt,  Stansfield 
V.  Portsmouth,  4  C.  B.  N".  s.  120. 
Where  the  tenancy  can  be  terminated, 
however,  only  on  reasonable  notice  to 
the  tenant  at  will,  he  must  remove 
when  his  tenancy  terminates.  Erick- 
son  v.  Jones,  37  Minn.  459,  35  X.  W. 
207. 

1.  Foley  V.  Addenbrooke,  13  M.  & 
W.  196,  per  Pollock,  C.  B.  See  Grady 
Fixtures,  2d  ed.  253. 


187 


§    129  THE   LAW    OF   PERSONAL    PROPERTY.  [pART  II. 

should  the  article  removed  be  such  as  can  be  taken  away  without 
the  destruction  or  serious  injury  of  the  freehold,  but  the  premises 
ahould  be  left  in  as  good  plight  and  condition  after  removal  as 
before  annexation,  so  far  as  practicable ;  and  it  is  generally  under- 
stood that  the  party  removing  must  repair  the  damages  sustained.^ 
If  any  unnecessary  and  wanton  damage  has  been  done,  and  the 
premises  are  left  in  such  a  state  that  they  cannot  be  conveniently 
applied  to  the  same  purpose  as  before,  the  tenant  is  liable."^ 

§  128a.     Rights  of  Action,  etc.,  in  General. 

An  action  for  damages  against  the  aggressor  will  lie  in  favor 
of  a  mortgagee  whose  security  is  impaired  by  the  wrongful  removal 
of  things  permanently  attached  which  passed  under  the  mortgage ; 
and  prior  to  such  removal  he  may  bring  a  bill  in  equity  to  restrain 
the  threatened  waste.'* 

§  129.     Transfer  of  Fixtures;   Various  Incidents. 

It  is  questionable  whether  the  tenant  has  a  complete  property 
in  fixtures  whilst  they  are  attached  to  the  soil.  Except  as  to  his 
right  of  removal,  these  seem  to  be  and  to  remain  part  of  the 
realty;  and  unless  this  right  of  removal  is  exercised  within  a 
suitable  period,  they  pass  with  the  land.  But  the  right  of 
removal  itself,  though  of  a  peculiar  nature,  partakes  rather  of  the 
character  of  a  chattel  than  an  interest  in  real  estate.  This  right 
may  be  transferred;  or  it  may  be  made  available  by  creditors.^ 
But,  as  in  landed  interests,  if  the  tenant  grants  or  mortgages  his 
fiixtures,   he  cannot  afterwards  defeat  this  act  by  a  subsequent 

2.  Taylor  Landl.   and  Ten.,   §   550;  denbrooke,  13  M.  &  W.  199.     And  see 
Avery    v.    Cheslyn,    3    Ad.    &    E.    75;  Re   Howard    Co.,    203    Fed.    445,    121 
Whiting    V.    Brastow,    4    Pick.    311;  C.  C.  A.  555   (bankrupt  tenant) . 
Kirwan  v.  Latour,   1   Har.   &,  J.  289.  4.  Lavenson   v.    Soap    Co.,    80    Cal. 
See  Hare  v.  Horton,  5  B.  &  Ad.  715.  245,  22  Pac.  184. 

Sometimes  there  are  statutes  on  this  5.  See  Taylor  Landl.  and  Ten.   5th 

subject;   e.   g.,   14   &   15   Viet.,   c.   25,  ed.,  §  549,  and  n. ;   London  Loan,  &c. 

§  3.  Co.  V.  Drake,  6  C.  B.  n.  s.  798;  Over- 

3.  Per  Pollock,  C.  B.,  Foley  v.  Ad-  ton  v.  Williston,  31  Penn.  St.  160. 

188 


CHAP.  VI.]  FIXTURES.  §    130 

voluntary  surrender.^  "WTien  rightfully  severed,  the  fixtures 
become  chattels.  But  meantime  trover  does  not  lie  for  them ; 
nor  replevin ;  nor  assumpsit  as  "  for  goods  sold  and  delivered."  '' 
The  rule  as  respects  their  sale  on  execution  is  somewhat  peculiar.^ 
And  they  are  considered  subject  to  liens  on  the  soil  to  which  they 
may  have  been  attached.^  In  American  practice,  and  especially 
where  the  annexation  to  the  realty  is  very  slight,  the  owner  of 
fixtures  may  hold  the  owner  of  the  soil  liable  for  a  conversion 
when  the  latter  refuses  to  allow  him  to  enter  and  remove  them.^ 
Things  which  are  strongly  affixed  are  not  attachable  as  personalty 
as  between  the  debtor  and  his  creditors.^ 

Facts  may  establish  the  waiver,  in  any  case,  of  a  controverted 
claim  to  fixtures.^  And  a  tenant  who  has  a  right  to  remove  cer- 
tain erections  as  fixtures  at  the  end  of  his  term  may,  by  remaining 
under  a  new  lease  inconsistent  with  this  right,  debar  all  removal 
accordingly.'* 

§  130.  Various  Examples  as  to  Things  Which  Might  Appear 
Real  or  Personal;  Turpentine,  Sap,  Peat,  etc. 
Before  passing  from  the  general  consideration  of  property  of  a 
mixed  description,  which  has  occupied  our  attention  thus  far 
under  the  leading  heads  of  heirlooms,  emblements,  and  fixtures, 
we  shall  do  well  to  notice  a  few  more  examples  of  things  which 
in  some  respects  might  appear  real,  yet  in  others  personal.  Tur- 
pentine, sugar-maple  sap,  and  the  like  products  of  a  tree,  in  a 

6.  London  Loan,  &c.  Co.  v.  Drake,  partners  may  treat  fixtures  as  per- 
6  C.  B.  N.  s.  T&S.  sonal   property.     Seeger  v.   Pettit,   77 

7.  Mackintosh    v.    Trotter,    3    M.    &       Penn.  St.  437. 

W.  184;  Lee  v.  Risdon,  7  Taunt.  188;  1.  See   Stout   r.   Stoppel,   30   Minn. 

Taylor   Land!,    and    Ten.,    §    549,    n.;  56,   59;    Walker  v.   Schindel,   53   Md. 

McAuliffe  V.  Mann,  37  Mich.  539.     See  360. 
128  111.  29.  2.  Hackett  v.  Amsdon,  57  Vt.  432; 

8.  1  Arch.  Pract.  12th  ed.  655;  Tay-  McNally  v.  Connolly.  70  Cal.  3; 
lor  Landl.  and  Ten.,  §  549,  n. ;  Rice  Sampson  v.  Camperdown  Mills,  64 
V.  Adams,  4  Harring.  332.  Fed.  9^9. 

9.  Gray    v.    Holdship,    17    S.    &    R.  3.  Foster  v.  Prentiss,  75  Me.  279. 
413 ;  Schaper  v.  Bibb,  71  Md.  145,  17           4.  Iledderich  v.  Smith,  103  Ind.  203, 
Atl.    935.      On    dissolution    of    firm,  2  NT.  E.  315. 

189 


§  131  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

state  to  be  dipped  up,  are  personal  and  not  real  property;  and 
this,  although  the  flow  is  directed  into  boxes  cut  in  the  tree  itself; 
for  it  has  ceased  to  be  part  of  the  tree.^  Peat  cut  for  fuel,  lying 
on  land,  is  personal  property.^ 

§  131.  Various  Examples  Continued;  Buildings  on  Another's 
Lands. 
We  have  observed  under  what  circumstances  an  erection  by 
mutual  assent  upon  another's  land  becomes  or  fails  to  become  part 
of  the  real  estate  and  is  owned  accordingly.''  The  civil  law  upon 
this  subject  appears  to  have  differed  from  the  common  law  and 
to  have  applied  a  more  equitable  principle.  For  while,  according 
to  the  common  law,  a  person  who,  through  ignorance  of  his  title, 
or  by  mistake,  builds  upon  the  soil  of  another,  must  forfeit  the 
house,  and  can  claim  nothing  for  the  materials  or  labor  he  fur- 
nished ;  ^  the  civil  law  under  such  circumstances  made  the  owner 
of  the  soil  pay  the  value  of  the  materials  and  labor  to  the  builder, 
or  he  could  not  insist  upon  retaining  the  house.  But  the  general 
rule  of  the  civil  law  was,  that,  if  a  person  builds  upon  another's 
land,  the  house  follows  the  property  in  the  soil,  unless  it  can  be 
easily  removed ;  while  if  he  builds  the  house  knowingly,  he  is 
presumed  to  have  given  his  materials  and  labor  to  the  owner  of 
the  soil.^  Even  at  the  common  law  the  presumed  dedication  of 
an  owner's  materials  to  the  owner  of  the  land  which  in  theory 
deprives  the  former  of  his  property  is  so  disputed  by  the  facts 
in  some  instances  that  our  modern. courts  disincline  to  apply  the 
rule  of  forfeiture  to  the  owner  of  materials.^ 

5.  Branch  v.  Morrison,  5  Jones,  16;  land  becomes  fixture.  Book  4.  N.  Y. 
51  So.  595   (Tex.).  Rpts.,     Bender     ed.,     note,     p.     615. 

6.  Gile  V.  Stevens,  13  Gray,  149.  Opinion  by  non-expert  of  value  of 
See  also  §  53,  supra.  Old  rails,  the  barn  as  fixture,  see  Chamberlayne 
refuse  material  of  a  fence  which  has  Evid.,  §  2127. 

been   removed,   are  of   course   person-  9.  Wood  Civ.  L.,  b.  2,  c.  3,  p.  114. 

alty   once   more.      Pettis   v.    Darling,  See  1  Washb.  Real  Prop.  3. 

57  Vt.  641.  1.  Lowenberg  v.  Bernd,  47  Mo.  297; 

7.  Supra,  p.  163,  n.  Atchison   R.   v.   Morgan,   42   Kan.   31. 
S.  Building  erected  upon  another's  See  Ryder  v.  Faxon,  171  Mass.  206. 

190 


CHAP.  VI.]  FIXTURES.  §    132 

§  132.  Various  Examples  Continued;  Pews,  Organs,  Church 
Furniture,  etc. 
Pews  in  churches  arc  treated  bj  the  Continental  jurists  as 
immovable  property.^  So  the  law  of  England  considers  them  as 
a  parcel  of  the  freehold;  belonging,  as  it  is  said,  to  the  incum- 
bent, although  the  use  of  them  is  in  those  who  have  the  use  of  the 
church.  And  ecclesiastical  writers  in  that  country  discriminate 
between  parson  and  parishioners,  in  determining  the  right  to  the 
materials  of  seats  in  various  instances.^  But  in  the  United  States, 
land  and  materials  alike  belong  usually  to  the  organized  society 
of  the  church,  in  the  first  instance,  whose  officers  sell  or  let  the 
pews  from  time  to  time  to  individuals;  and  while,  in  the  absence 
of  statute  provisions,  pews  partake  of  the  nature  of  realty,  they 
are  in  some  States  made  personal  property  by  statute."*  Some 
controversies  of  little  practical  consequence,  over  the  nature  of 
bells,  bell-ropes,  and  organs,  are  reported  in  the  older  books.^ 
And  it  might  seem  superfluous  to  say  that  a  stove  and  pipe  in  a 
church  are  chattels,  and  not  real  estate;  though  furnaces  might 
usually  be  treated  as  permanent  fixtures.^  A  bell  once  set  up  in 
the  belfry  of  an  old  church,  and  afterwards  transferred  with  its 
framework  to  the  lot  where  a  new  church  was  being  erected,  and 
there  remaining  in  regular  use  for  about  a  year  until  the  tower 
of  the  new  edifice  should  be  ready  for  its  reception,  is  construc- 
tively held  to  be  part  of  the  realty.''  And  an  organ,  though 
usually  a  chattel,  may,  when  set  into  a  special  niche  provided  for 
the  purpose  of  giving  the  church  an  architectural  finish,  become 
a  permanent  fixture.^ 

2.  Voet.  De  Mob.  et  Immob.,  c.  5,  Church  v.  Wells,  24  Penn.  St.  249; 
n.  8;  Pothier  Tr.  de  la  Com.,  n.  61;  Hodges  v.  Green,  28  Vt.  358;  Baptist 
2  Burge  Col.  and  For.  Laws,  29.  Churcli  v.  Bigelow,  16  Wend.  28. 

3.  Amos  and  Fer.  Fixtures,  204 ;  5.  See  1  Burn  Ecc.  Law,  tit. 
Burn   Ecc.   Law,   vol.    i.,   tit.    Church.  Church. 

See  Presbyterian  Cliurch  v.   Andruss,  6.  Congregational  Society  v.  Stark, 

1  Zabr.  325.  34  Vt.  243. 

4.  See  Mass.  Rev.  Laws,  c.  36,  §  38 ;  7.  Congregational  Society  v.  Flcm- 
1  Washb.   Real   Prop.   9;    Buck   Eccl.  ing.  11  Iowa,  533.     See  §  115. 

Law,    146,    &c. ;    3    Kent    Com.    402;  8.  Rogers    v.     Crow,     40    Mo.     91. 

191 


§  133  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

§  133,  Character  of  Property  as  Real  or  Personal ;  Doctrine  of 
Equitable  Conversion. 
Finally,  the  character  of  property  is  frequently  determined  by 
the  equitable  doctrine  of  conversion.  One  of  the  maxims  of  the 
chancery  courts  is,  that  equity  looks  upon  that  as  done  which  ought 
to  be  done.  As  a  consequence  of  this  maxim,  money  directed  to 
be  employed  in  the  purchase  of  land  or  land  directed  to  be  turned 
into  money  is  in  general  regarded  as  that  species  of  property  into 
which  it  is  directed  to  be  converted;  either  immediately,  or  at 
some  future  time,  according  to  circumstances.^  Thus,  a  devise 
that  the  land  of  a  testator  should  be  sold,  and  the  money  paid  over 
to  an  alien,  has  been  carried  into  effect,  although  under  the  law 
an  alien  could  not  take  real  estate.^  This  doctrine  of  conversion 
bears  especially  upon  the  descent  and  distribution  of  property  in 
cases  where  one  would  take  if  the  property  were  real,  and  another 
if  it  were  personal.  The  persons  entitled  to  the  property  whose 
conversion  is  directed  are  entitled  to  enforce  the  conversion, 
either  actually  or  virtually;  but  not  a  stranger.^  A  like  rule 
sometimes  applies  in  disposing  of  the  surplus  produce  of  real 
estate  sold  for  certain  purposes.  For  where  real  estate  is  directed 
to  be  sold  under  a  will,  to  carry  out  specified  objects,  so  much  as 
remains  of  the  real  estate,  or  its  produce,  after  making  a  necessary 

Settees  easily  removable  and  not  at-  2    Spence    Eq.    268,    269;    Story    Eq. 

tached   to   the   building  are   chattels.  Jur.,  §  TffO. 

lb.     As  to  the  rights  of  pew-owners  3.  Ackroyd      v.    Smithson,   1   Lead, 

in  this  country,  see  Buck  Eccl.  Law,  Cas.   Eq.    2d   ed.   690   et  seq.;   Smith 

146  et  seq.;  Newbury  v.  Dow,  3  Allen,  IManual  Equity,  9th  Eng.  ed.  161.    See 

369;    Jackson   v.    Rounsville,    5    Met.  Kitchens  v.   Jones,   87  Ark.   502,   113 

127;  Presbyterian  Church  v.  Andruss,  S.  W.  29,  19  L.  R.  A.  N.  s.  723,  128" 

1    Zabr.    325;    Kineaid's    Appeal,    66  Am.    St.    Rep.    36.     And   accordingly, 

Penn.   St.  411 ;   Kimball  Co.  v.  Po'a-  in  an  American  case,  where  A,  by  will, 

kow,  109  N.  E.  313,  268  111.  344.  after    sundry    legacies,   gave    all    the 

9.  See  Story  Eq.  Jur.,  §  790;  Flet-  residue   of   her  estate,   real  and   per- 

cher  V.  Ashburner,   1  Lead.   Cas.   Eq.  sonal,   to   C,   and   empowered   her  ex- 

2d  ed.  659  ct  seq.;  Craig  v.  Leslie,  3  ecutor   to   sell   her    real   estate;    and. 

Wheat.    577 ;    Houghton   v.    Hapgood,  the   personal  estate  being  insufficient 

13  Pick.  154.  to  pay  her  debts  and  legacies,  he  did 

1.  Craig  V.  Leslie,  3  Wheat.  577.  so;    and   upon   a   final   adjustment  of 

2.  See  Fletcher  V.  Ashburner,  supra ;  his  accounts  a  surplus  in  money  re- 

192 


CHAP.  VI.] 


FIXTURES. 


133 


sale  for  such  objects,  goes  as  real  or  personal  property  according 
to  the  testator's  intention.^ 


mained ;  it  was  held  that  this  surplus 
was  to  be  treated  as  real  and  not  as 
personal  property.  C  had  died  a  few 
days  after  A;  so  this  surplus  went  to 
C's  heirs,  and  not  to  liis  adminis- 
trator. Cook  V.  Cook,  5  C.  E.  Green 
(N.  J.),  275.  Real  estate  which  has 
been  added  to  partnership  stock  is 
often  treated  as  though  converted  into 
personal  property.  See  Pars.  Partn. 
369  et  seq. 

Amos  and  Ferard's  work  on  Fix- 
tures is  well  known.  A  more  recent 
text-book  of  good  repute  on  this  sub- 


ject is  M.  D.  Swell's.  But  while  the 
reader  may  find  elsewhere  more  au- 
thorities cited  upon  this  perplexing 
subject,  it  is  believed  that  the  lead- 
ing principles  announced  are  suflS- 
ciently  stated  and  vouched  for  in  the 
foregoing  chapter.  All  such  contro- 
versies involve  mixed  questions  of 
law  and  fact;  and  hence  multiplied 
citations  only  lead  to  mental  confu- 
sion. 

In  the  present  edition  (1917)  the 
latest  cases  are  carefully  considered 
for  citation  and  comment. 


13 


193 


CHAPTER  VII 

PERSONAL  PROPERTY  IN  EXPECTANCY 

§  134.     Time  of  Enjoyment  of  Personal  Property  to  be  Consid- 
ered. 

We  have  considered  in  the  foregoing  chapters  the  various  kinds 
of  personal  property.  We  may  now,  following  the  example  of 
the  common-law  writers  on  real  estate,  treat  of  personal  property 
with  reference  to  the  time  of  enjoyment. 

§  135.     General  Doctrine  of  Interests;    Immediate  or  Expectant. 

Blackstone  lays  it  down  that  estates,  with  respect  to  the  time 
of  enjoyment,  are  either  in  immediate  possession,  or  in  expect- 
ancy; that  estates  in  expectancy  are  created  at  the  same  time  and 
are  parcel  of  the  same  estates  as  those  upon  which  they  are 
expectant;  and  that  expectant  estates  are  to  be  subdivided,  first, 
into  the  remainder, —  which  is  an  estate  limited  to  take  effect  and 
be  enjoyed  after  another  particular  estate  is  determined, —  and, 
secondly,  into  the  reversion,  which  is  the  residue  of  an  estate  left 
in  the  grantor  and  his  heirs,  to  commence  in  possession  after  the 
determination  of  some  particular  estate  granted.  Where  a  man 
grants  by  one  and  the  same  instrument  lands  to  A  for  twenty 
years,  and  then  to  B  and  his  heirs  forever,  B's  interest  is  a 
remainder;  where  lands  are  granted  to  A  for  life,  or  to  A  andl 
his  male  issue,  and  A  dies  or  there  is  a  failure  of  male  issue,  there 
is  a  reversion,  by  operation  of  law,  to  the  grantor,  to  be  again 
disposed  of  at  pleasure.^  In  short,  while  estates  or  interests  are 
said  to  be  in  possession  when  the  person  having  the  estate  or 
interest  is  in  actual  enjoyment  of  that  in  which  such  estate  or 
interest  subsists,  an  estate  or  interest  is  in  expectancy  when  the 
enjoyment  is  postponed,  although  the  estate  or  interest  has  a 
present  legal   existence.     The   doctrine   of  expectant   estates,    as 

1.  See  2  Ewell's  Bl.  Com.,  lee.  11;  Co.  Lit.  142,  143. 
194 


CHAP.  VII.]    PERSONAL  PROPERTY  IN  EXPECTANCY.        §  136 

applied  to  lands  and  tenements,  gives  rise  to  some  of  the  most 
curious,  not  to  say  the  most  subtle  and  perplexing,  distinctions  of 
legal  science. 

§  136.     How  Far  This  Doctrine  Applies  to  Personal  Property. 

How  far  does  this  doctrine  apply  to  personal  property? 
Anciently  it  had  no  application  whatever.  There  was  no  such 
thing  legally  possible  as  an  expectant  interest  in  chattels ;  and 
this  because  of  the  perishable  nature  of  such  property,  its  insig- 
nificance, and  its  movable  characteristics.  Houses  and  lands 
would  remain  comparatively  unchanged  through  a  succession  of 
owners ;  but  animals  died,  furniture  and  garments  wore  out,  and 
money  required  to  be  kept  in  constant  circulation ;  so  that  the 
ownership  of  these  latter  things  was  of  little  consequence  unless 
immediate,  complete,  and  exclusive.  So,  too,  a  party  in  expect- 
ancy of  lands,  or  those  guarding  his  interests,  might  watch  the 
party  in  possession,  and  check  all  attempts  on  his  part  to  commit 
waste ;  and  however  much  the  incidents  might  have  been  damaged, 
the  freehold  remained  intact.  But  who  would  undertake  to  trace 
single  chattels  through  a  series  of  years,  when  the  possessor  might 
destroy,  secrete,  or  remove  them  beyond  the  reach  of  remainder- 
men and  reversioners  ?  The  temporary  occupation  of  lands,  the 
collection  of  rents,  the  gathering  of  annual  crops, —  these  consti- 
tuted a  substantial  usufructuary  enjoyment  of  property  in  the 
eyes  of  men.  But  in  an  age  when  capital  and  income  were  almost 
unknown,  and  the  loan  of  money  for  recompense  was  deemed  an 
offence,  the  use  of  movable  property  given  to  one  with  a  remainder 
over,  would  have  been  worth  either  too  little  or  too  much  to  the 
remainderman,  according  to  the  measure  of  his  predecessor's 
conscience. 

While,  therefore,  our  English  ancestors,  being  stimulated  by 
the  desire  to  control  freehold  property  and  to  transmit  hereditary 
titles  to  unborn  offspring,  favored  from  early  times  the  creation 
of  estates,  more  or  less  valuable,  and  for  longer  or  shorter  periods, 
in  lands,  so  that  one  might  have  an  immediate  interest,  while 

195 


§  137  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

another's  was  by  postponement,  the  law  refused  to  sanction  an 
application  of  the  same  principle  to  goods  and  chattels. 

But  the  rule  which  thus  discriminated  between  things  real  and 
things  personal  began  to  relax  as  these  two  species  of  property 
assimilated  more  closely,  in  value  and  importance,  to  one  another ; 
and  in  modern  times,  when  mercantile  enterprise  has  developed 
new  sources  of  wealth  and  new  species  of  permanent  investments, 
the  force  of  the  old  objections  to  limitations  of  personal  property 
is"  well-nigh  spent ;  and  failing  the  reasons,  the  rule  must  fail. 
If  real  estate  is  valuable  to-day,  so  is  personal  property;  if  the 
one  can  be  preserved  intact,  so  to  a  great  extent  can  the  other ;  if 
the  enjoyment  of  rents  and  growing  crops  for  years  or  for  life  is 
valuable,  not  less  so  is  the  receipt  of  interest  and  dividends  for  a 
like  period.  Hence  we  shall  find  that  the  doctrine  of  interests  or 
estates  in  expectancy  has  come  at  last  to  be  applied  with  much 
the  same  force  to  personal  as  to  real  property;  though  not  abso- 
lutely so,  since  the  two  systems  were  built  up  apart,  and  each  has 
its  essential  and  peculiar  characteristics. 

§  137.  As  to  Personal  Property;  Interests,  Immediate  or 
Expectant. 
Let  us  bear  in  mind  that  the  expectant  estate,  at  common  law, 
whether  by  way  of  remainder  or  reversion,  takes  effect  after  some 
particular  estate  which  was  created  at  the  same  time  —  such  as  an 
estate  for  life  or  for  years  —  has  determined.  Thus,  if  I  have  a 
piece  of  land,  I  may  grant  it  to  A  for  twenty  years,  then  to  B  and 
his  heirs  forever ;  or,  granting  it  to  A  for  twenty  years  and  noth- 
ing more,  the  law  implies  that  the  reversion  is  in  me  and  my 
heirs.  A  in  such  case  has  the  particular  estate;  while  B  by  way 
of  remainder  (or  I,  or  my  heir  again,  by  way  of  reversion)  has 
the  estate  in  expectancy.  So  much  for  real  property.  Now,  to 
take  the  case  of  personal  property.  If  I  have  one  hundred  shares 
of  bank  stock,  and  give  the  income  to  A  for  twenty  years  or  for 
life,  then  the  principal  to  B,  the  interest  of  A  is  particular,  while 
that  of  B  is  in  expectancy.  Whether  the  property,  then,  be  real 
or  personal,  and  whatever  the  technical  terms  employed  to  distin- 

196 


CHAP.  VII.]         PERSONAI.    PROPERTY    IN    EXPECTANCY.  §    138 

guish  them,  two  interests  in  the  property  are  created  simultane- 
ously: the  one,  the  particular  interest,  to  take  effect  presently; 
the  other,  the  interest  by  way  of  remainder  or  reversion,  which  is 
to  take  effect  hereafter. 

But  while  lands  are  only  the  subject  of  tenure  at  the  common 
law,  and  held  by  estates  therein,  not  owned,  personal  property  is 
essentially  the  subject  of  absolute  ownership.  This  fundamental 
difference  in  theory  has  already  been  pointed  out.^  To  say,  then, 
that  goods  and  chattels  may  be  settled  or  limited  by  the  creation 
of  estates  in  them,  would  not  be  literally  correct.  The  use  of  the 
terms  estates  for  life,  in  remainder  and  in  reversion,  in  the  present 
connection,  must,  therefore,  be  rather  by  analogy  than  in  a  literal 
sense.  We  should  speak  rather  of  interests  in  personal  property. 
And  in  many  cases  a  striking  difference  will  be  found  in  the  effect 
of  the  same  limitation,  according  as  its  application,  whether  to 
real  or  to  personal  property.^ 

§  138.     Expectant  Interests  in  Personalty  under  a  Will. 

The  common-law  rule,  then,  was  anciently  that,  if  any  chattel 
were  assigned  to  A  for  his  life,  A  would  at  once  become  legally 
entitled  to  the  whole,  inasmuch  as  no  estate  could  be  created 
therein.  But  an  exception  was  afterwards  made  in  favor  of  chat- 
tels real ;  for  we  find  in  Manning's  Case,  where  a  person  possessed 
of  a  farm  for  the  term  of  fifty  years  devised  and  bequeathed  the 
lease  to  B  after  the  death  of  his  wife,  giving  her  the  use  and 
occupation  of  the  farm  during  her  natural  life,  that  it  was  held 
that  B  should  have  the  term  after  the  life-interest  had  expired; 
by  way,  however,  of  executory  devise,  and  not  by  way  of 
remainder.'^  Limitations  of  this  sort  by  will,  therefore,  were 
deemed  proper  so  early  as  the  reign  of  James  I.^  Yet  the  early 
cases  proceeded  upon  the  ground  of  indulgence;  for  the  argument 
was  that  a  last  will  and  testament  might  create  an  interest  after 

2.  Svpra,  §  6.  5.  lb.     And  see  Tvampct's  Case.   10 

3.  See  Wms.  Pers.  Prop.  17th  Eng.       Co.  4f>;   Child  v.  Baylie,  Cro.  J.  459; 
ed.  404.  2  Kent  Com.  352. 

4.  8  Co.  94  b. 

197 


§  138  THE  LAW  OF  PERSONAL  PROPERTY.       [ PART  II. 

death  which  one  could  not  pass  in  his  lifetime  by  gift,  grant,  or 
conveyance ;  nay,  that  even  this  favor  could  only  be  shown,  when, 
as  in  the  above  instance,  merely  the  use  of  the  chattel,  and  not 
the  chattel  itself,  was  given  to  the  first  legatee.^  From  chattels 
real  the  same  doctrine  appears  to  have  extended  to  chattels  per- 
sonal, under  like  restrictions;  and  it  became  a  rule  that  limita- 
tions of  goods  and  chattels  generally,  by  way  of  remainder,  after 
a  bequest  for  life,  were  good;  the  property  being  supposed  to 
continue  meantime  in  the  testator's  executor,  and  the  use  only  of 
the  chattel  being  given  to  the  first  legatee/ 

Chancery  pursued  this  doctrine  for  a  time;  but  a  distinction 
so  artificial  being  found  unsatisfactory,  it  was  at  last  thrown 
aside,  and  a  broader  rule  was  announced,  such  as  might  seem 
better  calculated  to  enforce  the  intention  of  a  testator  and  do  more 
exact  justice  between  the  objects  of  his  bounty.  Before  the  close 
of  the  seventeenth  century  it  was  clearly  settled  that,  if  a  person 
devise  and  bequeath  goods  to  A  for  life  with  remainder  over  to  B, 
it  is  a  good  limitation  to  B,  and  this  whether  the  goods  or  the  usq 
of  the  goods  were  given  to  A  by  the  terms  of  the  will.^  For 
equity  found  the  civil  and  canon  laws  available  in  this  respect, 
which  construe  the  use  of  the  thing  and  not  the  thing  itseK  to 
pass,  where  the  first  interest  is  for  a  limited  time.^  In  all  such 
cases  A  has  merely  a  life  interest ;  while  B  has  a  vested  interest 
by  way  of  remainder,  which  he  may  dispose  of  at  his  pleasure; 
and  chancery  compels  the  person  to  whom  courts  of  law  may  have 
awarded  the  legal  interest  to  make  good  any  such  disposition. 

6.  See  2  Ewell's  Bl.  Com.  398.  Trusts,  L.  R.   6  Eq.   589.     As  to  the 

7.  lb.;  Eq.  Ca.  Abr.  360.  See  Wnis.  bequest  in  expectancy  to  one  named 
Pers.  Prop.  ITtli  Eng.  ed.  404-406;  as  executor,  see  4  Ch.  D.  841.  Among 
Fearne  Cont.  Rem.  402,  404.  the  many  cases  where  future  estates 

8.  Freem.  206;  2  Kent  Com.  352;  in  personal  property  have  been  re- 
2  Bl.  Com.  398.  cently    sustained    are   the    following: 

9.  Hyde  v.  Parrat,  1  P.  Wms.  1.  Thomas  v.  Castle,  76  Conn.  447,  56 
Subject  to  the  rule  against  perpetu-  Atl.  854;  Trogdon  v.  Murphy,  85  111. 
ities  (to  be  noticed  post)  one  may  119;  Ackerman  v.  Vreeland,  14  N.  J. 
create  successive  life  or  temporary  Eq.  23;  In  re  Albiston,  117  Wis.  272, 
interests   by   his  will.      See   Grylls'a  94   N.   W.    169;    Ridgely   v.    Ridgely, 

198 


CHAP.  VII.]    PERSOXAL  PROPERTY  IX  EXPECTANCY.         §  139 

§  139.  Expectant  Interests  Created  in  Personalty  by  Deed  of 
Trust,  etc. 
Nor  is  it  longer  necessary  that  limitations  of  this  sort  should 
be  by  will;  they  are  equally  good  when  made  by  deed  of  trust. ^ 
Settlements  by  way  of  remainder,  whether  of  things  real  or  per- 
sonal, are  not  very  common  in  this  country;  the  genius  of  our 
institutions  being  somewhat  opposed  to  fettering  the  transmission 
of  property.  But  in  England  the  deed  of  trust  comes  frequently 
into  requisition  for  creating  and  preserving  family  entails. 
Whenever  a  settlement  of  any  kind  of  personal  property  is  to  be 
made,  the  property  is  assigned  to  trustees,  in  trust  for  A  for  his 
life,  and  after  his  decease  in  trust  for  B,  and  so  on.  The  assign- 
ment to  the  trustees  vests  in  them  the  whole  legal  property  at  law ; 
while  in  equity  the  trustees  will  be  compelled  to  pay  the  entire 
income  to  A  for  his  life,  and  after  his  decease  to  B,  and  so  on 
until  the  trusts  are  completely  fulfilled.^  Settlements  of  this  sort 
are  to  be  found  in  some  of  our  older  States ;  and  whether  common 
in  practical  application  or  not,  the  doctrine  that  personal  property 
may  be  limited  by  way  of  remainder  after  a  life  interest  created 
at  the  same  time  is  fully  recognized  in  the  United  States  as  well 
as  in  England,  especially  as  regards  testamentary  dispositions.^ 
It  has  been  a  matter  of  dispute  whether  deeds  of  this  sort  (as 
contrasted  with  wills)  can  be  upheld  unless  expressed  to  be  in 
trust."*  However  this  may  be,  equity,  as  is  well  known,  would 
reluctantly  suffer  any  trust  to  fail  for  want  of  a  trustee  to  support 

100    Md.    230,    5?    Atl.    731;     Ehode  39Q.     For  slji  estate  pur  autre  vie,  see 

Island   Hospital  Trust   Co.   v.   Noyes,  In  re  Barber,  18  Ch.  D.  624. 
26  R.  I.  323,  58  Atl.  999;  In  re  Moore,  3.  See  cases   supra;  2   Kent   Com. 

15a  N.  Y.  602,  46  N.  E.  960,  2  Prob.  352,   353,   and  n.;    Moffat   v.    Strong, 

Rep.   Ann.    130;    Bennett  v.   Bennett,  10   Johns.    12;    LangAvorthy   v.    Chad- 

217  111.  434,  75  N.  E.  339,  4  L.  R.  A.  wick,  13  Conn.  42;  Healey  v.  Tappan, 

N.  s.  470,  and  note.  45   N.   H.   243;    Progdon   v.   Murphy, 

1.  See     2     Ewell's    BI.     Com.     398,  85  111.  113. 

Archbold,  n.;  Fearne  Cont.  Rem.  406;  4.  Betty    v.    Moore.    1    Dana,    237; 

Child  V.  Baylie,  Cro.  J.  459:  Porter  V.  ]Morro\v    v.     Williams,     3     Dev.     263. 

Tournay,   3   Ves.   311;    2    Kent   Com.  Contra,   Powell    v.   Brown,   1   Bailey, 

352 ;  Bill  V.  Cureton.  2  Myl.  &  K.  512.  100. 

2.  Wms.  Pers.  Prop.  17th  Eng.  ed. 

190 


§  140  THE  LAW  OF  TERSONAL.  PROPERTY.        [PART  II. 

it.  And  in  instruments  which  settle  goods  and  chattels  to  the 
wife's  separate  use,  the  court  supports  the  trust  by  making  the 
husband  himself,  if  no  other  be  found,  the  trustee,  and  charging 
him  with  its  faithful  execution.^ 

§  140.     Exception  as  to  Perishable  Chattels. 

But  the  doctrine  of  expectant  interests  in  personal  property 
applies  in  strictness  only  to  those  species  of  chattels  which  might 
be  designated  as  of  a  durable  nature.  Perishable  chattels  consti- 
tute an  exception  to  the  rule.  Thus,  if  wine,  corn,  hay,  and  other 
articles  for  food  and  drink,  whose  use  consists  presumably  in  their 
consumption,  be  bequeathed  to  one  for  life,  with  limitation  over 
to  another  by  way  of  remainder,  it  is  held  that  the  limitation  over 
cannot  take  effect,  even  though  the  first-named  person  should  die 
in  the  testator's  life.^  The  reason  given  is  one  of  construction: 
that  the  gift  or  bequest  of  such  articles  for  life  must  have  been 
intended  as  an  absolute  gift,  since  one  could  not  use  without  using 
up  the  property.^ 

But  if  we  were  to  extend  that  principle  very  far,  we  should  be 
likely  to  frustrate  instead  of  carrying  out  a  testator's  wishes,  in 
many  instances.  There  are  various  kinds  of  personal  property, 
of  a  more  or  less  perishable  nature ;  and  the  word  "  durable  " 
must  be  used  with  reference  to  movables  in  a  relative  rather  than 
an  absolute  sense.  Tools  and  implements,  garments,  ships,  furni- 
ture, and  books,  are  all  worn  out  in  time,  though  their  use  does 
not  so  completely  necessitate  their  consumption  as  in  the  case  of 
articles  for  food  and  drink.  Leaseholds  and  annuities,  too,  grow 
less  valuable  by  the  lapse  of  time.     Equity  does  not  disregard  the 

5.  See  Schouler  Dom.  Eel.,  §§  182,  30;  Merrill  v.  Emery,  10  Pick. 
185;  Bennett  v.  Davis,  2  P.  Wms.  (Mass.)  507;  German,  v.  German,  27 
316;  Wallingsford  v.  Allen,  10  Pet.  Penn.  St.  116;  Perry  Trusts,  §  547; 
583.  Tyson  v.  Blake,  22  N.  Y.  558;   Shaw 

6.  Andrew  v.  Andrew,   1  Coll.   690.  v.   Huzzey,   41   Me.   495;    Harrison   v. 

7.  Randall  v.  Russell,  3  Meriv.  194 ;  Foster,  9  Ala.  955 ;  Cain  v.  Robert- 
Evans  V.  Inglehart.  6  Gill  &  J.  171;  son,  27  Ind.  App.  198,  61  N.  E.  61. 
Henderson  v.  Vaulx,  10  Yerg.  (Tenn.) 

200 


CHAP.  VII.]    PEESOXAL  PKOPEKTY  lis'  EXPECTANCY.        §  1^0 

testator's  wishes,  if  reasonable,  as  gathered  from  the  whole  instru- 
ment which  disposes  of  perishable  property ;  and,  as  Lord  Eldon 
laid  down  the  rule,  where  personal  property  is  not  specifically 
given,  and  consists  of  an  interest  wearing  out,  or  one  salable  at 
present,  yet  in  point  of  enjoyment  future,  the  whole  should  be 
converted  into  money  as  between  tenant  for  life  and  remainder- 
man.^ Wherever,  then,  a  will  contains  no  expression  of  intention 
that  the  perishable  property  bequeathed  shall  be  enjoyed  in  specie; 
where,  for  instance,  household  furniture,  liquors,  garments,  plate, 
and  the  like,  are  given  for  life,  along  with  money  in  the  funds, 
and  other  securities ;  the  court  is  justified  in  treating  the  perish- 
able property  at  its  cash  valuation,  and  in  directing  it  to  be  turned 
into  money  and  invested,  the  income  only  to  be  paid  regularly  to 
the  party  or  parties  for  life  in  succession,  while  the  principal  is 
reserved  for  the  remainderman.^ 

This  exception  in  regard  to  thing's  quce  ipso  usu  consumuntur 
may  therefore  at  the  present  day  be  considered  as  founded,  not  so 
much  upon  the  testator's  incapacity  to  limit  over  the  beneficial 
enjoyment  of  such  property,  as  upon  his  implied  intention  that 
the  party  first  in  interest  should  be  permitted  to  consume  them.^ 
The  doctrine  of  things  perishable  in  the  use  does  not  apply  to  a 
gift  of  farming  stock.^  And  it  has  been  held  that  where  a  man's 
wearing  apparel  is  given  with  other  things  to  the  wife  for  life, 
with  remainder  over,  she  has  not  the  absolute  interest  in  them ; 
though  it  was  argued  in  this  case  that  she  might  have  consumed 
the  garments  by  putting  them  upon  her  children  or  servants.^ 

8.  See  Fearns  v.  Young,  Q"  Ves.  552;  7  E.  L.  &  Eq.  216;  2  Kent  Com.  353; 
Howe  V.  Earl  of  Dartmouth,  7  Ves.  Patterson  v.  Devlin,  Mcilull.  459; 
137.  Eandall    v.    'Russpll,    3    Meriv.    194; 

9.  Perry   Tru-sts,    §   547,   and   cases  Smith   v.    Barham,   2    Dev.    Eq.    420; 
cited;  Homer  v.  Shelton,  2  Met.  194;  Jones  v.  Simmons,  7  Ire.  Eq.  178. 
Minot  V.   Thompson,   106   Mass.   587;  2.  Groves   v.   Wright,    2   Kaj'   &    J. 
Clark  V.  Clark,  8  Paige,  152 ;  Eichel-  350.     And  as  to  shipping,  see  Healey 
berger   v.    Barnitz,    17    S.    &   R.   293;  v.  Tappan.  4;- N.  H.  243. 

L.  R.  13  Eq.  267;  Hemenway  v.  Hem-  3.  In    re  Hall's   Will,   1    Jur.   N.   s. 

enway,  134  Mass.  487.  974.     See  Cockayne  v.  Harrison,  L.  K. 

1.  Morgan  v.  Morgan,  14  Beav.  72;       13    Eq.   432.     A  gift  of  articles   for 

201 


§  141  THE  LAW  OF  PERSONAL,  PROPERTY.       [pART  II. 

The  rule  of  the  civil  law  with  regard  to  perishable  property  was 
somewhat  different.  Under  that  system  of  jurisprudence,  the 
usufruct  of  things  consumed  carried  along  with  it  the  porperty; 
and  it  was  all  the  same  whether  one  had  the  use  or  the  usufruct 
of  such  things  as  grain  and  liquors  given  him.  Yet  the  usufruc- 
tuary was  distinguished  from  the  proprietor,  in  being  compelled, 
after  the  usufruct  had  expired,  to  restore,  according  as  his  title 
obliged  him,  either  an  equal  quantity  of  the  same  kind  with  that 
which  he  had  received,  or  the  value  of  the  things  at  the  time  he 
received  them."* 

§  141.     Use  by  the  Party  in  Immediate  Interest. 

Where  articles  are  limited  over  in  specie,  by  way  of  remainder, 
the  party  holding  the  particular  estate  or  interest  must  not  waste 
the  goods  any  more  than  a  life  tenant  of  lands,  since  the  enjoy- 
ment of  property,  whether  real  or  personal,  is,  in  either  case,  by 
way  of  usufruct  only.  Specific  chattels,  it  may  be  said,  are  to  be 
enjoyed  and  used,  each  according  to  its  nature,  and  beneficially. 
Allowance  for  ordinary  wear  and  damage  should  be  made  in  favor 
of  the  party  who  has  the  particular  interest ;  and  the  articles 
in  specie  shall  be  given  up  at  the  end  of  his  term  in  the  condition 
in  which  they  may  then  happen  to  be,  although  wasted  and 
diminished  by  the  use,  provided  they  have  not  been  misused.^ 
Where  such  property  is  sold,  however,  and  the  proceeds  are 
invesetd  in  interest-bearing  securities  of  an  incorporeal  character, 
the  element  of  consumption  by  use  becomes  practically  eliminated 
from  the  computation;  and  to  sell  consumable  articles  and  so 
invest  the  proceeds  is  the  usual  practice  whenever  a  will  permits 
of  the  construction,  rather  than  to  give  them  over  in  specie  to  the 
life-tenant.^     Where    "  net   proceeds "    of   a    fund   after   paying 

life  that  can  only  be  used  by  wearing  5.  Action    may   be    maintained    for 

out  or  otlierwiSe  consuming  them  im-  damage    to    a    necklace    by    the    re^" 

plies  an  absolute  estate.     Harrison  v.  mainderman  against  the  estate  of  the 

Foster,   9  Ala.   955;    German  v.   Ger-  life  tenant.      In  re    Swan,    10   Wkly. 

man,  27  Pa.  St.  116,  67  Am.  Dec.  451.  Notes,  113    (Ch.  Div.). 

4.  1  Dom.  Civ.  Law,  §§  989,  990.  6.  See    2    Kent    Com.    354;    Perry 

202 


CHAP.  VII.]    PERSONAL  PROPERTY  IN  EXPECTANCY.        §  143 

charges  and  expenses  are  to  go  to  the  life  beneficiary,  all  ordinary 
wear  and  tear  should  be  borne  by  the  income ;  but  probably  for 
large  and  unusual  expenses  a  different  rule  would  apply.^ 

§  142.     Rule  Applied  to  Animals. 

If  domestic  animals  are  bequeathed  for  life  with  remainder 
over,  the  tenant  for  life,  taking  the  increase  to  himself,  is  bound 
to  keep  up  the  number  of  the  original  stock.  But  if  the  usufruct 
happens  to  be  of  such  animals  as  cannot  produce  young  ones,  as 
a  set  of  horses  or  mules,  or  of  any  one  beast  alone,  the  person 
having  the  life-interest  will  not  be  bound  to  fill  up  the  place  of 
one  which  dies  through  no  fault  on  his  part.^  The  life  beneficiary 
of  animals  takes  presumably  all  increase  of  live  stock  to  himself.^ 

§  143.  Rule  Applied  to  Stock  and  Bonds;  Dividends,  Interest 
Coupons,  etc. 
Where  personal  property  invested  in  stocks  is  limited  over  by 
way  of  remainder,  the  income  being  payable  to  an  intermediate 
party  having  the  particular  estate,^  the  question  sometimes  arises 
as  to  the  disposition  of  extraordinary  profits  which  have  been 
declared  on  the  stocks  by  way  of  dividend.  The  rule  of  the 
English  chancery  courts  appears  to  be  to  consider  such  bonuses, 
or  extra  dividends,  whether  consisting  of  additional  shares,  or 
payable  in  cash,  as  an  accretion  of  capital ;  and  investment  is 
decreed  accordingly;  the  effect  of  which  rule  may  be  that  the 
tenant  or  beneficiary  for  life  takes  less  and  the  remainderman 
more,  than  his  fair  proportion.^  And  such  extraordinary  accu- 
mulations have  been  set  apart  for  the  remainderman,  even  where 

Trusts,  §  552.     Personal  chattels  may  8.  2    Kent    Com.    353,    n. ;    1    Dom\ 

be  used  by  the  tenant  in  life,  if  he  is  Civ.     Law,     §§     986-988 ;     Horry     v. 

entitled  to  possession,  in  any  place;'  Glover,  2  Hill  Ch.  521. 

or  he  may  let  them  out  to  hire.    Mar-  9.  See  Perry  Trusts,  §  546. 

shall   V.   Blew,   2   Atk.   217.     But   he  1.  Perry  Trusts,  §  543. 

cannot  pawn  or  sell  them  beyond  the  2.  Brandor  v.  Brander,  4  Ves.  800; 

extent  of  his  own  interest.     Hoare  vT  Paris  v.  Paris,  10  Ves.  185;  Gilley  v. 

Parker,  2  T.  P.  376.  Burley,    22    Boav.    624;     Wms.    Per8. 

7.  See  Jones,  Re,  103  N.  Y.  621.  Prop.  5th  Eng.  ed.  240. 

203 


§    143  THE  LAW   OF   PERSONAL   PROPERTY.  [pART  II. 

thej  manifestly  arose  from  profits  made  during  the  term  of  the 
beneficiary  for  life.^  Bnt  where  it  appears  affirmatively  that  the 
extra  dividend  arises  from  increased  profits  of  the  current  year, 
it  is  held  to  belong  to  the  beneficiary  for  life.'* 

The  English  rule  in  this  respect  seems  to  have  originated  in 
reasons  of  convenience  rather  than  of  fairness ;  Lord  Loughbor- 
ough, in  the  first  instance  of  the  kind,  objecting  to  hunting  back 
and  seeing  to  what  part  of  the  saving  each  was  entitled ;  ^  and 
Lord  Eldon  afterwards  acceding  with  reluctance  to  a  practice 
which  could  not  well  be  supported,  as  he  thought,  on  principle.^ 
And  to  judge  from  the  latest  English  decisions  on  this  point,  the 
line  in  favor  of  the  remainderman  appears  to  be  drawn  at  bonus 
dividends  which  are  appropriated  by  a  company  as  an  actual 
increase  of  the  capital  stock/  But  in  this  country  the  attempt  is 
sometimes  made  to  apportion  surplus  accumulated  and  stock  divi- 
dends in  such  cases.  Thus,  the  rule  in  Pennsylvania  is  distinctly 
declared  to  be,  that,  on  the  one  hand,  a  surplus  fund  accumulated 
in  stock  over  and  above  the  current  dividends  at  the  time  of  the 
testator's  death  is  part  of  the  stock  itself  and  goes  as  principal; 
and  that,  on  the  other  hand,  all  accumulations  after  the  testator's 
death  are  as  much  a  part  of  the  income  as  the  current  dividends, 
and  as  such  belong  to  the  legatee  of  the  income  or  profits  for  life, 
who  has  the  right  to  take  them,  notwithstanding  that  the  accumu- 
lations were  withheld  from  distribution  for  a  time  after  the  tes- 
tator's death.^     This  is  manifestly  the  just  rule,  though  by  no 

3.  Brauder  v.  Brander,  4  Ves.  800.  the   purchase   of  new   steamers,   were 

4.  Barclay  v.   Wainwright,   14  Ves.  held  to  be  capital  and  not  income,  as 
66;  Preston  v.  Melville,  16  Sim.  163.  between  a  beneficiary  for  life  and  re- 

5.  See  Brander  v.   Brander,   4  Ves.  maindermen.     Barton's  Trusts,  L.  R. 
800.  5  Eq.  238. 

6.  See  Paris  v.  Paris,  10  Ves.  185.  7.  See   Bouch   v.    Sproule,    12    App. 
A    later    case    before    Vice-Chancel-       385.     Cf.   (189'4)   3  Ch.  578. 

lor  Wood  supports  the  same  doctrine;  8.  Earp's  Appeal,  28  Penn.  St.  368. 

and   new   .shares    issued   by    a    steam  And  see  Van  Doren  v.  Olden,  4  C.  E. 

navigation  company  to  represent  sur-  Green    (N".  J.),  176:   Lord  v.  Brooks, 

plus    profits   for   the    preceding   half-  52  N".  H.  77;   64  Penn.  St.  256;  Vin- 

year,    which    had    been    laid    out    in  ton's  appeal,  99  Penn.  St.  434. 

204 


CHAP.  VII.]    PERSONAL  PKOPERTY  IN  EXPECTANCY.       §  143a 

means  easy  of  practical  application.  In  other  States  again,  as, 
for  instance,  Massachusetts,  the  English  chancery  rule  is  favored, 
from  motives  of  convenience;  and  the  tendency  of  these  courts 
appears  to  be  to  treat  stock  dividends  as  prima  facie  capital,  and 
cash  dividends  as  prima  facie  income.^  But  in  the  latest  Massa- 
chusetts cases  this  rule  seems  to  be  so  far  modified  as  to  regard 
any  dividend  made  of  the  stock  of  the  corporation  which  has  been 
bought  in  by  the  corporation  from  its  earnings  as  income  and 
payable  to  the  tenant  for  life  if  the  dividend  represents  no  actual 
increase  of  the  capital  stock.  ^ 

§  143a.     The  Same  Subject. 

Questions  of  this  sort  should  be  determined,  however,  according 
to  the  peculiar  circumstances  of  the  case  presented,  and  such  is 
the  preferable  modern  tendency.  There  are  circumstances  under 
which  the  avails  of  stock  bonuses,  extra  dividends,  or  dividends, 
would  be  treated  as  income  and  not  capital,  when  the  rights  of 
life-tenant  and  remainderman  are  under  consideration.^  And 
money  dividends,  under  certain  corresponding  circumstances,  are 

9.  Minot  V.   Paine,   99   Mass.    101*  was  created.    Minot  v.  Paine,  99  Mass. 

Daland   v.   Williams,    101   Mass.    571.  101;    Wilberding   v.    Miller,    90    Ohio 

Where  corporation  property  consisted  St.  28,  106  N.  E.  665;   Hite  v.  Hite, 

wholly  of  real  estate,  and  part  of  it  93    Ky.    257,    20   S.    W.    778;    Earp's 

was    taken    by    eminent    domain,    the  Appeal,   28  Pa.   St.  368;   Re  Osborne, 

compensation    money,    if    distributed,  209  N.  Y.  450,  103  N.  E.  723;  Bryan 

belongs  to  the  capital  and  not  the  in-  v.    Aiken,     (Del.),    86    Atl.    674,    82 

come  of  a  trust  fund  invested  in  the  Atl.   817;   In  re  Heaton's   Estate,  89 

shares.    Heard  v.  Eldredge,  109  Mass.  Vt.  550,  96  Atl.  21.    A  dividend  paid 

258.     See  also  Gibbons  v.  Mahon,  136  out  by  notes  of  the  company  is   in- 

U.  S.  549.  come  and  not  principal,  although   it 

1.  Leland    v.    Hayden,     102     Mass.  includes   past   accumulated    dividends 

542;     Perry    Tru-sts,     §     545,     notes.  that    might    have    been    paid    on    the 

Under  the  Massacliusetts  rule  all  stock  stock  when  it  is  paid  out  of  earnings, 

dividends   go    to    the    remainderman;  Boston    Safe    Depo.sit   Co.    v.    Adame, 

under  the  Kentucky  rule  they  belong  210  Mass.  175,  106  N.  E.  590. 

to    the    life    tenant,    and    under    the  2.  E.    g.,    Leland    v.    Hayden,    102 

Pennsylvania  rule  they  go  to  the  life  Mass.    542.      As    to    adjustment    of 

tenant  only   so   far  as  they   are  de-  U.   S.   legacy  tax.   in  such   cases,  see 

rived   from   earnings   since   the  trust  Sohier  v.  Eldredge,  103  Mass.  345. 

205 


§  143a         THE  LAW  OF  PEKSONAL  PROPERTY.       LPART  II. 

treated  as  capital  and  not  income;  as,  for  instance,  where  banks 
are  wound  up  and  their  assets  distributed  by  way  of  dividend 
among  the  stockholders.^  Profits  received  by  trustees,  under  the 
sale  at  an  advance  of  a  subscription  right  to  new  stock,  are,  by 
the  Pennsylvania  rule,  regarded  as  income  and  not  capital.'*  A 
dividend  declared  on  shares  before  the  testator's  death,  but  not 
actually  payable  until  after  his  death,  has  been  regarded,  under 
the  English  rule,  as  capital  and  not  income.^  The  intention  of  a 
testator  is  always  an  element  for  consideration,  and,  in  compliance 
with  his  wishes,  where  wasting  securities  are  specifically 
bequeathed  by  him,  the  life-tenant  has  been  allowed  to  receive 
the  dividends,  even  though,  as  in  the  case  of  a  company  whose 
dividends  are  derived  from  the  sale  of  lands,  every  dividend  must 
necessarily  lessen  the  capital  stock.^ 

Cases  somewhat  analogous  to  those  of  stock  bonuses  may  arise 
in  bond  investments.  In  England  the  life  beneficiary  is  so  far 
favored  above  the  party  in  remainder  as  to  the  entire  actual 
income,  that  no  part  of  the  income  is  to  be  used  for  indemnifying 
the  latter  against  the  disadvantage  of  having  stock  purchased 
above    par   by   the   trustee   which   will   eventually   come   to    the 

3.  Perry  Trusts,  §§  544,  545,  and  rule  in  favor  of  the  remainderman 
cases  cited.  is   so  far   changed   that  dividends   in 

4.  Wiltbank's  Appeal,  64  Penn.  St.  money  which  come  from  the  earnings 
256.  But  as  to  purchasing  new  shares  of  the  capital  invested  belong  to  the 
under  an  option,  where  capital  stock  tenant  in  life.  Perry  Trusts,  §  545; 
is  increased,  see  Moss's  Appeal,  83  Barclay  v.  Wainwright,  14  Ves.  66; 
Penn.  St.  264.  And  see  Vinton's  Ap-  1  McClel.  527 ;  Johnson  v.  Johnson, 
peal,  99  Penn.  St.  434.  15  Jur.  714;  Plumbe  v.  Neild,  6  Jur. 

5.  De  Gendre  v.  Kent,  L.  R.  4  Eq.  n.  s.  529;  Lord  v.  Brooks,  52  N.  H. 
283.  77;  Read  v.  Head,  6  Allen,  174.    Cash 

6.  See  Read  v.  Head,  6  Allen,  174 ;  dividends,  extra  dividends,  or  bonuses 
Hill  Trustees,  3d  Am.  ed.  566.  And  declared  from  the  earnings,  are  thus 
see  Wilday  v.  Sandys,  L.  R.  7  Eq.  held  to  be  income  and  to  belong  to 
455;  146  N.  Y.  78.  the    tenant   for   life.      Perry,    §    544. 

The     subject    of    stock    dividends,  And  of  course  a  dividend  earned  be- 

bonuses,  extra  dividends,  &c.,  is  con-  fore  the  testator's  death,  but  declared 

sidered    at    more      length     in    Perry  afterwards,    goes    to    the    tenant    for 

Trusts,    §§    544,    545.      According   to  life.      Bates  v.   Mackinley,    31    Beav. 

the   better   modern   opinion,   the   old  280. 

206 


CHAP.  VII.]    PERSONAL  PROPERTY  IN  EXPECTANCY.        §  144 

remainderman  at  only  par.  Perhaps  in  the. difficulty  of  estimat- 
ing such  speculative  and  prospective  values  lies  the  good  sense  of 
such  a  rule ;  for  by  the  rise  of  stock  thus  purchased,  the  value  of 
the  capital  may  be  greatly  enhanced  at  the  life  beneficiary's  death.' 
In  Massachusetts,  however,  the  majority  of  the  court  has  once 
attempted  to  apply  to  the  trustee's  purchase  of  bonds  at  a  premium 
a  rule  more  advantageous  to  the  party  in  remainder.^ 

§  144.     Income  and  Capital;    Life-tenant  and  Remainderman. 

Every  beneficiary  for  life  of  the  residue  of  personal  estate, 
under  a  will,  is  entitled  to  the  income  of  all  such  part  of  the 
residue  as  has  not  been  required  for  the  payment  of  debts  and 
administration,  and  is  found  to  be  in  a  proper  state  of  investment ; 
and  to  the  income  of  such  property  he  is  entitled  from  the  death 
of  the  testator.^  Where  legacies  are  bequeathed  and  the  residue 
given  to  a  tenant  for  life  with  remainder  over,  the  court,  in  adjust- 
ing the  accounts  between  tenant  for  life  and  remainderman,  will 
consider  the  debts  and  legacies  as  paid,  not  out  of  capital  only, 
nor  out  of  income  only,  but  with  such  portion  of  the  capital  as, 
together  with  a  proportional  part  of  the  income  of  that  portion, 
would  appear  sufficient  for  the  purpose.^     And  if  legacies  are 

7.  Perry  Trusts,  §  547.  and  gone  through  a  process  of  insol- 

8.  See  New  England  Trust  Co.  v.  vent  reorganization,  to  the  utter  dis- 
Eaton,  140  Mass.  532,  4  N.  E.  69,  comfiture  of  such  attempts  to  adjust 
three  judges  dissenting!  (indudinjg  prospective  income  to  capital. 
Morton,  C.  J.).  Here  the  trustee  was  9.  Angerstein  v.  Martin,  T.  &  R. 
directed  by  the  court  to  retain  from  232;  Allhusen  v.  Whittell,  L.  R.  4  Eq. 
the  life  beneficiary's  income  enough  to  295.  See  Parnham's  Trusts,  L.  R.  13 
make  good  to  the  capital  the  amount  Eq.  413.  For  the  rule  as  to  giving 
of  premiums  paid  in  purchasing  such  the  tenant  for  life  the  first  year's  in- 
"  permanent "  seaurities.  This  ap-  come,  in  connection  with  the  settle- 
pears  to  be  not  only  an  unfair  rule,  ment  of  an  estate,  see  Perry  Trusts, 
but  one  which  makes  vain  effort  to  §  551,  and  cases  cited;  Angerstein  v. 
take  in  the  full  scope  of  consequences.  Martin,  2  Sim.  18 ;  Williamson  v. 
Financial  experience  has  since  shown  Williamson,  6  Paige,  303. 

that  many  such  railway  and  other  in-  1.  Allhusen  v.  VMiittell,  L.  R.  4  Eq. 

vestment  bonds,  apparently  quite  safe,       295. 
have    defaulted    on    interest    coupons 

207 


§  145         THE  LAW  OF  PERSONAL  PROPERTY.       [PABT  II. 

given  to  legatees  contingent  upon  their  reaching  a  certain  age,  the 
life-beneficiarj  is  entitled  to  the  intermediate  income  of  the  fund 
set  apart  to  meet  the  contingency.^ 

§  145.     Rule  of  Apportionment  Applied. 

There  is  a  general  rule  of  law  which  forbids  the  apportion- 
ment of  periodical  payments  which  become  due  at  fixed  inter- 
vals; and,  under  its  strict  operation,  the  remainderman  might 
stand  upon  a  more  advantageous  footing  than  is  reasonable 
with  respect  to  the  beneficiary  for  life.  But  this  rule,  like  that 
of  surplus  dividends,  is  founded  in  judicial  convenience  rather 
than  justice;  and  modem  policy  discourages  its  application  in 
many  cases  where  the  life-tenant  would  be  injuriously  affected 
thereby.  When  a  debt  is  secured  by  bond  or  mortgage,  the 
interest  may  be  apportioned,  because  it  is  regarded  as  earned 
from  day  to  day,  even  though  the  interest  be  expressly  made 
payable  half  yearly.^  Large  accumulations  of  profits  extending 
over  a  number  of  years  have  been  held  in  this  country  to  be  ap- 
portionable.'*  Where  the  life-tenant  of  real  estate  dies,  his  rent 
is  almost  universally  apportionable,  under  both  English  and 
American  statutes.^  As  to  annuities,  equity  will  sometimes  pre- 
sume, from  the  necessities  of  the  case,  that  apportionment  was 
intended,  and  make  its  decree  accordingly.^  And  recent  statutes 
are  to  be  found,  which  extend  this  same  reasonable  doctrine  of 
apportionment  to  persons  entitled  to  the  income  for  life  of  any 
property,  whether  real  or  personal,  as  against  remainder-men.^ 

2.  lb.  7.  See  Stat.  4  &  5  Will.  IV,  c.  22, 

3.  Edwards  v.  Countess  of  War-  §  2;  Wms.  Pers.  Prop.,  ITth  Eng.  ed. 
wick,  2  P.  Wms.  176;  Sherrard  v.  399.  Why  such  legislation  is  not 
Sherrard,  3  Atk.  502.  common  in  the  United  States  is  doubt- 

4.  Earp's  Appeal,  28  Penn.  St.  368.  less  because  there  is  less  occasion  to 

5.  3  Kent  Com.  471  and  n. ;  Stat.  11  apply  for  it;  the  policy  is  manifestly 
Geo.  II,  c.  19,  §  15;  Perry  Trusts,  just.  See  Mass.  Pub.  Stats.,  c.  136. 
§  556.  §  25;   Sohier  v.  Eldredge,  103  Mass. 

6.  Hay  v.  Palmer,  2  P.  Wms.  501;  345. 
Howell    V.    Hanforth,    2    Bl.    843;    3 
Kent.  Com.  471. 

208 


CHAP.  VII.  J    PERSOXAi  PROPEETY  I^•  EXPECTANCY.         §  146 

Yet  we  must  remember  that,  at  the  common  law,  neither  rents 
nor  annuities  could  be  apportioned.  And,  independently  of  local 
legislation,  there  is  no  apportionment  of  dividends;  so  that  if 
stock  be  settled  in  trust  for  one  person  during  life,  with  remainder 
to  another,  the  remainder-man  is  entitled  to  the  whole  of  the 
dividend  which  falls  due  next  after  the  decease  of  the  person  en- 
titled for  life.^ 

The  remainder-man  is  entitled  to  the  fund  upon  the  death  of 
the  o^vner  of  the  life  estate ;  income  or  interest  as  from  such  date 
is  due  him,  and  no  deduction  should  be  made  from  the  fund  for 
administering  on  the  life-beneficiary's  estate.^ 

§  146.  Rule  against  Perpetuities. 

The  rule  against  perpetuities  is  applicable  to  limitations  of 
personal  as  well  as  of  real  property.^  In  order  to  prevent  the 
fancies  and  conceits  of  dying  men  from  embarrassing  their  suc- 
cessors, the  courts  long  ago  decided  that  the  vesting  of  a  devise 
should  not  be  postponed  beyond  a  certain  reasonable  period ;  and 
the  same  holds  good  of  a  bequest.  That  period,  as  finally  fixed 
upon,  is  the  period-  of  a  life  or  lives  in  being  at  the  death  of  the 
testator,  and  the  term  of  twenty-one  years  more;  to  which  is 
added  the  period  of  gestation  in  case  of  a  devisee  en  ventre  sa 
mere?  Hence,  an  executory  devise  or  bequest,  limited  to  take 
effect  after  the  indefinite  failure  of  issue  of  a  person  living  or 
deceased,  creates  a  perpetuity,  and  is  void  for  remoteness.''     And 

8.  Pearly  v.  Smith,  3  Atk.  260;  2.  1  Jarm.  Wills,  226,  227:  2  Redf. 
Sherrard  v.  Sherrard,  3  Atk.  502;  Wills,  1st  ed.  845,  846;  Cadell  v. 
Quinn  v.  Madigan,  65  N.  H.  8,  17  Atl.  Palmer,  1  CI.  &  Fin.  372.  As  to  the 
976.  See  Paton  v.  Sheppard,  10  Sim.  New  York  rule  see  In  re  Wilcox,  11T4 
186;    Granger    v.    Bassett,    98    Mass.  N.  Y.  288.  87  N.  E.  497. 

462;  Perry  Trusts,  §  556.  3.  lb.;  Wms.  Pers.  Prop.,  5th  Eng. 

9.  Reiff's  Appeal,  16  Atl.  636,  124  ed.  245;  Bengough  v.  Edridge,  7  Sim. 
Penn.  St.  145.  173;   Cadell   v.  Palmer,  7  Bligh,  202. 

1.  Instances  of  wrongful  suspension  Of    two    possible    constructions    of    a 

of  perpetuities.    Book  26,  N.  Y.  Rpts..  will,  that  seems  to  be  preferred  which 

Bender  ed.,  note,  p.  118.     Illegal  ac-  would  avoid  violating  the  rule  against 

cumulation  of  perpetuities.     Book  36,  perpetuities.       Rand     v.     Butler,     48 

N.  Y.  Rpts.,  Bender  ed.,  note,  p.  728.  Conn.  293. 

U  209 


§  14G  THE  LAW  OF  PERSONAL  PROPERTY.        [PABT  II. 

where  one  sets  apart  by  his  will  a  certain  sum  of  money,  directing 
that  the  interest  be  applied  in  keeping  up  repairs  on  a  family 
tomb,  this  is  likewise  void,'*  But  charitable  trusts  are  an  excep- 
tion to  the  rule  against  perpetuities;  for  it  is  of  the  essence  of 
charity  to  be  never  failing.^  Hence,  some  difficulty  might  be  ex- 
perienced in  a  case  where  a  bequest  of  personal  property  verged 
very  closely  upon  the  nature  of  a  charitable  trust, —  as  if  one 
made  a  gift  of  income  for  repairing  the  tombs  of  his  distant 
kindred.  Sometimes,  too,  a  bequest  which  is  too  remote  of  itself 
is  accompanied  by  a  charitable  bequest;  and  here  the  English 
decisions  appear  to  have  established  the  proposition  that  where 
a  sum  of  money  is  given,  part  of  which  is  to  be  applied  to  a 
purpose  too  remote,  and  the  rest  for  charitable  purposes,  the  whole 
gift  must  fail.^  But  still  there  is  considerable  conflict  in  the 
English  cases  as  to  how  far  a  gift  to  persons  within  the  allowed 
limits  fails  in  general  by  being  mixed  up  with  others  which 
come  within  the  prohibition  against  perpetuities.''  And  the  New 
York  rule  is  a  reasonable  one,  that  if  some  gifts  are  valid  per  se, 
and  others  void,  the  court  will  sustain  the  former  if  they  can  be 
separated  from  the  latter.^ 

As  a  testator  cannot  postpone  the  vesting  of  an  executory  devise 
or  bequest  for  a  longer  term  than  twenty-one  years,  besides  the 

4.  Rickard  v.  Hobson,  31  Beav.  244.  Sel.  525;  White  v.  White,  7  Ves.  423; 
See  Hunter  v.  Bullock,  L.  R.  14  Eq.  Odell  v.  Odell,  10  Allen,  1;  2  Schoul. 
45.  Wills,  Exrs.  and  Admrs.,  §  1465. 

5.  Wells  V.  Heath,  10  Gray  (Mass.)  6.  Fowler  v.  Fowler,  10  Jur.  n.  S. 
17.  See  Joeelyn  V.  Nott,  44  Conn.  55.  648;  Chapman  v.  Brown,  6  Ves.  404; 
The  court  will  not  interfere  with  the  Cramp  v.  Playfoot,  4  Kay  &  J.  479. 
limitation  of  a  trust  fund  unless  is  is  7.  Arnold  v.  Congreve,  1  Russ.  & 
unreasonable.  Oldfield  v.  Attorney-  My.  209 :  Lord  Dungannon  v.  Smith, 
General,  219  Mass.  37&,  106  K  E.  12  CI.  &  Fin.  546:  Webster  v.  Bod- 
1015.  The  fact  that  a  gift  in  re-  dington,  26  Beav.  128;  Wilson  v.  Wil- 
mainder  to  a  State  cannot  take  effect  son,  4  Jur.  x.  s.  1076.  and  other  cases 
till  the  State  by  proper  legislation  cited  in  2  Redf.  Wills,  849,  23  Hun, 
accepts  it,  does  not  make  it  void  as  a  223;  2  Schoul.  Wills,  Ex'rs  and 
perpetuity.       Bell     v.     Nesmith,     217  Adm'rs,  §   1465. 

Mass.  254,  104  N.  E.  721.    See  2  Redf.  8.  Van  Vechten  v.  Van  Veghten,  8 

Wills,  821;    Williams  v.   Williams,  4       Paige,  105. 

210 


CHAP.  VII.]    PERSONAL  PROPERTY  IN  EXPECTANCY.         §  146 

lives  in  being  already  mentioned,  so  he  cannot  extend  that  term 
even  where  he  does  not  avail  himself  of  the  privilege  of  lives  in 
being.  Where,  for  instance,  the  testator  directed  a  postponement 
of  the  vesting  for  twenty-eight  years  after  his  death,  the  limitation 
was  held  void ;  and  there  being  other  limitations  dependent  upon 
this,  they  fell  through  in  consequence.^  But  this  rule  does  not 
prevent  one  from  postponing  the  vesting  for  thirty,  or  any  number 
of  years,  provided  the  property  be  ultimately  to  vest  in  persons 
who  are  living  both  at  the  time  of  the  testator's  death  and  at  the 
time  of  the  vesting,  since  that  renders  it  impossible  for  the  terra 
to  extend  beyond  the  period  of  an  existing  life.^  The  question 
of  remoteness,  it  must,  however,  be  borne  in  mind,  is  to  be  de- 
termined by  reference  to  possible  events,  and  not  to  those  which 
actually  occur;  and  a  limitation  to  such  persons  or  upon  such 
events  that  it  may  lead  to  a  perpetuity  under  the  rule  is  void, 
whatever  might  be  found  to  be  the  facts  if  one  waited  long  enough 
to  ascertain  them.^  And,  of  course,  the  reckoning  of  all  such 
limitations  is  from  the  date  of  the  testator's  death,  and  not  from 
the  date  of  his  will.^ 

The  rule  against  perpetuities  is  most  frequently  violated  by  a 
devise  or  bequest  to  classes,  individuals  of  which  may  not  come 
into  existance  during  the  prescribed  period;  or  to  persons  whose 
interest  is  deferred  beyond  the  period  of  reaching  the  age  of 
twenty-one  one  years;  the  question  being  here,  as  always,  not 
whether  the  estate  actually  vests  within  the  time,  but  whether  it 
may  not.** 

This  whole  doctrine  of  perpetuities  is  of  more  interest  to 
English  than  American  students.     But  it  may  be  laid  down  that 

9.  Palmer  v.  Holford,  4  Riiss.  403;  3.  2    Redf.    Wills,    850;     2    Jarm. 

Speaknian  v.  Speakman,  8  Hare,  180.  Wills     (ed.     1861),     257     and     note; 

1.  Lochlan  v.  Reynolds,  9  Hare,  Tregonwell  v.  Sydenham,  3  Dow.  1D4, 
796;   1  Jarm.  Wills    (ed.  1861),  230;  215. 

2  Redf.  Wills,  1st  ed.  846  4.  1  Jarm.  Wills    (ed.   1861).   233; 

2.  Passim,  Church,  &c.  v.  Grant,  3  2  Redf.  Wills,  1st  ed.  847;  Bou<?hton 
Gray,  142;  Palms  v.  Palms,  68  Mich.  v.  James,  1  Coll.  26;  a.  c.  1  H.  L. 
355;   Hodsou  v.  Ball,  14  Sim.   558.  Cas.   406;   2   Schouler,   §   1465. 

211 


§  147  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  11. 

limitations  of  personal  property,  so  far  as  the  doctrine  has  been 
developed  in  our  own  courts,  follow  the  English  decisions  in  the 
main.  The  statutes  of  some  States  are  explicit  against  permit- 
ting the  suspension  of  ownership  in  property  for  long  periods. 
Thus,  in  New  York,  the  legislature  has  forbidden  limitations  or 
conditions,  as  to  personal  property,  for  a  longer  period  than  two 
lives  in  being  at  the  date  of  the  instrument  creating  it,  or,  if  by 
will,  in  being  at  the  death  of  the  testator.^ 

§  147  Limits  to  Accumulations  of  Income;  Thellusson  Act. 

A  kindred  doctrine  to  perpetuities  is  that  of  the  period  during 
which  income  may  be  accumulated  under  an  executory  devise  or 
bequest.  The  English  statute  which  now  controls  this  rule  is  that 
of  39  &  40  Geo.  III.  c.  98,  familiarly  known  as  The  Thellusson 
Act.  This  statvite  restricts  the  term  for  accumulation  to  the  life 
of  the  grantor  or  settlor  of  property  and  twenty-one  years  after 
his  death,  or  during  the  minority  of  such  person  or  persons  as 
would  otherwise  be  entitled  under  the  will.^  The  object  here  is 
to  prevent  an  avaricious  and  unfeeling  ancestor  from  locking  up 
his  treasures  altogether,  principal  and  income  alike,  for  the  full 
period  permitted  in  the  rule  against  perpetuities  which  we  have 
just  considered.  A  Mr.  Thellusson,  whose  memory  is  thus  con- 
signed by  legislative  enactment  to  an  unenviable  notoriety,  had 
made  an  extraordinary  will,  by  which  he  virtually  disinherited 
his  own  offspring  in  favor  of  an  unborn  distant  posterity,  in  di- 
recting the  income  of  his  property  to  be  accumulated  during  the 
lives  of  all  his  children,  grandchildren,  and  great-grandchildren, 
who  were  living  at  the  time  of  his  death,  for  the  purpose  of  creat- 
ing a  princely  fortune  to  be  spent  by  the  later  descendants  of  his 

5.  1  N.  Y.  Rev.  Stats.  773,  §§  1-5;  6.  See  Wms.  Real  Prop.,  22(i  Eng. 

2   Kent   Com.   353,  n.     See  Dodge  v.       ed.  415;  2  Redf.  Wills,  1st  ed.,  c.  16, 
Pond,  23  N.  Y.  69;  Odell  v.  Odell,  10       passim;    Thellusson    v.    Woodford.    4 
Allen,    1;    Perry  Trusts,   §§   377-390;       Ves.    221;    11    ib.    112;    Schouler,    § 
2  Schouler,  Wills,  Ex'rs  and  Adm'rs,       1465 ;  Perry  Trusts,  §§  393-399. 
§  1465 ;  and  in  general,  John  C.  Gray 
on  Perpetuities. 

212 


CHAP.  VII.]    PEKSONAL  PROPERTY  IX  EXPECTANCY.        §  147 

family ;  and  although  keeping  within  the  strict  letter  of  that  rule 
which  permits  an  executory  devise  or  bequest  to  be  so  long  sus- 
pended, —  a  rule  which  in  strictness  would  include  both  capital 
and  income,  —  he  so  moved  his  fellow-countrymen  to  indignation 
that  it  was  determined  to  prevent  by  act  of  Parliament  the  possible 
repetition  of  any  such  exhibition  of  family  pride  at  the  expense 
of  family  affection.  Similar  legislation  may  be  found  in  some  of 
the  United  States,  as  in  New  York  and  Pennsylvania.  But  where 
no  such  statute  is  found,  the  usual  rule  against  perpetuities  fur- 
nishes the  only  limitation.'' 

Under  the  Thellusson  Act,  it  is  held  that  directions  for  accumu- 
lating income  beyond  the  period  allowed  are  good  for  that  portion 
of  time  which  comes  within  the  act,  and  are  only  void  as  to  the 
remainder.^  But,  independently  of  statutes,  any  trust  for  ac- 
cumulation which  transcends  the  rule  against  perpetuities  would 
be  void  in  toto,  and  the  estate  would  vest  in  the  same  manner  as 
if  the  entire  direction  with  regard  to  accumulation  had  been 
omitted.^  And  this  is  the  New  York  rule;  the  income  going  as 
in  case  of  intestacy.^ 

7.  In  New  York,  the  period  for  ac-  v.   Cook,   7   Paige,  534 ;    Penn.   Stats, 

cumulation  must  be  during  the  minor-  April  18,  1853,  Purd.  Dig.  853. 
ity    of    the    persons    to    be    benefited,  8.  Wms.   Real   Prop.,   22d   Eng.   ed. 

and   terminate   at   the    expiration    of  415 ;  2  Eedf.  Wills,  838,  839 ;  1  Jarm. 

their   minority;    and    the    statute   of  Wills,  286,  287;   Rosslyn's  Trust,  16 

this  State  is,  in  many  respects,  like  Sim.   391. 

the   Thellusson   Act.       All    directions  9.  Boughton  v.  James,   1   Coll.   26; 

for  accumulation   contrary  to  or  in  e.  c.  1  H.  L.  Cas.  406;  Scarisbrick  v. 

excess  of  the  rule  as  defined  by  the  Skelmersdale,  17  Sim.  187. 
legislature  are  so  far  void;   and  if  a  1.  Hull  v.  Hull,  24  N.  Y.  647.     See 

minor  for  whose  benefit  a  valid  aecu-  Phelps's  Executor  v.  Pond.  23  N.  Y. 

mulation   of  interest  or  profits  is  di-  83,    commenting    upon    Kilpatrick    v. 

rected    be    destitute,    the    court    may  Tolinson,  15  N.  Y.  322;  1  N.  Y.  Rev. 

apply  a  suitable  sum  from  the  aecu-  Stats.  726,  §  40;  ib.  773,  §  2;   Wil- 

mulated  moneys  for  his  relief,  as  to  Hams  v.  Williams,  8  N.  Y.  525 ;  also 

support  and  education.     1  N.  Y.  Rev.  Odell  v.  Odell,  10  Allen,  1.    The  Thel- 

Stats.  773,  §§  1-5;  2  Kent  Com.  353,  lusson  Act  applii^  to  the   income  of 

n.     See  Dodge  v.  Pond,  23  N.  Y.  69  ;  both  personal  and  real  estate.     Wms. 

Kane   v.    Gott,    24    Wend.    641:    Gott  Real  Prop.,  22d  Eng.  ed.  415.     But  it 

213 


§  147  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

The  rule  against  accumulations  is  not  restrained  to  cases  which 
expressly  provide  for  accumulation,  but  it  applies  likewise  to 
cases  where  provisions  are  made  which  by  implication  lead  to  this 
result;  as,  for  instance,  where  the  whole  residue  of  an  estate  is 
given  in  such  a  manner  that  the  vesting  is  substantially  postponed 
until  a  later  period  than  that  allowed  by  law;  for  this  must  of 
necessity  involve  the  accumulation  of  the  residue  by  adding  income 
to  principal  while  the  period  of  suspension  lasts.^  But  a  testator 
may  do  three  things  without  violating  any  statute.  First,  he  may 
suspend  the  absolute  ownership  of  the  corpus  of  his  estate,  and 
render  it  inalienable  during  the  permissible  period;  secondly,  he 
may  during  such  suspension  dispose  of  the  income  annually  as  it 
accrues,  though  not  directing  its  accumulation  except  for  a  single 
purpose ;  thirdly,  he  may  give  vested  legacies  and  provide  for  their 
payment  at  a  future  definite  period.  And  upon  these  combined 
reasons  a  disposition  was  sustained  in  ]^ew  York,  some  years  ago, 
where  a  testator,  after  rendering  his  estate  inalienable  during  the 
period  allowed  by  law,  gave  pecuniary  legacies,  payable  at  future 
periods,  with  the  manifest  intention  that  they  should  be  paid  from 
income  as  it  accrued,  leaving  the  corpus  of  the  estate  to  pass  un- 
impaired to  the  residuary  legatees.^  Where  bequests  are  given 
with  directions  for  accumulation  which  are  void  under  the  statute, 
the  English  rule,  which  is  recognized  also  in  l^ew  York,  is  that 
only  the  direction  for  accumulation  is  to  be  held  void,  and  that 
the  bequest  will  take  effect  as  though  there  had  been  no  such 
direction.'* 

does  not  extend  to  funds  which  were  Wills,  840  and  notes;   Bryan  v.  Col- 
provided  for   the   payment   of   debts,  lins,  16  Beav.  14. 

or  for  raising  portions  for  children.  3.  Phelps's    Executor    v.    Pond,    33 

See   Wms.   Eeal   Prop.,   22d   Eng.    ed.  N.   Y.    69.      See    Mandlebaum   v.   Mc- 

415;  2  Redf.  Wills,  838,  839;  1  Jarm.  Donell,  29  Mich.  78. 

Wills,  286,   287;   2   Schouler,   §   1465.  4.  lb.;     Williams    v.     Williams,     4 

2.  1    Jarm.    Wills,    29'3;     2    Redf.  Seld.    525;    Martin   v.    Margham,    14 

Sim.  230. 

214 


CHAP.  VII.]    PERSONAL  PROPERTY  IX  EXPECTANCY.         §  148 

§  148.  Real  and  Personal  compared;  As  to  Estates  Tail. 

Notwithstanding  the  many  strong  points  of  resemblance  which 
we  have  seen  between  real  and  personal  interests  in  expectancy, 
there  are  same  rules  worthy  of  special  mention  which  do  not  seem 
to  apply  with  equal  force  to  the  two  property  systems.  Thns,  an 
estate  tail  in  lands  is  created  by  those  technical  and  almost  in- 
flexible words  "  heirs  of  the  body."  But  the  same  expression, 
when  used  with  reference  to  chattels,  gives  the  absolute  interest 
to  the  first  donee,  unless  something  can  be  found  in  the  instrument 
to  show  that  the  donor's  intention  was  clearly  to  restrict  him  to  a 
life  estate ;  in  which  case  the  heirs,  if  they  were  to  take  after  the 
life  estate  has  determined,  will  take  as  purchasers  and  not  by  way 
of  limitation.^  And  even  the  more  manageable  expression 
"  issue  "  is  subject  to  the  same  rule  of  construction  under  these 
circumstances  if  sanctioned  by  the  whole  scope  of  the  will ; 
namely,  in  favor  of  an  absolute  gift  to  the  first  donee.^  Estates 
tail,  whether  in  real  or  personal  property,  are  very  rarely  met 
with  in  American  practice,  so  that  one  must  rely  chiefly  upon  the 
shifting  opinions  of  the  English  chancery  for  the  later  develop- 
ment of  this  doctrine.  There  the  disposition  was  formerly  to 
apply  the  old  rules  of  tenure  to  aid  in  construing  wills  of  per- 
sonal property.  But  more  recently  the  current  of  authority 
turned  in  favor  of  regarding  more  liberally  the  giver's  actual  in- 
tention in  such  cases,  and  confining  feudal  reasons  to  the  feudal 
property  in  which  they  originated.^ 

Chancellor  Kent  says  positively  that  the  same  words  which 
under  the  English  law  would  create  an  estate  tail  as  to  freeholds 

5.  2  Kent  Cora.  354 ;  2  Redf.  Wills,  7.  lb.  See,  further,  Andrew-s's 
385;  Jackson  v.  Bull.  10  Johns.  19;  Will,  27  Beav.  608;  Christie  v.  Gos- 
Ex  parte  Wynch,  5  De  G.,  M.  &  G.  ling,  Law  Rep.,  1  H.  L.  279;  Hender- 
188,  and  cases  cited.  son  v.  Cross,  7  Jur.  n.  s.  177;  Wms. 

6.  See  Ex  parte  Wynch,  ib.,  where  Per.s.  Prop..  17th  Eng.  ed.  403.  Mr. 
this  .whole  subject  is  fully  discussed  Williams's  dislike  of  expectant  estates 
and  authorities  cited.  And  see  Knight  in  chattels  seems  to  have  carried  him 
V.  Ellis,  2  Br.  C.  C.  570;  Chandless  beyond  the  chancery  courts  in  his 
V.  Price,  3  Ves.  99.  statements  on  this  point. 

215 


§  148 


THE  LAW  or  PERSONAL  PROPERTY. 


[part  II. 


give  the  absolute  interest  as  to  chattels.^  But  this  statement  is 
too  broad ;  certainly  so  far  as  concerns  England.  And  with  regard 
to  the  United  States  as  well  as  England,  we  think  the  rule  is 
better  stated  by  one  of  our  later  equity  jurists  in  these  words: 
"  The  natural  presumption  in  regard  to  personal  estate  is,  that  the 
whole  interest  was  intended  to  be  given  unless  something  else  is 
clearly  expressed.  And  in  regard  to  real  estate  it  is  ordinarily 
intended  that  a  life  estate  merely  was  intended  to  be  conveyed, 
when  no  words  of  inheritance  are  used,  unless  an  intention  to 
give  the  fee  is  clearly  expressed."  ^  In  this  country  the  heir  is 
more  readily  regarded  as  purchaser,  however,  than  in  England.^ 

It  has  generally  been  understood  that  where  real  and  personal 
estate  are  included  in  one  and  the  same  bequest,  and  the  real 
estate  must  be  held  to  have  vested,  the  same  rule  of  construction 
will  be  applied  to  the  personal  estate.^  Limitations  of  property 
real  and  personal,  with  remainder  by  way  of  estate  tail,  are  to  be 
found  blended  together  sometimes  in  modem  practice.^     In  the 


8.  2  Kent  Com.  354,  and  cases  cited. 
For  an  instance  of  executory  trust 
in  jewels',  see  Slielley  v.  Shelley,  L.  R. 
6  Eq.  540. 

9.  Per  Redfield,  C.  J.,  in  White  v. 
White,  21  Vt.  250. 

1.  Whitehead  v.  Lassiter,  4  Jones 
Eq.  79;  Chew's  Appeal,  37  Penn.  St. 
23;  Ingram  v.  Smith,  1  Head,  411; 
2  Redf.  Wills,  388-391. 

2.  Farmer  v.  Francis,  2  Sim.  &  Stu. 
505,  Tapseott  v.  Newcombe,  6  Jur. 
755.  Heilman  v.  Heilman,  129  Ind. 
59,  28  ]Sr.  E.  310. 

See,  however,  St.  John  v.  Dann,  66 
Conn.  401,  34  Atl.  110,  where  the 
beneficiary  took  a  contingent  remain- 
der in  the  realty  and  executory  devise 
in  the  personalty. 

The  word  vested  as  applied  to  per- 
sonal property  has  a  somewhat  dif- 
ferent meaning  from  that  applied  to 


it  in  relation  to  real  estate,  and  in 
connection  with  personalty  it  signi- 
fies interests  not  subject  to  a  condi- 
tion precedent.  Scott  v.  West,  63 
Wis.  529,  24  N.  W.  18,  161,  25  N.  W. 
18. 

3.  Thus,  in  Christie  v.  Gosling, 
which  was  decided  on  appeal  in  the 
House  of  Lords  in  1866,  the  question 
arose  as  to  the  construction  of  a  will 
which  devised  lands  for  life  with 
remainder  to  certain  sons  in  tail, 
and  also  gave  certain  personal  estate 
to  be  held  by  trustees  upon  such 
trusts  and  for  such  estates  and  inter- 
ests as  were  declared  concerning  the 
real  estate,  or  as  near  thereto  as  the 
rules  of  law  or  equity  would  admit, 
with  a  proviso  that  the  personal  es- 
tate should  not  vest  absolutely  in  any 
tenant  in  tail  unless  such  person 
should   attain  twenty-one.     The   life- 


216 


CHAP.  VII,]    PERSON AI.  PKOPEKTY  IN  EXPECTANCY.         §  149 

United  States,  real  and  personal  property  are  made  to  follow  the 
same  general  rules  of  distribution  under  the  local  codes,  so  that 
we  are  free  from  many  of  those  perj^lexities  of  construction  which 
have  been  inseparable  from  the  system  of  our  mother  country. 

§  149.  Real  and  Personal  Compared;  As  to  Contingent  Remain- 
ders. 
The  feudal  law  with  respect  to  contingent  remainders  was  ex- 
ceedingly abstruse.  Where  an  estate  in  land  was  invariably  fixed, 
to  remain  to  a  certain  person  after  the  particular  estate  was  spent, 
it  was  called  a  vested  remainder,  the  estate  being  already  vested, 
though  still  in  expectancy ;  but  where  the  estate  was  to  take  effect 
either  to  an  uncertain  person  or  upon  some  uncertain  event,  the 
name  of  contingent  remainder  was  applied,  for  it  remained  sus- 
pended, in  mid-air,  as  it  were,  and  might  never  vest  at  all.*^  T^ow, 
limitations  of  personal  property,  as  we  have  seen,  are  more  analo- 
gous to  executory  devises  than  to  remainders,  whatever  the  term 
applied;  if,  indeed,  the  language  of  feudal  tenure  be  applicable 
at  all.  The  essential  quality  of  an  executory  devise,  that  which 
gives  it  the  great  advantage  over  a  contingent  remainder,  is  that 
while  the  owner  of  the  intervening  estate  might,  and  often  did  at 
the  common  law,  defeat  a  contingent  remainder  altogether,  by  a 
certain  mode  of  conveyance  which  would  effect  a  sort  of  legal 
abortion,  he  can  by  no  act  of  his  own  prevent  expectant  interests 
under  an  executory  devise  from  coming  into  being  or  vesting  at 
the  appointed  time.^     Hence  is  the  general  principle  that  every 

tenant  being  dead,  the  bequest  of  the  be.     Christie  v.  Gosling,  L.  R.  1  H.  L. 

personalty   was  declared   valid   up   to  279.     See  Harrington   v.   Harrington, 

and    including    his    eldest    son,    then  L.  R.  3  Ch.  564. 

under  age;  and  it  is  understood  that  4.  See  2  Bl.  Com.  168,  169. 

this  decision  meant  to  go  further,  to  5.  Hopkins  v.  Hopkins,  1  Atk.  581; 

the    extent    of    ruling    that,    on    the  Wins.  Real  Prop.,  22d  Eng.  ed.  382; 

death  of  the  eldest  son  under  twenty-  Nightingale  v.  Burrell,  15  Pick.  104 ; 

one,  the  bequest  of  personal  property  1    Jarra.    Wills,    828,    829;     2    Redf. 

Avould    go    over    to    the    next    person  Wills.  650.     Stat.  8  &  9'  Vict.,  c.  106, 

named  in  the  will  as  tenant  for  life  §    8,    changes    materially    the   law    of 

or  tenant  in  tail,  as  the  case  might  contingent  remainders   in  that  coun- 

217 


§150  THE   LAW   OF   PERSONAL    PROPERTY.  [PART  II. 

interest  in  personal  property  which  is  provided  to  take  effect  in 
futuro,  is  of  an  indestructible  nature,  and,  notwithstanding  the 
acts  of  a  party  having  the  present  beneficial  enjoyment,  takes 
effect  in  its  proper  turn;  so  long,  at  least,  as  the  rule  against 
perpetuities  is  not  violated.^ 

Where  a  remainder  in  lands  had  been  devised  to  sons  of  the 
tenant  for  life,  it  was  held  in  Massachusetts  that  on  the  usual 
principle  of  tenures  the  remainder  vested  on  the  death  of  the 
testator  in  the  sons  then  living,  but  in  case  of  after-born  children 
opened  again  and  let  them  in/  But  Chief  Justice  Parsons  adds : 
"  Of  a  chattel  there  can  be  no  remainder,  which  may  vest  and 
afterwards  open  to  let  in  after-born  children ;  and  the  interest  in 
it  must  be  contingent,  until  the  time  provided  for  the  distribution 
of  it,  in  order  that  they  may  take."  ^ 

§  150.     Real  and  Personal  Compared;  As  to  Reversonary  Inter- 
ests. 

We  do  not  find,  as  a  matter  of  practice,  that  expectant  estates 
are  mentioned  by  way  of  strict  reversion,  in  personal  chattels. 
It  would,  of  course,  be  inconsistent  with  testamentary  dispositions 
to  limit  property  in  this  manner.  But  the  loan  of  chattels,  with 
or  without  the  stipulated  payment  of  a  certain  sum  for  their  use 
for  a  certain  specified  time,  is  a  matter  of  every-day  business. 
Pianos  and  other  household  furniture  are  often  let  with  a  house. 
We  can  hardly  apply  the  term  "  expectant  estates  "  to  such  chat- 
tel interests,  although  in  many  respects  the  owner's  interest  is 
somewhat  analogous  to  the  landlord's  estate,  by  way  of  reversion, 
in  lands  which  he  has  leased  for  a  particular  life  or  for  years.^ 

try.    Cf.  In  re  Swan,  10  Wkly.  Notes,  As    to    the    old    English    practice    of 

113   (Ch.  Div.).  drawing  settlements  so  as  to  preserve 

6.  1  Jarm.  Wills,  834;  2  Kent  Com.  contingent  remainders,  see  Perry 
352,  353;   Wms.  Pers.  Prop.  245.-  Trusts,    §§    522,    523.       8    &    9    Vict., 

7.  Dingley  v.  Dingley,  5  Mass.  535.  c.  106,  renders  these  formalities  no 
And    see    Crisfield    v.    Storr,    36    Md.  longer  necessary.     lb. 

129.  9.  As    to    estates    in    reversion    in 

8.  Dingley  v.  Dingley,  5  Mass.  535.      lands,  see  2  Ewell's  Bl.  Ck)m.  176. 

218 


CHAP.  VII.]    PERSONAL  PROPERTY  IN  EXPECTANCY.        §  151 

It  is  clear,  however,  that  personal  property  may  be  subjected  to 
much  the  same  modifications  of  ownership  as  real  estate,  even 
though  not  by  way  of  technical  devise  or  bequest;  and  we  may 
readily  conceive  of  a  case  where  some  one  making  a  family  settle- 
ment —  as  a  husband  —  might  wish  to  so  limit  chattels  to  wife 
or  child  that  there  would  be  still  an  interest  in  himself,  operating 
by  way  of  reversion. 

The  term  "  reversionary  interest "  is,  however,  one  of  frequent 
application  in  the  law  of  trusts  to  things  both  real  and  personal ; 
and  it  appears  to  be  applied  without  much  discrimination  to 
expectant  interests  in  general ;  not  in  the  more  restricted  sense  of 
that  residue  which  remains  to  one  who  has  carved  out  of  his  own 
a  lesser  estate.  We  hear  sometimes  of  "  future  or  reversionary 
interests  "  in  chattels,  whether  vested  or  contingent.^  Most  com- 
monly are  these  expressions  applied  to  family  settlements.^  Inas- 
much as  a  reversion,  unlike  a  remainder,  arises  by  operation  of 
law,  there  is  no  particular  reason  why  the  term  "  reversionary  in- 
terest "  should  not  have  a  more  exact  meaning  in  connection  with 
things  personal,  if  a  corresponding  convenient  term  were  applied 
to  interests  by  way  of  remainder. 

§  151.     Real  and  Personal  Compared;  As  to  Conditional  Devise 
or   Bequest. 

The  distinction  between  limitations  of  real  and  personal  prop- 
erty may  be  further  illustrated  by  the  case  of  a  conditional  devise 
or  bequest.  Landed  estates  granted  on  condition  precedent  could 
not,  at  common  law,  vest  in  the  grantee  until  the  condition  had 
been  performed;  while  those  granted  on  condition  subsequent 
vested  at  once,  but  were  liable  to  be  defeated  afterwards  through 
non-performance.^     Hence,  where  one  makes  a  will  containing  a 

1.  See  Burrill  Diet.  "Reversionary  Peaehey  Marr.  Settle.  165,  261.  733; 
Interest;  "  Bouvier's  Diet.  ib. ;  Wms.  Osborn  v.  Morgan,  8  E.  L.  &  Eq.  192; 
Pers.  Prop.  350;  Ibbottson  v.  Rhodes,       9  Hare,  432. 

2    Vern.    554;    Browne    v.    Savage,    7  3.  See  2  Ewell's  Bl.  Com.  152-154; 

W.  R.  571.  Co.  Lit.  201. 

2.  See    Sohouler    Dom.     Rel.     131; 

219 


§    152  THE  LAW  OF   PEESOJS'AL   PROPEKTY.  [PAKT  II. 

devise  of  lands  upon  condition  to  some  person  in  expectancy,  it  is 
material  to  inquire  whether  the  condition  he  precedent  or  subse- 
quent."* But  in  regard  to  personal  property  our  law  follows  the 
rule  of  the  civilians,  which  made  no  distinction  between  condi- 
tions precedent  and  subsequent.  And  hence,  where  a  legacy  de- 
pends upon  a  condition  precedent  which  becomes  impossible,  the 
bequest  will  vest  and  become  absolute;  though  it  is  otherwise 
where  performance  of  the  condition  forms  the  consideration  of 
the  gift.^  But  where  a  gift  is  made  upon  an  immoral  condition, 
it  fails  altogether;  this,  too,  being  the  doctrine  of  the  civil  law.^ 

I  152.  Equity  Aids  Parties  in  Expectancy;  Security  from  Life 
Beneficiary,  Etc. 
Courts  of  equity  furnish  their  assistance  to  parties  interested 
in  expectancy,  where  the  chattels  are  already  subject  to  an  inter- 
mediate interest.  The  English  rule  was  formerly  more  stringent 
than  at  present ;  security  being  required  from  the  beneficiary  for 
life,  in  favor  of  the  person  entitled  by  way  of  remainder.  But 
Lord  Thurlow  says,  in  Foley  v.  Bumell,  that  these  cases  have 
been  overruled,  and  chancery  now  demands  of  the  intermediate 
party  only  an  inventory,  which  affords  more  equal  justice.^  If 
there  should  appear,  however,  good  cause  to  apprehend  that  the 
property  would  be  wasted,  secreted,  or  removed  by  the  plaintiff, 
security  may  still  be  required.^  The  American  cases  generally 
support  the  same  views.^     But  as  executors  and  trust  officers  gen- 

4.  2  Wms.  Ex'rs,  10th  ed.  1004 ;  In  re  Moore,  39  Ch.  Div.  116,  57  L.  J. 
Gorst  V.  Lowndes,  11  Sim.  434;  2  Ch.  936,  59  L.  T.  Rep.  N.  S.  681,  37 
Eedf.  Wills,  661  et  seq.;  Moakley  v.       Wkly.   Rep.    83. 

Riggs,  19  Johns.  71,  72.  6.  lb.;    Swinb.,   pt.   4,   §    6,   pi.    16. 

5.  2  Jarm.  Wills  (ed.  1861),  13;  See,  further,  c.  13,  Part  III,  on  Lega- 
Reynish  v.  Martin,  3  Atk.  330;  Mad-      cies,  post. 

dox    V.    Maddox,    11    Gratt.    804 ;    2  7.  Foley  v.  Bumell,  1  Br.  C.  C.  274. 

Greenl.    Cruise,    16;    2    Redf.    Wills,  8.  lb.;   2  Kent  Com.  354;   1  Jarm. 

665,  675;  2  Schoul.  Wills,  Ex'rs  and  Wills,  835. 

Adm'rs,  §  1463.     See  Ransdell  v.  Bos-  9.  De     Peyster     v.     Clendining,     S 

ton,   172   111.   439',    50   N.   E.    111.   43  Paige,  295 ;  Homer  v.  Shelton,  2  Met. 

L.  R.  A.  526,  3  Prob.  Rep.  Ann.  156;  194;     LangAvorthy    v.    Chadwick,     13 

220 


CHAP.  VTl.]         PERSONAL  PROPERTY  IX  EXPECTANCY.        §  153 

erally  are  in  the  habit  of  giving  bonds  for  the  performance  of 
duties,  it  can  hardly  be  considered  unreasonable  to  require  some 
kind  of  security,  at  least,  in  the  remainder-man's  favor,  from  the 
life  beneficiary  in  possession,  especially  if  the  property  itself  is 
easily  capable  of  destruction  or  removal ;  though  where  the  prop- 
erty is  in  the  hands  of  trustees  having  the  legal  estate,  such  special 
precautions  might  be  imnecessary.  Where  property  is  given  by 
the  executor  to  the  tenant  for  life  and  by  him  consumed,  the  execu- 
tor either  of  the  testator  or  of  the  tenant  for  life  may  be  held 
responsible.^  The  rule  in  Pennsylvania  under  legislative  enact- 
ment is  to  require  security  in  all  cases,  under  the  direction  of  the 
Orphans'  Court,  where  chattels  are  bequeathed  to  one  for  life  and 
then  limited  ovor.^ 

The  civil  law  made  the  usufructuary,  in  general,  give  not  only 
an  inventory,  but  the  necessary  security,  which,  according  to 
circumstances,  would  be  with  or  without  sureties ;  and  if  the  prop- 
erty might  be  easily  injured,  this  constituted  an  important  ele- 
ment in  determining  as  to  the  need  of  sureties.'' 

§  153.     Death  of  Life  Beneficiary;  Presumptions. 

In  a  case  where  the  life  beneficiary  of  a  fund  had  been  trans- 
ported in  1832  and  had  not  afterwards  been  heard  of,  the  remain- 
der-men applied  twenty  years  later  for  payment,  on  the  presump- 
tion of  death.  Said  the  Master  of  the  Rolls :  "  T  will  not  now 
dispose  of  the  capital,  but  I  cannot  refuse  to  order  payment  of 
the  future  dividends  to  the  children,  on  their  undertaking  to  abide 
by  any  order  of  the  court  to  make  good  the  dividends  received  by 
them  out  of  their  shares  of  the  capital,  if  it  should  hereafter 
appear  that  their  father  is  still  alive."  '^ 

Conn.    42;    Henderson   v.    Vaulx,    10  786;   Bedford's  Appeal,  40  Penn.  St. 

Yerg.    530;    2    R<Hif.    Wills,    655,    n.;  18,  17  S.  E.  241. 

2   Kent   Com.    354,   and  n. ;    Rowc   v.  3.  1  Dom.  Civ.  Law.  99'4. 

White,    1    C.    E.    Green.    411:    Perry  4.  Per  Romilly.  M.  R.,  In  re  Mile- 

Trufets,  §  541,  and  cases  cited.  ham's  Trust,   15  Beav.  507:   21   E.  L. 

1.  Jones  V.  Simmons,  7  Ire.  Eq.  172.  &  Eq.  550. 

2.  See    2    Kent   Com.    354,   n.      See  Upon    the   general    subject    of    per- 
also  Hawthorne  v.  Beckwith,  89  Va.  sonal  property  in  expectancy,  the  stu- 

221 


CHAPTER  VIII 


JOINT    AND    COMMON    OWNERS 


§  154.     Number  and  Connection  of  Owners  of  Personal  Property. 

The  number  and  connection  of  owners  is  an  important  element 
to  be  considered  in  dealing  with  the  law  of  personal  property. 
Writers  on  the  subject  of  real  estate  tell  us  that  lands  may  be 
held  either  in  severalty,  or  by  joint  tenancy,  or  by  co-parcenary, 
or  in  common ;  and  under  these  heads  they  embrace  about  all  the 
law  that  pertains  to  the  subject ;  though  the  title  of  husband  and 
wife  to  land  is  something  peculiar  and  might  constitute  still  an- 
other topic. ^  Taking  a  corresponding  standpoint  from  which  to 
view  the  subject  of  personal  property,  we  shall  see  that  similar 
principles  of  classification  are  to  be  adopted.  The  very  same 
terms  are  sometimes  applied  indiscriminately  to  lands  and  chat- 
tels, as  where  one  speaks  of  a  joint  tenancy  or  a  tenancy  in  com- 
mon under  a  patent.  But  we  are  still  to  remember,  as  before,  that 
while  real  estate  is  theoretically  the  subject  of  tenure,  personal 
property  is  owned ;  and  it  would  be  more  correct  to  designate 
persons  as  joint  owners  or  owners  in  common,  than  as  tenants  of 
a  chattel. 

§  155.     Owners  in  Severalty;  Joint  and  Common  Owners. 

Where  one  holds  or  owns  property,  as  the  case  may  be,  in  his 
sole  right,  without  any  other  person  being  joined  or  connected 
with  him  so  long  as  his  interest  continues,  we  say  that  he  is  a  ten- 
ant in  severalty  of  the  land,  or  a  sole  or  several  owner  of  the 

dent  is  referred  to  works  upon  Trusts,  extensive  works  of  Jarman  and  Red- 

A  good  modern  work  upon  this  sub-  field  upon  Wills,  and  also  in  2  Schoul. 

ject,  especially  for  American  readers,  Wills,    Ex'rs    and    Adm'rs,    §§    1458- 

is  that  of  the  late  Jairus  W.  Perry.  1475. 

Lewin  on  Trusts  has  a  good  English  1.  See  2  Ewell's  Bl.  Com.  179-195; 

reputation.     The  topics  of  this  chap-  1  Washb.  Real  Prop.,  c.  13. 

ter  are  incidentally  considered  in  the 

222 


CHAP.  VIII.]  JOINT  AND  COMMON   OWNERS.  §    156 

chattel.  This  species  of  ownership  being  the  simplest  and  most 
familiar,  needs  no  special  exposition.  Next,  as  to  an  estate  bj 
co-parcenarj,  that  tenancy  has  sole  reference  to  the  inheritance 
of  lands ;  and  in  this  country,  where  the  rule  of  equal  descent  and 
distribution  prevails,  as  to  both  real  and  personal  property,  it  has 
no  application  whatever.^ 

We  have  only  then  to  consider,  at  length,  in  the  present  con- 
nection, two  leading  classes  of  owners  to  personal  property:  first, 
joint  owners ;  second,  owners  in  common.  To  these  the  present 
chapter  will  be  exclusively  devoted.  As  concerns  the  rights  of 
husband  and  wife  in  one  another's  property,  special  treatises 
should  be  consulted  by  the  reader ;  ^  and  of  partners,  stockholders, 
and  the  like  we  shall  speak  hereafter. 

§   156.     Joint  Ownership  of  Personal  Property;  Its  Nature  and 
Creation. 

First,  as  to  joint  owners  of  personal  property.  Where  two  or 
more  are  joined  together  with  reference  to  the  same  property, 
having  unities  of  title,  time,  interest,  and  possession,  they  are  joint 
tenants  thereof  if  the  property  be  real,  and  joint  owners  if  it  be 
personal.  Unity  of  title  is  necessary,  that  is  to  say,  the  title 
should  arise  under  one  and  the  same  instrument,  or  be  created 
by  the  same  act  on  the  part  of  the  donor  or  seller ;  unity  of  time, 
that  is,  each  interest  should  vest  at  the  same  moment ;  unity  of 
interest,  that  is,  these  interests  in  the  property  should  be  for  the 
same  duration  and  the  same  quantity;  and  unity  of  possession, 
that  is,  each  tenant  or  o\vner  must  have  an  undivided  possession  of 
each  entire  part  as  of  the  whole,  and  not  possess,  one  a  distinct 
and  separate  portion,  and  the  other  another  distinct  and  separate 
portion."*  The  creation  of  such  ownership  depends  upon  the  acts 
of  parties,  for  it  does  not  result  from  operation  of  the  law.^ 

2.  2   Ewell's  Bl.   Com.    187,   339;    4  and  t\.\   4  Kont  Com.  359;  2  ib.  350; 
Kent  Com.  363.  Co.  Lit.  182  a 

3.  See   Schoul.   Domestic   Relations.  5.  But  tlio   mere  deposit  of   money 

4.  1  Ewell's  Bl.  Com.  180-18^,  399,  to   a   joint    account   does   not    import 

228 


§  156  THE  LAW  OF  PERSONAL  PROPERTY.        [PAET  II. 

As  there  can  be  no  '^  estate  "  in  personal  property,  many  of 
those  technical  distinctions  which  are  made  in  the  books  between 
joint  estates  for  life,  in  tail,  or  in  fee,  have  no  application  to  our 
present  subject.^  But  any  interest  which  may  be  lawfully  created 
in  chattels,  whether  immediate  or  expectant,  is  itself  susceptible 
of  joint  as  well  as  sole  ownership;  and,  as  we  take  occasion  to 
show  elsewhere,  personal  property  may  be  limited  in  modern  times 
to  very  much  the  same  effect  as  lands,  notwithstanding  the  natural 
and  technical  differences  between  them/ 

Household  furniture,  merchandise,  animals,  and  other  mov- 
ables of  a  corporeal  character,  may  therefore  be  so  vested  in  two 
or  more  persons  as  to  constitute  them  joint  owners  thereof.^ 
There  may  likewise  be  joint  owners  of  a  promissory  note ;  ^  of  a 
patent- right ;  ^  of  a  legacy ;  ^  of  stock ;  -^  of  an  insurance  policy ;  ^ 
of  a  bank  deposit ;  ^  and,  in  short,  of  any  chattel,  whether  of  a 
corporeal  or  incorporeal  nature,  whether  in  the  nature  of  a  chose 
in  possession  or  of  a  chose  in  action;  so  long  indeed  as  that  chattel 
can  be  the  subject  of  ownership  at  all,  unless  special  reason  to 
the  contrary  exists.  Nor  does  the  principle  apply  only  to  chattels 
personal;  for  chattels  real,  such  as  a  lease  for  years,  may  be 
owned  by  two  or  more  jointly.^ 

It  is  the  fundamental  principle  of  a  joint  tenancy,  that  while 

survivorship.      Eobinson    v.    Bank,    7  2.  3  Redf.  Wills,  497;  2  Atk.  220; 

Cal.  App.  642,  95  Pac.  533.  Armstrong  v.  Armstrong,  L.  R.  7  Eq. 

6.  Wms.  Pers.  Prop.,  17th  Eng.  ed.       518. 

451,  D6  N.  E.   627;   Attorney-General  3.  Crossfield   v.    Such,    22    E.   L.    & 

v.    Clark,   222   Mass.   291,   110   N.   E.  Eq.  555. 

299;   Durfee's  Estate,  Re,   140  N,  Y.  4.  Farr  v.    Grand    Lodge,    83    Wis. 

S.  594,  79  Misc.  Rep.  655;   140  N.  Y.  446;   In  re  Davies'  Policy  Trusts,  53 

S.  9^19.  K  W.  738,  IS  L.  R.  A.  249;    [1892], 

7.  See  preceding  chapter.  1  Ch.  90. 

8.  2  Ewell's  Bl.  Com.  39'9;   2  Kent  5.  50  Hun,  477. 

Com.  350;   Crocker  v.  Carson,  33  Me.  6.  Taylor  Landl.   and  Ten.,   §   114; 

436;  Swartwout  V.  Evans,  37  111.  442.  Burns   v.    Bryan,    12    App.    Cas.    184. 

9.  Conover  v.  Earl,  26  Iowa,  167;  See  also  Given  v.  Kelly,  85  Penn.  St. 
People's  Bank  v.  Keeoh,  26  Md.   521.  309. 

1.  Pitts   V.    Hall,    3    Blatchf.    201; 
Curtis  Patents,  §  190. 

224 


CHAP.  VIII.]  JOINT   AXD   COMMON   OWNERS.  §    156 

the  parties  constitute  but  one  person,  so  to  speak,  as  far  as  the 
rest  of  the  world  is  concerned,  with  regard  to  themselves  each  is 
entitled  to  an  equal  share  of  the  rents,  income,  and  profits,  so 
long  as  he  lives ;  and  when  one  dies,  the  survivor  takes  the  entire 
interest,  to  the  complete  exclusion  of  the  heirs,  or  personal  repre- 
sentatives of  the  partj  deceased.^  This  right  of  survivorship  is 
the  great  clog  upon  property  vested  in  joint  owners  as  distin- 
guished from  those  who  own  in  common ;  for  it  seems  very  unrea- 
sonable on  the  face  of  it,  that  while  both  are  equally  o^vners,  the 
longest  liver  should  have  the  whole.  And  the  modern  policy  of 
the  law,  strengthened  and  enforced  by  numerous  local  statutes,  is 
to  regard  property  which  has  been  given  or  sold,  granted  or 
devised,  to  two  or  more  persons  without  words  indicating  how  it 
shall  be  held,  as  a  tenancy  or  ownership  in  common  presumably, 
rather  than  a  joint  tenancy  or  ownership.^  And  an  exception 
which  has  long  been  made  in  favor  of  trade  or  agriculture  is  to 
regard  the  implements  and  stock  used  in  any  joint  undertaking 
of  this  sort  as  exempted  from  the  rule  of  survivorship;  though 
here  the  modern  principles  to  be  applied  are  those  peculiar  to  the 
law  of  partnership,  which  we  shall  examine  hereafter.^ 

But  it  must  be  conceded  that  the  policy  of  discouraging  sur- 

7.  It  is  interesting  to  note,  as  Ix^ar-  McClain,  51  Kan.  153.  Under  a  stat- 
ing on  the  nature  of  joint  tenancy,  iite  which  abolishes  survivorsiiip  as 
that  where  stock  is  issued  in  tlie  incident  to  joint  tenancy,  a  deed  or 
name  of  two  and  the  survivor,  the  will  may  expressly  create  such  inci- 
transfer  on  the  death  of  one  is  tax-  dent.  Jones  v.  Cable,  114  Penn.  St. 
able  under  the  inheritance  tax  as  586,  7  Atl.  79'!.  See  Houghton  v. 
being  one  to  take  effect  in  possession  Brantingham,  86  Conn.  635,  86  Atl. 
after  the  death  of  the  joint  owner.  664  (.survivorship  abolished).  Sur- 
Matter  of  Dana  Co.,  164  N.  Y.  App.  vivorship  may  be  created  by  contract. 
Div.  44.  Chippendale  v.  North  Adams  Bank,  222 

Joint  tenants  of  personal   property  Mass.  409,  111  N.  E.  371.    See  Majot's 

and  right  of  survivor.     Book  36  N.  Y.  Estate,   199   N.  Y.   29,   92  N.   E.   402 

Rpts.,  Bender  ed.,  note,  p.  379.  (removal  from  one  State  to  another). 

8.  See  2  Ewell's  Bl.  Com.  183;  4  9.  See  Co.  Lit.  182  a;  2  Kent  Com. 
Kent  Com.  359,  360,  n. ;  1  Washb.  Real  359.  And  see  next  chapter  as  to 
Prop.  408,  and  n. ;  Bradford  v.  Ben-  Partners. 

nett,    48    111.    App.    145;    Simons    v. 

15  225 


§    156  THE    J.AW    OF    PERSONAL    PKOPEKTY.  [pART  II. 

vivorship  has  been  applied  in  practice  more  directly  to  lands  than 
chattels ;  and  this  we  have  no  doubt  is  mainly  for  the  reason  that 
a  strict  joint  ownership  (not  a  partnership)  in  chattels  is  seldom 
created  so  as  to  occasion  hardship  or  last  any  considerable  length 
of  time,  except  it  be  by  will.  The  construction  of  wills  involves 
chiefly  the  question  of  testamentary  intent ;  and  bequests  and  lega- 
cies, dependent  upon  the  contingency  of  one  or  another's  death, 
are  by  no  means  unusual  in  various  other  connections.  The  doc- 
trine of  survivorship  might  apply  well  enough,  then,  to  gifts  of  this 
sort,  if  so  the  testator  intended  it,  though  intolerable  when  en- 
forced where  two  persons  had  bought  and  paid  for  goods  and  chat- 
tels together,  and  thus  jointly  acquired  a  title  by  purchase.  Sub- 
ject to  the  exceptions  made  in  favor  of  trade  and  agriculture,  the 
rule  has,  it  is  true,  been  laid  doMm,  that  if  personal  property, 
whether  of  a  corporeal  or  incorporeal  character,  be  given  to  A 
and  B  simply,  without  the  use  of  other  words,  they  will  be  joint 
owners,  having  equal  rights  as  between  themselves  during  the 
joint  ovmership,  and  being  with  respect  to  third  persons  but  a 
single  individual  in  the  legal  sense. ^  Whether,  however,  this 
would  amount  to  a  presumption  in  favor  of  survivorship,  as 
against  a  quasi  partnership  in  the  property,  the  decided  cases  leave 
it  rather  difficult  to  determine;  and  the  more  so  from  the  circum- 
stance that  the  term  "  joint  ownership  "  is  frequently  used  in  an 
indefinite  sense,  so  far  as  personal  property  is  concerned, —  as  it 
certainly  ought  not  to  be, —  consequently  embracing  both  the 
technical  joint  ownership  and  the  ownership  in  common.^  The 
modem  rule  of  equity  is  certainly  to  defeat  a  joint  tenancy  where- 
ever  it  is  possible;  and  in  this  country  the  incident  of  survivor- 
ship is  destroyed  by  statute  almost  entirely,  except  in  the  case  of 
legacies  or  devises,  and  where  persons  are  appointed  co-executors 
or  co-trustees  or  co-guardians,^  or  when  one  expressly  creates  the 
incident. 

1.  2   Kent   Com.    350;    Wms.   Pers.  2.  See  Swartwout  v.  Evans,  37  111. 

Prop.,   17th    Eng.   ed.    451.      And   see  442;     Pars.     Partn.     548;     White    v. 

Crossfield   v.    Such,    22    E.    L.    &   Eq.  Brooks,  43  N.  H.  402. 

555.  3.  See  Perry  Trusts,  §  136;  Nichol- 

226 


CHAP.  VIII.]  JOINT  AND  COMMON   OWNERS.  §    157 

§  157,     Joint  Ownership  Under  a  Will. 

As  to  legacies  of  personal  property.  Chancellor  Kent  says  that 
the  courts  at  one  time  leaned  against  any  construction  tending  to 
support  a  "  joint  tenancy  "  in  legacies  of  chattels,  and  testators 
were  presumed  to  have  intended  to  confer  legacies  in  the  most 
advantageous  manner;  but  that  in  Campbell  v.  Campbell  the 
Master  of  the  Rolls  reviewed  the  cases,  and  concluded  that  where 
a  legacy  was  given  to  two  or  more  persons,  they  would  t^ke 
jointly  unless  the  will  contained  words  to  show  that  the  testator 
intended  a  severance  of  the  interest  and  to  take  away  the  right 
of  survivorship ;  and  that  this  rule  of  construction  has  been 
declared  and  followed  in  the  subsequent  cases.^  But  yet  legacies 
and  general  testamentary  dispositions  mainly  depend  upon  the 
testator's  intention,  as  we  have  already  remarked.  The  legal 
construction  of  wills  favors  the  vesting  of  legacies ;  and  the  rule  is 
general,  that  where  a  bequest  to  two  or  more  whose  names  are 
coupled  together  fails  as  to  one  because  of  his  death  before  the 
will  can  take  effect,  or  from  other  cause,  there  is  no  lapse  of  the 
bequest  so  long  as  the  other  party  or  parties  remained  at  the 
testator's  death  to  take  it  by  way  of  survivorship.^  The  effect  of 
such  a  rule  is  to  prevent  a  collapse  of  the  testamentary  gift,  so 
that  from  this  point  of  view  it  is  certainly  beneficial.  And  it 
should  be  added  that  words  of  survivorship  are  usually  to  be  re- 
ferred to  the  period  of  the  testator's  death.  But  if  there  be  a 
previous  life  estate,  it  appears,  according  to  the  later  English 
authorities,  that  the  period  of  division  among  survivors  will  be 
the  death  of  the  person  who  has  the  life  interest.^ 

son  V.  Caress,  45  Ind.  479.     Kendall  Campbell,  4  Bro.  15;  Jackson  v.  Jack- 

V.    Hamilton,    4    App.    Cas.    504,   dis-  son,  9  Ves.  591.     Sec  Mayn  v.  Mayn, 

cusses  the  question  of  joint  and  sepa-  L.  R.  5  Eq.  150;  Morgan  v.  Britten, 

rate  liability  on  one  contract.     There  L.  R.  13  Eq.  28. 

is   no   settled    rule   of   equity    that   a  5.  Humphrey     v.     Tayleur,     Ambl. 

contract  which   in  terms  is  joint  and  136;     Morley    v.    Bird,    3    Ves.    628; 

would   be  so  construed   at  law  as  to  Cowdin  v.  Perry.  11  Pick.  503;  Wms. 

be  treated  in  equity  as  joint  and  sev-  Pers.   Prop.,   17    Enf».   ed.    511. 

eral.     lb.  6.  2     Rodf.     Wills,     2d     ed.     489; 

4.  2  Kent  Com.   351;    Campbell   v.  Wordsworth   v.   Wood,    4    My.   &    Cr. 

227 


§  159         THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

§  158.     Joint  Executors,  Trustees,  Etc. 

Executors,  trustees,  and  other  officers  who  have  the  legal  estate 
in  personal  property  are  usually  brought  within  the  rule  of  joint 
ownership  where  two  or  more  are  appointed  to  act  together;  for 
it  is  inconvenient  for  such  persons  to  hold  as  owners  or  tenants 
in  common.  The  practice  with  regard  to  trust  settlements  is  to 
make  the  trustees  joint  owners,  in  order  that  surviving  trustees 
may  take  the  entire  fund,  rather  than  that  the  executors  or  admin- 
istrators of  any  trustee  who  may  happen  to  die  should  have  any 
right  to  meddle  with  the  share  of  the  deceased.^  And  so,  too, 
where  a  bequest  under  a  will  is  made  to  joint  executors  as  a  class, 
and  one  or  more  of  them  dies  in  the  testator's  lifetime,  or  after 
the  testator's  death  and  prior  to  the  period  of  division  or  any  sev- 
erance of  the  joint  ownership,  the  whole  property  vests  in  the 
survivors  for  the  purposes  designated  in  the  will.^  In  short, 
trust  property,  testamentary  or  otherwise,  is  generally  limited  to 
fiduciary  officers  as  joint  tenants,  and  such  is  the  construction 
favored  constantly  by  the  court.^ 

While  the  presumption  is  in  favor  of  joint  ownership  as  regards 
co-executors,  persons  who  are  made  owners  in  common  as  legatees 
are  not  permitted  to  defeat  the  purpose  of  the  testator  regarding 
the  legacy,  on  the  plea  that  they  were  also  made  joint  owners  as 
executors.* 

§  159,     Joint  Ownership;  How  Construed,  Etc. 

The  doctrine  of  survivorship  should  have  a  beneficial,  not  a 
merely  technical  operation.  Thus,  whenever  an  estate  is  limited 
to  two  jointly,  the  one  capable  of  taking  and  the  other  not,  he  who 
is  capable  shall  take  the  whole.^ 

641;   Barber  v.  Barber,  3  My.  &  Cr.  9.  See  Perry  Trusts,  §  343. 

688.  1.  See  Barber  v.   Barber,   3   My.  & 

7.  Wms.  Pers.  Prop.,  17  Eng.  ed.  Cr.  688;  1  Atk.  494;  Bain  v.  Lescher, 
396;    Knight  v.   Gould,   2    My.   &   K.  11  Sim.  397. 

295 ;    Perry   Trusts,    §    343 ;    2    Kedf .  2.  See  Humphrey  v.  Tayleur,  AmW. 

Wills,  2d  ed.  489.  136. 

8.  lb. 

228 


CHAP.  VIII.]  JOINT  AND   COMMON    OWNERS.  §    160 

If  two  persons  advance  money  bj  way  of  mortgage  or  otherwise, 
and  take  the  security  to  themselves  jointly,  and  one  of  them  die, 
the  survivor  will  be  a  trustee  in  equity  for  the  representatives  of 
the  deceased  of  the  share  which  the  latter  advanced.^  And  in 
many  other  other  ways  does  equity  discourage  the  presimiption  of 
an  unjust  ownership  of  chattels,  especially  where  some  joint  under- 
taking, trade,  or  speculation,  is  construed  to  be  a  quasi  partner- 
ship. But  wherever  a  joint  ownership  exists  in  a  chattel,  the  rule 
of  survivorship  pennits  that  joint  owner  who  outlives  his  fellow 
owner  to  take  the  whole  unaffected  by  any  disposition  which  the 
latter  may  have  made  by  his  will."*  Where,  however,  there  is  a 
burden  attached  to  the  relation,  as  in  a  lease  to  joint  parties  with 
a  covenant  to  pay  rent,  the  representatives  of  the  deceased  tenant 
have  been  held  jointly  and  severally  liable  with  the  survivor, 
though  having  no  interest  left  as  tenants.^ 

An  exception  to  the  requirement  of  unity  as  to  time  in  personal 
property  occurs  in  case  of  a  joint  ownership  created  by  will ;  to 
which  there  is  a  corresponding  exception  found  where  real  estate 
is  devised.  Thus,  under  a  bequest  to  A  for  life,  and  after  his 
decease  to  the  issue  or  children  of  B,  without  words  of  severance, 
all  the  issue  or  children  born  in  A's  lifetime  will  become  entitled 
jointly,  though  some  may  not  be  living  when  the  shares  of  the 
others  become  vested  in  interest.  On  the  death  of  any  of  them 
before  payment,  the  survivors  will  become  entitled  to  their  shares.^ 

§  160.     Severance  of  Joint    Ownership. 

Joint  ownership  in  chattels,  like  a  joint  tenancy  in  hinds,  is 
liable  to  severance;  that  is  to  say,  one  of  its  constituent  unities 
may  be  destroyed,  so  as  to  turn  the  estate  or  interest  into  an 
ownership  in  common.  Thus,  one  of  the  persons  interested  may 
dispose  of  his  interest  in  such  manner  as  to  sever  it  from  the 

3.  Potty  V.  Styward,  1  Ch.  57;  Lake  5.  Bums  v.  Bryan,  12  App.  Cas. 
V.  Gibson,  1  Eq.  Ca.  Abr.  290;  Perry      184. 

Trusts,  §  136.  6.  Sec  Wms.  Pers.  Prop.,  17th  Eng. 

4.  Soe  Wms.  Pers.  Prop.,  17th  Eng.       ed.  451. 
ed.  451. 

229 


§  1 G 1  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

joint  fund ;  losing,  likewise,  his  own  right  of  sundvorship.  This 
is  severance  by  act  of  one  of  the  parties.  Or,  again,  joint  owner- 
ship can  be  severed  by  mutual  agreement  of  the  owners.  And  we 
may  often  find  an  inference  raised  that  severance  had  actually 
taken  place,  where  the  course  of  dealing  between  the  parties 
jointly  interested  sufficiently  intimates  that  an  ownership  in 
common  was  mutually  established,  even  though  no  express  act  of 
severance  be  shown.  In  the  English  chancery,  where  the  iVmeri- 
can  rule  requiring  express  words  to  create  a  joint  tenancy  is  not 
easily  available,  the  courts  frequently  rely  upon  slight  circum- 
stances for  presuming  that  a  severance  has  taken  place.''  Deeds 
of  severance  are  sometimes  executed  voluntarily  by  parties ;  and 
the  operation  of  covenants  in  deeds  of  settlements  is  found  to 
have  the  severing  effect.^ 

161.  Ownership  in  Common;  Its  Nature  and  Creation. 

ISText  as  to  a  tenancy  or  ownership  in  common.  An  estate  or 
interest  of  this  kind  exists  where  two  or  more  hold  by  several  and 
distinct  interests,  not  by  a  joint  title  but  in  common,  the  only 
unity  recognized  being  that  of  possession.  There  may  be  a  com- 
mon ownership  of  personal  property  as  there  is  a  tenancy  in 
common  of  real  estate ;  and  a  common  ownership  may  arise,  more- 
over, either  from  the  actual  severance  of  a  joint  ownership  or  from 
a  transfer  to  two  or  more  to  hold  in  common.^  It  is  true  that  at 
law  a  chose  in  action  (or  incorporeal  chattel)  cannot  be  severed 
by  joint  owners  thereof  so  as  to  effect  an  ownership  in  common,^^ 
and  this  for  the  reason  that  such  property  is  not  legally  assign- 
able ;  but  in  equity  the  case  is  different,  and  such  assigTiments  are 

7.  See  \Yood,  V.  C,  in  Williams  v.  8.  In  re  Hewett  [1894],  1  Ch.  362. 

Hensman,  1  Johns.  &  H.   557.  But  it  And    see   Attorney-General    v.    Clark, 

is  held  that  the  marriage  of  a  daugh-  222  Mass.  29'1,  110  N".  E.  299 ;   In  re 

ter  who  is  a  joint  legateen  does  not  Harris'  Estate,  169  Cal.  725,  147  Pac. 

per  se  sever  the  joint  ownership  un-  967. 

der  a  will.     Armstrong  v.  Armstrong,  9.  2    Bl.    Com.    399;    2    Kent   Com. 

L.  R.  7   Eq.   518.     See  also   [1891]    3  350;    Wms.    Pers.    Prop.,    17th    Eng. 

Ch.  59.  ed.  455. 

230 


CHAP.  VIII.]  JOIXT  AND   COMMON    OWNERS.  §     161 

protected.^  The  sole  owner  of  chattels  may  sell  an  undivided  in- 
terest and  thus  create  the  relation.^  ^^lle^e  two  or  more  are 
made  tenants  in  common  by  deed  or  some  general  instrument 
well  written,  a  difficulty  will  seldom  arise.  But  in  wills  there  is 
greater  indulgence  given  to  informal  expressions,  in  order  to  effect 
a  testator's  wishes,  and  it  is  a  rule  that  any  words  which  denote 
an  intention  to  give  to  each  of  the  legatees  a  distinct  interest  in 
the  subject  of  the  gift  will  create  them  common  owners  therein,^ 
or  in  a  contrary  case  joint  tenants."* 

Of  course  tho  various  species  of  chattels  which  were  enumerat<^d 
as  capable  of  being  subjected  to  joint  ownership  may  as  well  be 
owned  in  common.  And  as  common  owners  can  hold  by  several 
and  distinct  titles,  unlike  joint  owners,  whose  title  must  have 
been  created  by  one  and  the  same  will  or  other  instrument,  so  a 
common  ownership  of  chattels  may  arise  in  a  variety  of  ways.^ 
Thus,  a  contract  that  A.  shall  find  timber,  and  B.  shall  manu- 
facture it  into  shingles  and  have  a  certain  proportion  of  the 
number  manufactured,  is  held  to  make  A.  and  B.  tenants  in 
common  of  the  shingles.^  And  parties  may  be  tenants  in  common 
of  grain  which  is  mingled  in  a  grain  elevator  before  actual  di- 
vision has  been  made.^  Transactions  of  this  sort,  however, 
border  very  closely  upon  the  law  of  partnership,  as  we  shall  see 

1.  Wms.  Pers.  Prop.,  17th  En<».  ed.  intention  of  the  testator  is  manifest. 
455.      The    subject    of    assignment    is  Stetson  v.  Eastman,  84  Me.  366. 
treated  siipi-a,  §§   72-86.  4.  See  Phelps  v.  Simons,  153  Mass. 

2.  Such  interest  may  be  designated  415,  4  N.  E.  657. 

by   dollars'    worth    as   well    as    by    a  5.  Presumption    that    ownership    is 

specified  fraction.     74  Mich.  652.  in  equal  interests  overcome  by  proof. 

3.  Wms.  Pers.  Prop.,  17th  Eng.  ed.  Hill  v.  Reiner,  167  Mich.  400,  132 
455;  Davis  v.  Smith,  4  Harring.  68;  N.  W.  1031.  And  see  Chippendale  v. 
Hart  V.  Marks,  4  Bradf.  161  ;  Phene's  North  Adams  Bank,  222  Ma.'^s.  499, 
Trusts  in  re,  L.  R.  5  Eq.  346;  Gilpin  111  N.  E.  371;  Ilaynes  Mercantile  Co. 
V.   Hollingsworth,   3   Md.   190;    Bryan  v.  Bell,  163  Ala.  326,  50  So.  311. 

V.  Twigg,  L.  R.  3  Eq.  433.     The  law  6.  White  v.   Brooks,   43   N.   IT.  402. 

now     presumes     that    a    tenancy     in  7.  Cushing  v.  Breed,  14  Allen,  376 ; 

common  was  intended  under  the  be-  Sexton  v.  Graham,  53  Towa,  181;  61 
quest    of    a    will,    unless    a    difi'erent       Iowa.  648.     See  in  N.  Y.  Vol.  II,  the 

doctrine  of  Confusion  of  Goods. 

231 


§  ICl  THE  LAW  OF  PERSONAL  PROPEKTY.       [PART  II. 

hereafter,  though  there  is  sufficient  difference  left  to  support  a 
distinction;  as  where  the  main  object  of  the  relation  is  not  to  sell 
again  and  trade  but  to  own  together  and  finally  to  divide  among 
themselves.  Steam-engines  put  up  as  fixtures  for  two  or  more  to 
use  as  a  common  source  of  power  are  frequently  owned  by  them 
as  in  common.^  The  simultaneous  delivery  of  absolute  bills  of 
sale  of  the  same  personal  'property,  one  to  each  of  two  purchasers, 
each  purchaser  having  knowledge  of  the  transaction  with  the 
other,  renders  them  owners  in  common ;  and  a  like  principle 
applies  to  the  concurrent  execution  and  delivery  of  two  chattel 
mortgages  to  different  persons.  For  in  the  latter  case  the  legal 
effect  is  the  same  as  if  the  goods  were  mortgaged  to  them  by  one 
instrument.^ 

Owners  in  common,  unlike  joint  owners,  have,  then,  but  one 
unity:  that  of  possession.  The  interest  of  one  may  be  larger  or 
smaller  than  that  of  another,  and  it  may  have  been  acquired  at  a 
different  time  or  in  some  different  manner.  Joint  owners,  like 
joint  tenants,  may  be  said  to  have  their  title  per  my  et  per  tout, 
and  each  has  the  entire  possession  as  well  of  every  portion  as  of 
the  whole.  If  there  be  two  of  them,  for  instance,  each  has  an  un- 
divided moiety  of  the  whole.  ^  But  with  respect  to  a  common 
ownership,  each  owner  is  considered  to  be  solely  and  severally 
entitled  to  his  share,  whether  it  be  one-half,  or  three-fourths,  or 
any  other  proportion."     And  while  an  ownership  in  common  may 

8.  Hill   V.   Hill,   43   Penn.    St.    521.  Ala.  116;  Lewis  v.  Payne,  30  L.  R.  A. 

9.  Welch  V.  Sackett,  12  Wis.  243.  N.  S.  938,  113  Md.  127;  Loomis  v. 
There  may  be  tenants  in  common  of  O'Neal,  73  Mich.  582,  71  N.  W.  701; 
a    machine.      Osborn    v.    Schenck,    83  Shearin  v.  Rigsbee,  18   S.   E.   770,  97 


N.  Y.  201;  Given  v.  Kelly,  85  Penn 
St.  309.  Of  a  yacht.  Ennis  v.  Hutch 
inson,  30  N.  J.  Eq.  110.  Of  a  steam 
boat.  Coursin's  Appeal,  79  Penn.  220 
Of  a  horse.  Goell  v.  Morse,  126  Mass 
480.  Of  property  saved  from  a  wreck 
Boylston  Ins.  Co.  v.  Davis,  68  N.  C 


N.  C.  216;  Brown  v.  Wellington,  100 
Mass.  318;  Bird  v.  Bird,  15  Fla.  424; 
Creed  v.  People,  81  111.  565.  There 
may  be  tenants  in  common  of  the 
wool  growing  upon  sheep,  under  some 
special  agreement.  Beezley  v.  Croa- 
sen,  14  Or.   473. 


17.     As   to  tenants   in   common   of   a  1.  See  2  Kent  Com.   359. 

growing  crop,  see  Galford  v.  Stearns,  2.  There  is  no  presumption  that  the 

51  Ala.  434;  McKeithen  v.  Pratt,  53      interests  of  tenants   in   common   are 

232 


CHAP.  VIII.]  JOINT  AND  COMMON   OWNEES.  §    163 

be  expressly  created  by  will,  deed,  or  contract,  or  by  a  change  of 
title  from  joint  ownership,  it  often  arises  by  implication  upon  a 
legal  construction.^ 

§  162.  The  Same  Subject;  Special  Exceptions. 

Some  of  the  modern  kinds  of  incorporeal  personal  property  are 
of  so  peculiar  a  nature  that  the  principles  of  ownership  in  common 
cannot,  as  yet,  be  declared  to  apply  broadly  to  them.  Thus  it  is 
tolerably  clear  that  letters-patent  may  even  at  law  be  the  subject 
of  joint  or  common  ownership ;  yet  the  use  of  a  patent  right  is 
different  from  the  use  of  any  other  kind  of  property,  and  it  is  not 
safe  to  argue  from  analogy,  or  to  apply  precedents  regarding  a 
joint  or  common  ownership  which  are  borrowed  from  such  chattels 
as  horses  and  grain.'^  Whether  one  owner  in  common  of  letters- 
patent  can  work  the  patent  on  his  own  account  without  the  con- 
currence of  the  others  is  uncertain.^  Beneficiaries  together  under 
a  life  insurance  policy  may  well  be  presumed  joint  tenants,  since 
this  is  akin  to  a  legacy  from  the  party  whose  life  is  insured.^ 

§   163.   Incidents  of  Joint  and  Common  Ownership;  As  to  Third 
Persons. 
That  right  of  survivorship  which  so  strongly  characterizes  the 

equal.  But  where  a  conveyance  or  4.  See  Vose  v.  Singer,  4  Allen,  226. 
deed  to  two  or  more  persons  does  not  Hence,  it  is  held  that  one  jointly  in- 
state the  interest  of  each,  their  inter-  terested  in  a  patent  right  cannot 
ests  are  presumed  equal.  Canipau  v.  maintain  a  bill  in  equity  against  the 
Campau,  44  Mich.  31.  other  who  owns  it  with  liim,  to  com- 
3.  Thus,  where  personal  property  pel  contribution  of  a  portion  of  the 
descends  and  is  distributed  under  the  profits  of  sales  of  the  patented  arti- 
intestate  acts,  it  might  be  said  that  cle,  in  the  absence  of  a  special  agree- 
brothers  and  sisters  or  other  persons  ment.  Vose  v.  Singer,  4  Allen  (Mass.) 
entitled  as  a  class  were  as  to  one  an-  226.  See  Pitts  v.  Hall,  3  Blatclif.  201. 
other  like  owners  in  common  while  5.  Wms.  Pors.  Prop.,  5th  Eng.  wl. 
their  respective  s.hares'  remained  un-  29'1 ;  Hancock  v.  Bewley,  1  .Johns, 
distributed;  for  if  one  should  die  (Eng.)  601 ;  Grim  v.  Wicker,  80  N.  C. 
pending   a   distribution,   his   personal  343. 

representatives,  and  not  the  survivors,  6.  Farr  v.  Lodge,  83   Wis.  446,   53 

would  be  entitled  to  his  share.     See  N.  W.  738;  Davies  Re  [1892],  1  Ch. 

2  Kent  Com.  368.  90. 

233 


§  163  THE  LAW  OF  PERSONAL  PROPERTY.        [pART  II. 

interest  of  joint  owners  has  no  application,  of  course,  to  an  owner- 
ship in  common.  But  in  most  other  respects  the  incidents  of  joint 
and  common  ownership  are  quite  similar;  and  in  the  few  cases 
which  discuss  these  doctrines,  little  attempt  is  made  to  discrimi- 
nate between  the  two  kinds  of  interests,  both  of  them  being  fre- 
quently classed  under  the  head  of  "  joint  ownership,"  or  of  "  part 
ownership,"  which  last  is  better  applied  to  the  peculiar  relation 
of  shipowners.''  Joint  owners  and  owners  in  common  of  a 
chattel  have  each  an  independent  though  undivided  interest 
therein.  Subject  to  such  restrictions  upon  the  assignment  of  in- 
corporeal things  as  we  have  elsewhere  noticed,  each  has  the  right  to 
dispose  of  his  own  undivided  share ;  but  he  cannot  sell  the  whole 
property,  nor  in  fact  any  portion  except  his  own ;  and  if  he  under- 
takes to  dispose  of  any  larger  interest  on  his  own  responsibility, 
his  fellow-owners  are  not  bound  thereby.^  ISTor  can  one  joint  or 
common  owmer  pledge  or  mortgage  the  interest  of  the  other  joint 
or  common  owners ;  though  he  can  either  sell,  mortgage,  or  pledge 
his  own  interest  without  their  consent,  and  by  such  transaction 
the  new  party  becomes  a  common  owner  with  the  others.^  It 
matters  not  that  the  purchaser,  mortgagee,  or  pledgee  was  igno- 
rant of  the  existence  of  other  parties  in  interest  when  he 
acquired  rights  in  the  chattel,  provided  they  were  guilty  of  no 
laches;  for  it  is  a  general  principle  that  the  seller  can  convey  no 
greater  title  than  he  has ;  but  to  the  extent  of  his  own  title,  and 
subject,  we  may  suppose,  to  the  usual  exceptions  in  favor  of 
negotiable  instruments,  the  transaction  will  be  upheld.  In  case 
property  is  sold  under  a  chattel  mortgage,  the  proceeds  should  be 

7.  See  post,  as  to  Shipowners.  A    co-owner    may    separately    insure 

8.  White  V.  Brooks,  43  N.  H.  402;  his  interest  against  fire,  and  in  caSe 
Russell  V.  Allen,  13  N.  Y.  173 ;  Story  of  loss  recover  and  retain  the  insur- 
Partn.,  §  89;  Groell  v.  Morse,  126  ance;  for  this  is  taking  no  title  or 
Mass.  480;  Perry  v.  Granger,  21  Neb.  advantage  to  the  prejudice  of  his  co- 
579,  33  N.  W.  261.  One  co-tenant  owner.  Harvey  v.  Cherry,  76  N.  Y. 
cannot  bind  another.  Book  36,  N.  Y.  436.  Edvidence  by  admissions  of  co- 
Rpts.,  Bender  ed.,  note,  p.  609.  party  jointly  liable,  see  Chamberlayne 

9.  lb.;    Frans   v.    Young,    24    Iowa,  Evid.,  §  1318b. 
375;   Welch  v.  Sackett,  12  Wis.  243. 

234 


CHAP.  VIII.] 


JOINT  AXD  COMMON    OWNERS. 


§  163 


divided    among    the    co-owners    in    proportion    to    their    several 
interests.* 

So,  too,  the  share  of  a  joint  or  common  owner  in  a  chattel  may 
be  taken  and  sold  in  execution  against  him.  But  the  sheriff  has 
no  right  to  take  and  sell,  on  an  execution  issued  against  only  one 
or  more  of  several  joint  or  common  owners,  the  entire  chattel ; 
and  where  he  has  done  so,  the  injured  co-owner  may  sue  him  for 
his  own  share  in  the  proceeds;  or,  perhaps,  regarding  him  as  a 
trespasser,  prevent  him  in  season  from  taking  exclusive  pos- 
session of  the  thing  and  selling  it  at  all.^  The  practical  diffi- 
culty which  would  thus  be  encountered  where  the  chattel  was 
indivisible,  like  a  horse,  is  quite  apparent.  For  the  rule  appears 
to  be  general  that  if  two  persons  o^vn  personal  property,  jointly 
or  in  common,  one  of  them  may  maintain  an  action  against  any 
third  person  who  appropriates  the  whole  to  the  exclusion  of  the 
joint  or  common  interest ;  in  respect  at  least  of  his  own  portion.^ 
On  the  other  hand,  the  undivided  interest  of  a  co-owner  of  chattels 


1.  See  Welch  v.  Sackett,  12  Wis. 
243.  Where  one  of  two  tenants  in 
common  has  paid  his  share  of  a  joint 
mortgage,  and  the  other  has  mort- 
gaged his  portion  a  second  time,  the 
former  is  entitled  to  a  discharge. 
Southworth  v.  Parker,  41  Mich.  198. 

If  one,  disregarding  the  rights  of 
his  co-owner,  authorizes  a  third  per- 
son to  sell  a  hor&e  and  receives  the 
proceeds  to  himself,  it  is  a  conver- 
sion for  which  the  co-owner  may  sue 
both  wrongdoers.  Goell  v.  Morse, 
126  Mass.  480.  And  see  Needham  v. 
Hill,  127  Mass.  133;  Ru&sell  v.  Rus- 
sell, 62  Ala.  48;  Williams  v.  Brassell, 
51  Ala.  397.  Or  the  co-o\vner  may  sue 
to  recover  his  proportion  of  the  price. 
Wright  V.  Searles,  59  How.  (N.  Y.) 
Pr.  176.  The  co-owner  who  is  wronged 
may  either  repudiate  the  sale  and  sue 
for  conversion,  or  he  may   ratify   it 


and  sue  for  his  share  of  the  prtv 
ceeds.  Perry  v.  Granger,  21  Neb.  579, 
33  N.  W.  261. 

The  .sale  by  one  co-owner  without 
leave  of  the  other,  is  an  ouster  and 
conversion,  and  the  co-tenant  may  fol- 
low the  chattel  into  the  hands  of  a 
purchaser,  or  recover  its  value  from 
the  wrong-doer.  Coursin's  Appeal, 
79  Penn.  St.  220.  See  Hooper  v. 
Bankhead.   171  Ala.   626.   54   So.   549. 

Destruction  of  unity  of  possession 
dissolves  the  co-tenancy.  Laughlin  v. 
O'Reily,  93  Miss.  121,  4.")  So.  193; 
60  S.  E.  643   (N.  C). 

2.  Neary  v.  Cahill,  20  111.  214; 
White  V.  Morton,  22  Vt.  15;  Shep- 
pard  V.  Shelton,  34  Ala.  652;  Hayden 
V.  Binney,  7  Gray.  416. 

3.  See  Bryant  v.  Clifford,  13  Met. 
138;  Boobier  v.  Boobier,  39  Me.  406; 
Goell  V.  Morse.  126  Mass.  480. 


285 


§104  THE   LAW   OF   PERSONAL    PROPERTY.  [ PART  II. 

may  be  seized  and  sold  in  attaehment  or  execution  if  the  property 
is  severable.'* 

But  the  ordinary  presumption  is  that  the  sole  possession  of  a 
chattel  by  one  joint  or  common  owner  is  the  possession  of  all ; 
and  especially  must  this  be  true  of  indivisible  personal  property.^ 
And  if  a  thing  is  owned  in  this  v/ay  all  appear  to  be  equally  en- 
titled to  the  possession  of  it,  and  the  one  in  actual  possession  has 
a  right  to  maintain  that  possession  against  the  others.  Courts 
were  not  long  since  ill-disposed  to  meddle  in  such  cases;  and  the 
owner  out  of  possession  was  usually  left  to  await  his  opportunity 
and  take  the  chattel  when  he  could ;  though  it  is  possible  that 
where  the  chattel  was  in  danger  of  being  injured  or  destroyed  by 
a  party  in  possession  who  would  be  unable  to  respond  in  damages, 
or  carried  wholly  without  the  jurisdiction,  a  court  of  equity 
would  require  him  to  deliver  possession  to  the  other  owners,  or 
else  give  security  against  its  injury  or  destruction;  a  similar  rule 
being  applied  sometimes  in  admiralty  where  part-owners  of  a  ship 
fail  to  agree  as  to  its  employment.^ 

§  164.  Remedies  of  Joint  and  Common  Owners  against  Third 
Persons, 
In  general,  joint  ovraers,  and  owners  in  common  of  chattels 
must  join  in  all  actions  relating  to  the  property;  since  otherwise 
there  would  be  a  multiplicity  of  suits, '^  Hence,  if  a  bond  or 
covenant  be  given  or  made  to  two  or  more  jointly,  all  must  join 
in  suing  upon  it ;  and  so  with  any  joint  contract ;  and  the  joint 

4.  Newton  v.  Howe,  29"  Wis.  331;  6.  See  Southworth  v.  Smith,.  27 
Boylston  Ins.  Co.  v.  Davis,  68  N.  C.  Conn.  355;  Conover  v.  Earl,  26  Iowa, 
17.  167 ;  Swartwout  v.  Evans,  37  111.  442. 

5.  Brown  v.   Graham,   24   111.   628;  See  §  209,  post. 

Buckmaster  v.  Needham,  22  Vt.  617;  Special  contract  between  tenants  in 

Southworth  v.   Smith,   27   Conn.   355.  common   may   affect  their   several   in- 

For  application  of  the  rule  of  limita-  terests.     34  App.  D.  C.  575,  583   (pur- 

tions    to   the    possession    of    one,    see  chose  of  an  incumbrance ) . 

Bowen  v.  Preston,  48  Ind.  367;  Baker  7.  May  v.  Parker,  12  Pick.  34;  Lane 

V.    Chase,    55    N.    H.    61;    Harral    v.  v.  Dobyns,  11  Mo.  105. 

Wright,  57  Ga.  484. 

236 


CHAP.  VIII.]  JOIXT   AND  COMMON   OWXERS.  §    164 

owners  of  personal  property  are  properly  joined  in  an  action  of 
replevin  to  recover  possession.^  Hence,  too,  all  the  owners  should 
join  in  trover  or  trespass  for  conversion  or  injuries  to  the  prop- 
erty, or  in  assumpsit  for  money  received  by  a  third  person  from  a 
sale  of  their  common  property;  and  so  on.^  But  non-joinder,  in 
such  case,  is  usually  matter  of  abatement ;  and  there  may  be 
legal  and  sufficient  cause  why  certain  co-owners  are  not  joined. 
Where,  it  is  said,  the  moving  cause  of  action  of  two  or  more  joint 
covenantees  is  several  and  not  joint,  each  may  maintain  his 
several  action  on  the  covenant ;  thus,  there  are  instances,  such  as 
that  of  several  persons  being  interested  in  a  fund,  where  one  is 
paid  and  the  others  are  not ;  or  where  one  seeks  his  share  in  the 
surplus  proceeds  of  a  sale  on  execution.^  It  is  held  that  if  a  co- 
owner  wrongfully  sells  and  converts  the  common  property,  and 
the  purchaser  again  sells  it  for  money,  the  other  co-owner  may 
bring  his  sole  action  of  trover  against  the  first  purchaser,  or  else 
may  waive  the  tort  and  sue  as  for  money  had  and  received,  to 
recover  his  interest  in  the  proceeds  of  the  sale  by  the  first  pur- 
chaser.^ x\n  action  cannot  be  sustained  in  the  name  of  two  where 
one  has  no  legal  interest  left  in  what  was  common  property,  hav- 
ing assigned  it  to  his  co-owner;''  though  a  third  person  may 
practically  take  the  place  of  a  co-owmer  by  assignment.'*     In  a 

8.  Wms.  Pers.  Prop.,  17th  Eng.  ed.  or  more  of  them  dies,  of  course,  on 
451:  Sims  v.  Harris,  8  B.  Monr.  55;  the  principles  of  joint  ownership,  the 
Glover  v.  Austin,  6  Pick.  209;  Eisen-  survivor  or  survivors  must  sue;  and 
hart  V.  Slaymaker,  14  S.  &  R.  153.  if  all  are  dead,  the  representatives  of 

9.  White  V.  Brooks,  43  N.  II.  402;  the  last  survivor.  Stowell  v.  Drake, 
U.  S.  Dig.  Joint  Tenants,  635;  Little  3  Zabr.  310;  Wms.  Per.s.  Prop.  276, 
v.  Harrington,  71  Mo.  390.  Am.  note. 

1.  Wms.  Pers.  Prop.,  3d  Am.  ed.  3.  Murdock  v.  Chenango.  &c.,  Ins. 
276,    and    n.;     Parker    v.    Elder,    11       Co.,  2  Comst.  210. 

Humph.  547;   Catawissa  R.  R.  Co.  v.  One   having   a   joint    interest   may 

Titus.    49    Penn.    St.    277;    Bailey   v.  proceed    alone    to    recover    possession 

Powell,   11   Wis.  419.  from   a    mere   trespasser.      Kmnes   v. 

2.  White  V.  Brooks.  43  N.  H.  402.  Courege.  31  La.  Ann.  74;  52  So.  846; 
See  Bates  v.  Marsh,  33  Vt.  122;  Craver  v.  Mossbaeh.  57  Wash.  662. 
supra,   p.    235,   n.      Where   there   are  107  Pac.  1037. 

parties  to  a  joint  contract  and  one  4.  See  Grim  v.  Wicker,  80  N.  C.  343. 

237 


§  165         THE  LAW  OF  PERSONAL  PEOPERTY.       [PART  II. 

strong  emergency,  as  where  his  co-owners  refuse  to  join  him  and 
are  non-residents,  the  co-owner  of  personal  property  has  been 
allowed  to  sue  separately  a  third  person  for  a  wrong  done  to  the 
thing. ^  And  the  part  owner  who  is  in  sole  possession  is  some- 
times favored  in  such  suits,^ 

Bills  and  promissory  notes  are  sometimes  owned  jointly  or  in 
common;  and  it  is  fair  to  presume  that  the  single  holder  of  such 
a  chattel  may  sell  distinct  shares  to  different  persons  and  thus 
make  them  co-owners.  In  the  mercantile  community,  to  be  sure, 
those  who  own  a  bill  or  note  together  are  usually  to  be  deemed 
partners  or  quasi  partners ;  and  their  rights  and  liabilities  are  de- 
termined accordingly.  But  such  is  not  always  the  case  ;  and  where 
a  note  is  payable  to  A.  and  B.  jointly,  it  should,  according  to  the 
better  authorities,  be  indorsed  by  each ;  and  if  the  note  is  after- 
wards dishonored,  notice  should  be  sent  to  each,  and  not  to  one 
only.'' 

§  165.  Rights  and  Remedies  of  Co-owners  among  themselves. 

But  what  are  the  rights  and  remedies  of  joint  and  common 
owners  as  among  themselves  ?  If  the  property  is  an  indivisible 
chattel,  like  a  horse  or  a  mowing-machine,  the  common  law  affords 
very  little  comfort  to  the  party  who  happens  to  be  out  of  pos- 
session. The  exclusive  possession  being  in  one,  the  other's  legal 
remedy  is  in  general  to  take  it  back  when  he  can;  for  though  the 
possessor  thereby  prevent  the  other  from  fairly  using  the  chattel, 
this  is  not  such  a  conversion  of  the  thing  as  to  justify  the  co- 
owner  in  a  suit.^     Ordinarily,  nothing  short  of  a  destruction  of 

5.  Peek  v.  McLean,  36  Minn.   228.  A   co-owner   held   not  liable   for   per- 

6.  Hasbrouck  v.  Winkler,  48  N.  J.  sonal  injuries  to  a  third  person  in- 
L.  431,  6  Atl.  22.  flicted   by    an    animal   which   has   es- 

7.  See  People's  Bank  v.  Keeeh,  26  caped  from  his  co-owner's  sole  pos- 
Md.  521;  Willis  V.  Green,  5  Hill,  232;  session.  Marsh  v.  Hand,  40  Hun, 
2    Dougl.    653,    n.      But    as    to    joint  339. 

makers,  see  Union  Bank  v.  Willis,  8  8.  Allen    v.    Harper,    26    Ala.    686; 

Met.  504,  contra;  Harris  v.  Clark.  10  Southworth  \.   Smith,   27   Conn.   355 ; 

Ohio,   5;    Allen   v.   Harrah,   30   Iowa,  Co.    Lit.    IffQb;    Bertrand    v.    Taylor, 

370;    Cooper   v.   Bailey,    52   Me.    230.  32  Ark.  470.     Recovery  between  ten- 

238 


CHAP.  VIII.] 


JOINT  AND  COMMON   OWNERS. 


165 


the  chattel,  or  a  conversion  of  the  whole  to  his  own  use,  or  a  clear 
appropriation  of  the  whole  proceeds  of  a  sale,  or  something 
equivalent  to  an  utter  denial  of  the  co-ownership  rights,  will 
render  the  owner  in  possession  liable  to  his  co-owners.  It  is  a 
little  uncertain,  however,  what  acts  constitute  a  conversion,  so  as 
to  justify  a  suit  at  law.^  A  mere  dispossession  certainly  does  not 
amount  to  conversion;  though  dispossession  might,  if  amounting 
to  total  expulsion  or  accompanied  by  other  acts  showing  a  hostile 
intent.  The  protest  or  demand  of  the  aggrieved  party  should 
make  the  wrong  clear.^  The  right  to  exclusive  possession  may 
follow  as  an  incident  of  the  power  to  sell,  where  co-owners  have 
agreed  to  give  the  latter  power  to  some  one  or  more  of  their  number ; 
in  which  case  those  invested  with  the  right  are  liable  to  account  for 
the  proceeds  of  the  sale.^ 

One  co-owner  cannot  maintain  replevin  against  the  other  with  re- 
spect to  the  joint  or  common  property."'     Nor  as  a  general  rule  can 


ants    in    common.      Book    10,    N.    Y. 
Rpts.,  Bender  ed.,  note,  p.   453. 

9.  When  possession  of  one  is  ad- 
verse to  the  other.  Book  18,  N.  Y. 
Rpts.,  Bender  ed.,  note,  p.  303.  The 
secret  removal  of  the  entire  property 
by  one  of  several  common  owners 
without  the  consent  or  knowledge  of 
the  others,  and  for  the  purpose  of 
selling  and  applying  the  proceeds  to 
his  own  use,  has  been  held  not  to 
amount  to  a  conversion.  Jones  v. 
Brown,  38  E.  L.  &  Eq.  304.  Nor 
even  the  sale  of  the  property  to  a 
stranger  by  one  common  owner  or  his 
agent.  Barton  v.  Burton,  27  Vt.  93. 
But  see  next  paragraphs;  Goell  v. 
Morse,  126  Mass.  480;  supra,  §  163. 
One  common  owner  of  a  chattel  can- 
not sue  the  other  for  a  conversion, 
unless  the  common  property  is  de- 
stroyed, carried  beyond  the  State 
jurisdiction,  or,  when  perishable,  so 
disposed   of   as   to   prevent  the   other 


from  recovering  it.  Grim  v.  Wicker, 
80  N.  C.  343;  Strauss  v.  Crawford, 
89  N.  C.  149.  The  sale  by  one  of  two 
or  more  co-owners  to  himself  is  open 
to  suspicion  of  fraud.  16  N.  Y.  Supr. 
418.  A  sale  of  the  entire  interest  in 
a  personal  chattel,  in  which  there  is 
a  reversion,  whether  by  the  tenant  of 
the  particular  estate  or  by  a  stranger, 
is  an  injury  to  the  reversion,  for 
which  the  reversioner  may  maintain 
a  special  action  on  the  case ;  and,  al- 
though he  afterwards  regains  the 
possession,  before  the  termination  of 
the  particular  estate,  or  himself  be- 
comes tlie  purcliiiser  at  the  sale, 
neither  of  these  facts  is,  of  itself,  a 
bar  to  the  action.  Williams  v.  Bras- 
sell,  51  Ala.  397. 

1.  Sc^  Waller  v.  Bowling,  108  N.  C. 
289. 

2.  See   Corln^tt  v.  Lewis,   53   Penn. 
St.  322;  74  Mich.  653. 

3.  Russell  V.  Allen,  13  N.  Y.   173; 


239 


§  165 


THE  LAW  OF  PERSONAL,  PROPERTY. 


[part  II. 


he  maintain  an  action  against  his  co-owner  either  to  recover  their 
common  specific  chattel  or  for  his  undivided  interest  therein;  its 
mere  detention  by  the  other  party  affords  him,  moreover,  no 
relief."^ 

This  apparent  indifference  of  the  common  law  to  the  rights  of 
a  dispossessed  co-owner  in  chattels  does  not  commend  itself  to  the 
courts  of  our  own  land  at  the  present  day.  Equity  suggests  other 
possible  expedients  besides  suits  in  trover  and  conversion.^  The 
statutes  of  some  States  permit  an  action  at  law  to  be  brought  by 
the  aggrieved  co-owner  where  his  fellow-owner  simply  exercises 
exclusive  control,  and  takes  the  beneficial  enjoyment  to  himself.^ 
What  the  co-owners  have  previously  agreed  upon  together  may 
determine  their  respective  rights  and  remedies.'^  And,  what  is 
more  especially  worthy  of  our  attention,  there  are  a  number  of 
decisions,  relating  chiefly  to  oats,  hay,  grain,  and  gathered  crops, 
readily  divisible,  wherein  the  exclusive  appropriation  or  the  sale 


Busch  V.  Nester,  70  Mich.  525,  38 
N.  W.  458.  See  Hardy  v.  Sprowle, 
32  Me.  322. 

4.  Baloh  V.  Jones,  61  Cal.  234; 
Heller  v.  Hufsmith,  102  Penn.  St. 
533.  As  to  rights  and  liabilities  of 
co-owners,  see  Chamberlayne,  Evid., 
§  1314  et  seq.  Liability  between  them- 
selves. Book  25,  N.  Y.  Rpts.,  Bender 
ed.,  note,  p.  269. 

5.  See  Southworth  v.  Smith,  27 
Conn.  355. 

6.  See  Benjamin  v.  Stremple,  13 
111.  466;  Boyle  v.  Levings,  28  111. 
314;  Needham  v.  Hill,  127  Mass.  133. 
In  Alabama  a  trial  of  the  right  of 
property  may  be  maintained  whenever 
personal  property  is  seized  tinder  le- 
gal process,  when  trespass,  trover,  or 
detinue  Avoiild  lie  against  the  officer 
making  the  seizure.  Abraham  v.  Car- 
ter, 53  Ala.  8.  The  policy  of  some 
local  codes,  in  case  of  divisible  per- 
sonal property  which  is  owned  in  com- 


mon, is  to  make  the  aggrieved  co- 
owner's  right  of  action  complete  upon 
a  demand  in  writing  for  his  share  or 
its  value.  Wood  v.  Noack,  84  Wis. 
398,  54  N.  W.  785.  Under  a  Rhode 
Island  statute,  if  one  co-owner  ex- 
cludes the  other  from  enjoyment  of 
the  thing,  the  aggrieved  co-ovsmer  is 
entitled  to  an  account.  15  R.  I.  312. 
See  as  to  injunction  as  a  remedy. 
Hancock  v.  Thorpe,  129  Ga.  812,  60 
S.  E.  168. 

7.  See  [1892]  2  Q.  202.  And  one 
co-owner  trusted  by  the  others  to  take 
possession  for  the  common  benefit  will 
be  held  to  account  accordingly.  Pierce 
V.  Pierce,  89'  Mich.  233,  50  N.  W.  851 : 
Smith  V.  Smith,  150  N.  C.  81,  63 
S.  E.  177;  Morrison  v.  Roekl,  215 
Mo.  545,  114  S.  W.  981.  Good  faith 
towards  co-owners  is  required.  lb. 
And  see  Roll  v.  E^^erett,  73  N.  J.  E. 
697,  71  Atl.  263. 


240 


CHAP.  VIII.]  JOINT    AND    COilMON    OWNERS.  §     1G5 

by  one  of  the  joint  or  common  owners,  with  a  full  retention  of 
the  proceeds,  has  been  treated  as  a  conversion  sufficient  to  justify 
his  fellow-owners  in  suing  him  in  trover.  The  reason  for  this 
exception  to  the  general  rule  is  sometimes  said  to  be  that  the 
chattel  is  of  such  a  nature  as  to  be  necessarily  destroyed  by  its 
use.^  But  the  more  satisfactory  because  the  more  comprehensive 
reason  may  be  found  in  the  distinction  which  is  afforded  between 
divisible  and  indivisible  personal  property.  The  fact  that  one 
takes  into  his  possession  and  uses  exclusively  a  horse  or  machine 
for  the  time  being,  does  not  necessarily  prove  that  he  means  to 
repudiate  the  rights  of  the  others ;  since  the  property,  if  not  used 
in  some  such  way,  could  hardly  be  used  at  all.  But  where  the 
property  is  in  its  nature  divisible,  like  money  and  grain,  requir- 
ing no  act  of  sorting  or  setting  apart,  and  each  co-owner  might 
and  ordinarily  would  carry  off  his  own  share,  the  presumptions 
are  quite  different  where  one  takes  the  whole  into  his  custody 
and  refuses  to  give  up  any  portion.  And  there  is  often  a  cor- 
responding difference  apparent  in  the  matter  of  a  sale  in  these 
two  species  of  property.  But  the  right  to  enjoy  and  dispose,  even 
of  divisible  property,  as  between  joint  and  common  owners,  may 
be  regulated  by  their  own  agreement  among  themselves.^ 

Any  such  misuse  of  the  joint  or  common  property  as  amounts 
to  destruction  or  spoliation  thereof  constitutes  conversion,  and 
authorizes  a  suit  by  or  on  behalf  of  the  injured  parties.  But  the 
usual  and  legitimate  exercise  of  the  right  of  enjo^Tuent  is  no  such 
spoliation  or  destruction.  Under  some  circumstances,  a  co-owner 
of  machinery  may  take  it  out  of  the  mill  where  it  is  usually  kept 
and  set  it  up  in  his  own  mill ;  but  the  case  must  be  very  strong 
to  justify  such  a  proceeding;  and  the  disseverance  and  removal 


8.  Lowe  V.  Miller,  3  Gratt.  205 
Channon  v.  Lusk,  2  Lansinpr,  211 
Smvthe   v.   Tanker slov,   20    Ala.   212 


ceptions.  37  Hun,  594.  For  conver- 
sion of  promis.'=ory  note.  S'ee  Winner 
V.  Penniman,  35  Md.  163. 

Freest  v.  Arnold,  90  Mich.  13.    Trover  9.  See    Crocker    v.    Carson.    33    Me. 

lies  for  using  hay,  but  not  for  selling      436,  71  Atl.  858,  104  Me.  264;  93  Pac. 

it.     59  Vt.  363.     Wool  from  a  whole       566   (Utah). 

flock  does  not  come  within   such  ex- 

16  241 


§  166 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  II. 


of  heavy  and  strongly  fastened  machinery,  which  is  in  working 
order,  from  the  mill  where  it  belongs,  ought  generally  to  justify 
a  suit  on  the  ground  of  its  practical  destruction  or  spoliation.^ 
Sometimes  a  co-owner  may  alter  the  nature  of  the  chattel  while 
turning  it  to  its  ordinary  and  valuable  use,  and  yet  not  render 
himself  liable,  as  where  he  extracts  oil  from  the  whale ;  for  instead 
of  destroying  the  property,  though  changing  its  form,  he 
prevents  it.  from  deteriorating  in  value.  But  to  mix  iron  owned 
in  common  with  other  iron,  melt  the  whole  into  an  undistinguish- 
able  mass,  and  manufacture  new  articles  from  this  mass,  would 
amount  to  a  conversion.^  And  so  would  dismantling  or  so 
disposing  of  machinery  as  to  render  it  unfit  for  its  proper  use."' 

§  166.  The  Same  Subject;  Contribution,  Partition,  etc. 

The  law  favors  remedies  by  one  joint  or  common  owner  against 
another  to  recover  his  share,  not  only  in  the  proceeds  of  a  sale,  but 
in    the    income    or    profits    of   the    joint   or    common    property, 


1.  Cf.  Dodd  V.  Watson,  4  Jones  Eq. 
48;  Symonds  v.  Harris,  51  Me.  14; 
Benedict  v.  Howard,  31  Barb.  569. 

2.  Redington  v.  Chase,  44  N.  H.  36. 
See  Fennings  v.  Grenville,  1  Taunt. 
241;  Agnew  v.  Jolinson,  17  Penn.  St. 
373. 

3.  Given  v.  Kelly,  85  Penn.  St.  SO?. 
It  is  held  that  the  taking  of  a  chat- 
tel mortgage  on  the  property  from  a 
co-owner  as  security  for  his  debt  is 
no  conversion  by  the  mortgagee,  even 
though  the  giving  it  be  a  conversion 
by  the  mortgagor  (as  to  which,  qu.)  ; 
and  that  even  the  taking  possession 
of  the  thing  on  default  of  the  mort- 
gagor is  no  ouster  of  the  co-owner's 
right,  so  as  to  enable  him  to  sue  the 
mortgagee  without  demand.  A  con- 
version must  be  established,  or  at 
least  a  possession  so  hostile  as  to  ex- 
clude the  co-owner's  beneficial  enjoy- 
ment   or    fully    ignoring    his    right. 


Osborn    v.    Schenck,    83    N.    Y.    201; 
Needham  v.  Hill,  127  Mass.  133. 

See  Stevenson  v.  Boyd,  153  Cal. 
630,  96  Pac.  284,  19  L.  R.  A.  N.  s. 
525,  n. ;  Adams  v.  Bristol,  126  App. 
Div.  660,  111  N.  Y.  S.  231;  Warren 
V.  Coal  Co.,  84  Misc.  21,  145  N.  Y.  S. 
902  (conversion  by  one)  ;  Birnel  v. 
Boyd,  53  Ind.  App.  310,  101  N.  E. 
657;  Yoakum  v.  Davis,  162  Mo.  App. 
253,  144  S.  W.  877  (no  replevin)  ; 
Weiss  v.  Weiss,  75  Misc.  644,  133 
N.  Y.  S.  1021;  Merrill  v.  Mason,  159 
Mo.  App.  605,  141  S.  W.  454;  Rocky 
Mountain  Co.  v.  Lunt,  46  Utah,  299, 
151  Pac.  521 ;  Johnson  v.  McFry,  14 
Ala.  App.  170,  68  So.  716;  Woife  v. 
Childs,  42  Colo.  121,  94  Pac.  292; 
Doyle  V.  Bush,  171  N.  C.  10,  86  S.  E. 
165  (mortgage  of  the  common  prop- 
erty) ;  Willis  V.  Whayne,  142  Ky.  352, 
134  S.  W.  150  (limitations);  Wo- 
mack  V.   Douglas,    157   Ky.    716,   163 


242 


CHAP.  VIII.] 


JOINT   AND   COMMON   OWNERS. 


§  166 


wherever  such  share  has  been  withheld  from  him  against  his 
consent;  and  remedies  of  this  sort  are  sometimes  extended  by 
statute.'^  Thus,  where  co-owners  sell  and  one  receives  the  entire 
purchase-money,  the  other  can  maintain  an  action  for  money  had 
and  received  to  recover  his  proportion.^  Herein  joint  and 
common  owners  have  an  advantage  over  partners,  who  cannot  sue 
at  law,  but  must  bring  a  bill  in  equity  for  a  mutual  settlement  of 
accounts.*^  Compensation  for  individual  services  in  managing  or 
taking  care  of  the  property  is  not  favored,  where  a  co-owner 
claims  it,  except  upon  the  basis  of  a  mutual  understanding/ 
Where  a  co-owner  acquires  an  outstanding  adverse  title,  he  may 
be  presumed  to  take  it  for  the  benefit  of  all  the  co-owners,  subject 
to  their  liability  for  contribution  to  the  cost ;  and  so  too  where  he 
removes  an  incumbrance.^     But  while  one  ought  not  to  be  per- 


S.  W.  1130  (co-owner  must  ratify)  ; 
Adams  v.  Bristol,  196  N.  Y.  510,  S9 
N.  E.  1095;  Woods  v.  Bank  of  Hay- 
wards,  10  Cal.  App.  190,  106  Pac.  956 
(chattel  mortgage). 

4.  See  Dyer  v.  Wilbur,  48  Me.  287; 
White  V.  Brooks,  43  N.  H.  402;  Ben- 
net  V.  Bullock,  35  Penn.  St.  364; 
Keyser  v.  Morchead,  23  Idaho,  501, 
130  Pac.  992 ;  Victoria  Copper  Min- 
ing Ck).  V.  Rich,  193  Fed.  314,  113 
C.  C.  A.  238 ;  Maekotter  v.  Maekotter, 
74  Misc.  214,  131  N.  Y.  S.  815 
(equity). 

5.  59  How.  (N.  Y.)  Pr.  176.  Cf. 
Olive  V.  Martell,  83  Vt.  120,  74  Atl. 
1060;  Annon  v.  Brown,  65  W.  Va. 
34,  63  S.  E.  691. 

6.  But  see  Vose  v.  Singer,  4  Allen, 
226.  And  see  Coursin's  Appeal,  79 
Penn.  St.  220,  to  the  effect  that  the 
proceeds  of  sale  of  a  chattel  by  one 
co-owner  cannot  be  followed  by  the 
other  into  any  business  into  which 
the  wrong-doer  may  have  invested 
it  so  as  to  hold  him  to  account  for 
the  profits. 


Where  one  tenant  in  common,  on 
the  refusal  of  the  other  to  join  him, 
makes  neceSsarj'  repairs,  for  the 
benefit  and  preservation  of  the  joint 
property,  he  may  maintain  a  bill 
in  equity  against  his  co-tenant  for 
contribution.  McDearman  v.  McCIure, 
31  Ark.  559'.  See  further,  Newman 
V.  Newman,  27  Gratt.  714;  Talhnan 
V.    Barnes,    54    Wis.    181. 

7.  Fuller  v.  Fuller,  23  Fla.  236. 
But  a  mutual  understanding  on  this 
point  should  be  respected.  Barry  v. 
Coville,  129  N.  Y.  302,  29  N.  E.  307. 
Right  of  action  for  repairs  and  im- 
provements. Book  31.  N.  Y.  Rpts., 
Bonder's    od..   note,    p.    2S5. 

8.  Burgctt  V.  Taliaferro.  US  111. 
503,  9  N.  E.  334;  Dray  v.  Dray,  21 
Ore.  59,  27  Pac.  223;  Moon  v.  Jen- 
nings, 119  Ind.  130;  Turner  v.  Saw- 
yer, 150  U.  S.  578,  14  S.  Ct.  192.  Ad- 
verse possession  by  an  owner  in  com- 
mon will  only  run  from  the  time 
when  knowledge  was  brouglit  home  to 
his  co-owner.  Stewart  v.  Stewart,  S3 
Wis.  364 ;  Van  Gunder  v.  Va.  Coal  4 


243 


§  166  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  II. 

mitted  to  get  a  paramount  advantage  so  as  to  oust  his  co-owner, 
there  is  no  reason  why  he  may  not  fairly  buy  in  the  independent 
interest  of  another  co-owner  similarly  situated  and  gain  control 
by  such  means.^ 

What  course  shall  be  pursued  for  obtaining  a  partition  of 
chattels  held  by  co-owners  must  be  left  somewhat  to  reason  and 
conjecture.  No  action  lies  at  law  for  the  partition  of  personal 
property;  but  any  oral  and  voluntary  partition  which  has  been 
framed  and  carried  into  effect  by  the  parties  themselves,  each 
taking  his  allotted  share,  is  a  valid  one.'  Common  sense  sug- 
gests that  the  co-owners  of  a  single  indivisible  chattel,  who  desire 
a  final  severance  of  the  thing,  sell  it  and  take  their  respective 
shares  in  the  proceeds,  unless  one  buys  out  the  other;  and  if  co- 
owners  cannot  agree  to  thus  dispose  of  the  property,  a  court  of 
equity  will  afford  relief.^  As  to  personal  property  which  is 
severable  in  its  nature  and  lies  in  common  bulk  of  the  same  qual- 
ity, each  co-owner  may  sever  and  appropriate  his  own  share  at 
any  time,  if  it  can  be  determined  by  measurement,  count,  or 
weight ;  and  whether  he  sell,  consume,  or  destroy  it,  this  matters 
nothing  to  the  other  co-owners  so  long  as  their  respective  shares 
are  not  injured  thereby.  Not  only  is  the  consent  of  the  other 
co-owners,  in  absence  of  controlling  stipulations,  unnecessary  to 
the  completion  of  a  severance  in  this  manner,  but  they  have  no 
right  to  take  the  property  into  their  exclusive  keeping  so  as  to 
prevent  him  from  severing  his  interest.^  Furthermore,  the  co- 
Iron  Co.,  52  Fed.  838,  3  C.  C.  A.  294.  lie  sale)  ;  Coburn  v.  Page,  105  Me. 
The  possession  of  a  tenant  in  common  458,  14  Atl.  1026. 
is   not   usually   to   be   considered   ad-  1.  Bruce  v.    Osgood,   113    Ind.    360, 

verse  where  there  is  no  ouster  nor  an      14  N.  E.  563. 

equivalent  act.    See  108  Penn.  St.  595.  2.  Barney  v.  Leeds,  54  N".  H.   128. 

Purchase  by  one  joint  tenant  inures      See  §  166  a;  Ennis  v.  Hutchinson,  30 
to  all.     Book  15,  N.  Y.   Rpts.,  Ben-      N.  J.  Eq.  110. 
der's  ed.,  note,  p.  145.  3.  See  Fobes  v.  Shattuck  22  Barb. 

9.  See  Snell  v.  Harrison,  104  Mo.  568;  Tinney  v.  Stebbins,  28  Barb. 
158;  Starkweather  V.  Jenner,  216  U.  S.  290.  One  tenant  in  common  of  a 
524,  30  S.  Ct.  382  (purchase  at  a  pub-      chattel    may    recover    from    another 

money  expended  beyond  his  due  pro- 

244 


CHAP.  VIII.]  JOINT    AND    COMMON    OWNERS.  §    166a 

owner's  share  in  personal  property  severable  by  weight,  measure- 
ment, or  count,  may  be  demanded  of  the  co-owner  having  pos- 
session of  the  whole;  and,  on  the  latter's  refusal  or  conversion, 
the  former  may  sue  in  his  own  name  for  his  share  without  join- 
ing all  the  other  co-owners."*  Where  a  sale  of  the  whole  property 
has  actually  taken  place,  any  one  of  the  co-owners  may  recover 
his  share  from  the  purchaser  without  joining  other  co-owners ; 
and  in  this  way,  by  ratifying  the  wrongful  transfer  of  his  co- 
owner,  may  an  aggrieved  party  clear  himself  of  the  whole 
inconvenient  relation.^ 

§  166a.  The  Same  Subject;  Partition  in  Equity. 

Partition  between  co-owners  is  a  matter  of  individual  right; 
and  hence,  as  legal  remedies  are  confessedly  inadequate,  any 
court  having  general  equity  jurisdiction  to  grant  partition,  may 
do  so  upon  the  application  of  any  owner  of  personal  property  in 
common  whose  title  is  clear;  nor  can  the  unwillingness  of  the 
other  party  or  parties  defeat  this  right.^  An  actual  partition  of 
the  property  is  the  preferred  relief  thus  aiforded;  but  if  division 
be  impracticable,  a  sale  of  the  chattel  or  chattels  will  be  ordered 
with  an  accounting  and  division  of  the  proceeds.^  Whichever 
method  be  adopted,  the  same  equitable  principles  and  the  same 
just  regard  for  the  several  interests  involved  should  apply. 
Common  owners  or  tenants  of  a  life  estate  can  maintain  such  a 
suit ;  ^  even  an  undivided  fractional  part  of  the  whole  common 

portion  under  some  circumstances  of  58  N.  H.   384;   Perry  v.   Grangier.   21 

express    or    implied    contract.      Gard-  Neb.  579,  33  N.  W.  261. 

ner  v.   Cleveland,   9   Pick.   334.      And  6.  Willard    v.    Willard.    145    U.    S. 

see   U.    S.    Dig.    Joint   Tenants,    634;  116;    Spaulding    v.    Warner,    59'    Vt. 

MeDearman  v.  McClure,  31  Ark.  559.  646;  Kennedy  v.  Boykin,  35  S.  C.  61; 

Such    expenditures    or    services    ren-  Godfrey   v.   White,   60   Mich.   443,   27 

dered  may  be  set  off  in  action  ex  con-  N.  W.  593. 

tractu,  but  not  in  defence  of  trover,  7.  lb.      Statutes  are   found   in   fur- 

which  is  in  tort.     Russell  v.  Russell,  therance  of  such  remedies.     145  U.  S. 

62  Ala.  48.  116.    Sale  at  public  auction  is  favored 

4.  Lobdell  v.  Stowell,  51  N.  Y.  70;  generally.      Blakcmore  v.   Blakemore, 
Stall  V.  Wilbur,  77  N.  Y.   158.  2  So.  565.  39  La.  Ann.  804. 

5.  Lyman    v.    Boston   &    Maine   R.,  8.  Hawkins  v.  McDougal,  125   Ind. 

245 


§    107  THE    LAW    OF    PERSONAL    PROPERTY.  [PART  IL 

property  is  sometimes  set  oif  upon  petition ;  ^  and  an  owner  in 
common  out  of  possession  may  regain  his  cause  notwithstanding 
the  co-owner  has  the  actual  and  exclusive  possession.^  The  co- 
owner  is  not  compelled  to  defer  his  right  of  partition  in  the  hope 
of  some  future  speculative  rise  of  value ;  ^  nor  have  third  per- 
sons, such  as  creditors  of  a  co-ovsraer,  any  right  to  intervene  in 
such  judicial  proceedings.''  But  the  court  which  partitions  will 
properly  ascertain  in  advance  the  respective  interests  in  the 
property.'* 

§   167.  Disadvantage  of  Joint  or  Common  Ownership. 

If  the  doctrines  of  a  joint  and  common  ownership  in  things 
personal  appear  rather  vague,  meagre,  and  unsatisfactory,  this  is 
doubtless  because  they  are  so  seldom  applied  in  the  courts.  To 
adjust  controversies  between  those  who  are  so  unfortunate  as  to 
have  once  become  chattel  communists,  and  to  determine  how  far 
each  proprietor  shall  enjoy  or  dispose  of  what  ought  to  be  either 
sold  and  divided  or  else  managed  upon  some  special  agreement, 
is  a  task  which  the  judiciary  are  reluctant  to  assume.  If  per- 
sons have  money  to  invest  or  chattels  whose  use  is  likely  to  bring 
in  profit,  and  their  desire  is  to  mass  their  several  interests  to- 
gether for  some  joint  business  operation,  without  organizing  a 
company,  they  will  be  most  likely  to  find  themselves  drawn  into 
partnership:  a  relation  which  involves  greater  risks,  but  is  far 
better  adapted  to  the  wants  of  a  mercantile  community,  than 
that  of  either  a  joint  or  a  common  ownership.  It  is  this  relation 
of  partnership  which  we  shall  proceed  to  examine  in  our  next 
chapter. 

527,  28  N.  E.  807.    And  see  McQueen  3.  Stevens    v.    McCormick,    90    Va. 

V.  Turner,  91  Ala.  273,  8  So.  863.  735,  19  S.  E.  742. 

9.  Donner  v.  Quartermass,   90  Ala.  4.  As  to  a   tenant  in   common   not 

164,  8  So.  715.  in  actual  possession,  whose  title  is  dis- 

1.  Barker  v.  Jones,   62  N.   H.   497.  puted,    see    Criscoe    v.    Hambrick,    47 

2.  Land  v.  Smith,  44  La.  Ann.  931,  Ark.  235,  1  S.  W.  150. 
11  So.  577. 

246 


CHAP.  VIII.] 


JOINT    AND    COMMON    OWNERS. 


§  167a 


§   167a.  Joint  Adventures  and  Adventurers. 

Many  of  our  latest  cases  discuss  "  joint  adventures "  and 
"  joint  adventurers."  This  name  seems  to  be  applied  to  those 
special  combinations  of  two  or  more  persons,  where  in  some 
specific  venture  a  profit  is  jointly  sought  without  any  actual 
partnership  or  corporate  designation.  All  such  persons  are 
partners  or  quasi  partners,  rather  than  joint  or  common  owners; 
and,  as  our  next  chapter  will  show,  with  essentially  the  rights 
and  disabilities  which  pertain  to  the  partnership  relation,  al- 
though less  comprehensive  or  permanent  in  the  scope  intended.^ 


6.  See  McMillan  v.  Whitley,  38 
Utah,  452,  113  Pac.  1026;  Jones  v. 
Kinney,  146  Wis.  130,  131  N.  W. 
SSQ';  Edwards  v.  Johnson,  90  S.  C.  90, 
72  S.  E.  638 ;  Knudson  v.  George,  157 
Wis.  520,  147  N.  W.  1003;  Bryan  v. 
Thompson  Co.,  258  Mo.  187,  167  S.  W. 
440. 

Joint  adventurers  must  exercise 
good  faith  toward  each  other ;  and  if 
one  obtains  a  secret  profit  from  any 
Source  touching  the  joint  business, 
he  must  treat  it  as  their  common 
profit.  Sehvyn  Co.  v.  Waller,  142 
N.  Y.  S.  1051  (Sup.  Spec.  Term,  Co. 
1913);  Gamble  v.  Loffler,  28  S.  D. 
239,  133  N.  W^  288;  Bond  v.  Taylor, 
68  W.  Va.  317,  69  S.  E.  1000.  Ad- 
vances made  by  a  party  to  the  joint 
adventure  merely  entitle  him  to  re- 
imbursement. Migel  V.  Heller,  Hirsh 
&  Co.,  151  App.  Div.  637,  136  N.  Y. 
S.  969;  Briggs  v.  Boynton,  212  Mass. 
5,  38  N.  E.  794.  As  to  autliority  to 
pledge  the  joint  property  of  the  en- 
terprise, see  Smith  v.  Bank,  151  App. 
Div.  317,  135  N.  Y.  S.  985.  And  see 
Manker  v.  Tough,  79  Kan.  46,  98 
Pac.  792. 

As  to  net  profits  and  charges,  see 
Stone  v.  W'right  Wire  Co.,  199  Mass. 
306,  85  N.  E.  471;  Botsford  v.  Van 
Riper,    33    Nev.    156,    110    Pac.    705; 

247 


Streat  v.  Wolf,  135  App.  Div.  81,  119 
N.  Y.  S.  779. 

Joint  adventurers  may  assign,  un- 
like a  partner,  160  App.  Div.  725,  146 
N.  Y.  57.  Shares  are  presumably 
equal,  but  presumption  may  be  re- 
butted. Campbell's  Gas  Co.  v.  Ham- 
mer, 78  Ore.  612,  153  Pac.  475.  The 
furnisliing  of  capital  is  not  essential. 
Botsford  V.  Van  Riper,  33  Nev.  156, 
110  Pac.  705.  As  to  the  purchase  by 
one,  see  Boqua  v.  Marshall,  88  Ark. 
373,  114  S.  W.  714.  And  see  Thacke 
v.  Hernsheim,  115  N.  Y.  S.  216  (Sup. 
App.  Term,   1909). 

See,  further,  Gasser  v.  Wall,  111 
Minn.  6,  126  N.  W.  284;  Runklc  v. 
Burrage,  202  Mass.  89,  88  N.  E.  573  ; 
Jackson  v.  Hooper,  76  N.  J.  E.  185, 
74  Atl.  130  (an  implied  relation; 
Berry  v.  CoU)orn,  65  W.  Va.  493,  64 
S.  E.  665;  Whitman  v.  Bartlett.  156 
Ala.  546,  46  So.  972 ;  Stone  v.  Wright 
WMre  Co.,  199  Mass.  306,  85  N.  E. 
471  (insurance  charge)  ;  Irby  v.  Cage, 
Drew  &  Co.,  121  La.  615.  46  So.  670; 
Reed  v.  Engel,  237  111.  628,  86  N.  E. 
1110;  Bernitt  v.  Smith-Powers  Co., 
184  Fed.  139  (Ore.  C.  C.  1911). 

Rules  which  govern  rights  of  par- 
ties in  Joint  Adventures.  Book  22, 
N.  Y.  Rpts.,  Bender's  ed.,  note,  p.  784. 


CHAPTER  IX 


PAETNEES 


§  168.  The  Partnership  Relation,  for  the  Ownership  of  Personal 
Property. 
Personal  property  is  not  the  subject  of  several,  joint,  and 
common  ownership  alone.  Capital  is  employed  in  trade  and 
commerce  so  as  to  be  productive  of  the  largest  possible  profit  by 
means  of  close  combinations  among  individuals  for  the  pursuit 
of  gain.  Two  or  more  persons  unite  in  business,  each  furnishing 
something  valuable,  whether  it  be  money  capital  or  skill ;  and  by 
the  consolidated  credit  thus  obtained,  a  larger  influence  is  wielded 
in  the  mercantile  community,  and  bolder  enterprises  may  be 
successfully  carried  out,  than  where  individuals  act  separately 
and  singly.  Thus  we  have  the  law  of  partnership,  which  in  some 
respects  resembles  that  of  co-ownership,  and  yet  is  so  far  distinct 
and  independent  as  to  constitute  by  itself  an  important  and  ever- 
growing topic  of  jurisprudence  in  modern  times.  The  prime 
object  of  partnership  is  to  sell,  gain,  and  do  business  with  the 
common  fund;  not,  as  in  joint  and  common  ownership,  to  hold 
property  for  a  beneficial  enjoyment. 

The  origin  of  the  law  of  partnership  is  somewhat  uncertain; 
but  it  is  built  upon  the  law-merchant,  which  is  of  itself  nothing 
but  the  custom  of  merchants,  adopted,  enforced,  and  reduced  to  a 
legal  system  by  the  courts,  as  in  so  many  other  instances  of 
common-law  development.  With  the  growth  of  trade  in  modem 
times,  this  mercantile  usage  has  extended  and  developed  to  a 
wonderful  extent;  and  especially  in  the  United  States,  where,  by 
reason  of  our  social  freedom,  the  abundant  rewards  which  await 
hardy  enterprise  in  a  new  and  growing  country,  and  at  the  same 
time  the  comparative  lack  of  large  capital  which  prevails  among 
our  energetic  men,  this  principle  of  business  combination  has 
taken  deep  root.     Commercial  partnerships  were  known  to  the 

248 


CHAP,  IX.]  PARTNERS.  §    170 

Romans;  and  their  system  too  was  founded  upon  the  usages  of 
business,  and  indeed  inspired  much  of  our  modem  partnership 
law.  England  borrows  from  the  United  States  in  these  later  days 
many  important  principles  relative  to  the  subject  in  its  fullest 
development;  since  it  is  here,  and  not  there,  that  the  rights  and 
duties  of  partners  occupy  the  larger  share  of  attention  from  .the 
courts.^  There  is  a  movement  on  foot  in  this  country  to  codify 
the  law  of  partnership  by  means  of  what  is  known  as  the  Uniform 
Partnership  Act,  which  may  be  enacted  into  law  as  was  the 
Negotiable  Instruments  Act.^ 

§  169.  Division  of  Subjects  in  the  Present  Chapter. 

We  shall,  in  this  chapter,  consider,  first,  the  nature,  creation, 
and  general  purposes  of  partnership;  second,  the  rights  and  duties 
of  partners  to  themselves  and  to  the  public;  and,  third,  the  dis- 
solution and  change  of  partnership.  At  the  same  time  our  at- 
tention will  be  mainly  occupied,  as  befits  a  treatise  like  the  pre- 
sent, in  showing  the  reader  how  the  ownership  of  personal 
property  is  affected  by  the  relation  of  persons  holding  it  among 
themselves  as  partners. 

§  170.  Nature,  Creation,  and  Purposes  of  Partnership. 

And,  first,  as  to  the  nature,  creation,  and  general  purposes  of 
partnership.  Partnership,  may  be  defined  as  a  legal  entity 
formed  by  the  combination  of  two  or  more  persons  of  capital  or 
labor  or  both,  for  the  purpose  of  carrying  on  some  lawful  busi- 
ness for 'their  common  benefit,  and  dividing  its  profits.^  But  as 
to  the  essential  characteristics  of  a  partnership  the  law  is  not 
very  precise.  We  shall  see  hereafter  that  a  corporation  is  likewise 
a  legal  entity  formed  by  an  association  of  persons  for  carrying 

6.  See  Pars.  Partn.,  2d  ed.,  c.  1,  4th  §  2;  Smith  Merc.  Law,  20;  Smith 
ed.;  3  Kent  Com.  23;  Coll.  Partn.,  Com.  Law.  1st  Am.  ed.  194:  Pars. 
§  1;   Story  Partn.,  c.   1.  Partn..  4th  ed..  §§  1-6;  Bouvier's  Did. 

7.  See  instructive  criticism  of  this  "Partnership;"  Pooley  v.  Driver,  5 
act  in  28  Harvard  Law  Review,  762.  Ch.  Div.  458,  476. 

8.  3    Kent    Com.    23;    Coll.    Partn., 

249 


§  170  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

on  business  for  a  common  profit,^  though  differently  organized. 
Of  course,  the  partnership  combination  is  founded  upon  some 
contract  express  or  implied.  So,  the  combination  of  capital, 
whether  consisting  in  money  or  goods,  and  of  labor,  whether  it  be 
skilled  labor  or  not,  may  be  in  any  proportion  agreed  upon. 
Furthermore,  while  the  object  is  that  of  common  benefit  or  profit, 
the  relation  usually  extends  to  a  community  of  loss  as  well  as  of 
gain.  The  word  "  firm "  is  often  used  synonymously  with 
partnership.  It  is  said  that  whether  a  partnership  exists  is  a 
question  of  fact;  but  what  constitutes  a  partnership  is  a  question 
of  law.^ 

Some  kind  of  a  contract  must  be  made  in  order  to  constitute  a 
partnership  combination,  and  this  contract  must  have  been  exe- 
cuted. An  agreement  in  writing  to  become  partners  is  commonly 
designated  by  the  name  of  "  articles  of  partnership."  But  the 
partnership  contract  need  not  be  in  writing;  it  may  be  verbal.'^ 
Not  even  an  express  verbal  contract  is  necessary;  for  a  partner- 
ship may  grow  out  of  transactions  or  relations  in  which  the 
word  "  partner "  is  not  uttered,  and  it  is  often  to  be  gathered 
from  the  conduct  of  the  parties.     From  that  joinder  of  interests 

9.  The  entity  theory  of  pertnership  ertson    v.     Corsett,     39     Mich.     777; 

is  clearly  laid  down  in  Rosenbaum  v.  Walker  v.  Wait,  50  Vt.  668. 
Hayden,  22  Neb.  744,  36  N.  W.   147,  See    as   to   "joint    adventurers,"    § 

and  in  Robertson  v.  Corsett,  39  Mich.  167  a  supra. 
784;   Walker  v.  Wait,  50  Vt.  676.  2.  Pars.  Partn.  6.     But  of.,  as  to  a 

It   should  be  noted  that  the   legal  possible  distinction,  Cutler  v.  Thomas, 

entity  theory  of  a  partnership  has  not  25  Vt.   73.     According  to  the  weight 

been  adopted  in  the  Uniform  Partner-  of   authority,    a   partnership   may    be 

ship  Act  approved  by  the  Commission-  verbal  even  if  formed  for  the  purpose 

era  on  Uniform  State  Laws  in  19'14.  of  dealing  in  land,  though  some  au- 

For   an   instructive  discussion  of  the  thorities    require    a    writing.      Pars, 

whole   subject,   see   29    Harvard   Law  Partn.,  §  6,  4th  ed.  and  notes.    What 

Review,  pp.  158  et  seq.  agreement    makes     parties   "partners. 

1.  Pars.  Partn.,  §  6,  and  cases  cited ;  Book    16,    N.    Y.    Rpts.,    Bender    ed., 

Gabriel    v.    Evill,    6    Car.    &   M.    358.  note,   p.   35.      Establishment  of   part- 

The  word  "  entity  "  is  brought  out  in  nership    by    self-Serving    declarations, 

modern    American    cases.       Cross    v.  see     Chamberlayne     Evid.,     §§     2734, 

Burlington  Bank,  17  Kans.  336;  Rob-  2735.      Proof   of,   by  reputation,   see 

Chamberlayne  Evid.,  §  2751. 
250  ' 


CHAP.  IX.]  PARTNERS.  §    170 

and  conduct  which  the  law  considers  equivalent  to  partnership, 
the  agreement  of  persons  to  become  partners,  sometimes  for  an 
extensive  business,  and  sometimes  in  a  single  transaction,  will  be 
inferred.^ 

But  to  constitute  a  legal  partnership,  the  contract  must  be  for 
legitimate  purposes.  Hence,  combinations  formed  for  smuggling, 
gambling,  and  making  counterfeit  bills  are  not  partnerships  at 
all ;  for  on  general  principles  such  a  contract  of  parties  would  be 
illegal  and  void."*  And  where  a  government  officer  contracted 
for  the  building  of  a  fort,  stipulating  fraudulently  for  a  share  in 
the  profits,  it  was  held  that  no  partnesrhip  had  been  thereby 
created.^  Restrictions  upon  the  formation  of  partnerships  have 
sometimes  been  imposed  by  statute;  as  in  England,  where  a 
statute  made  it  unlawful  for  a  partnership  beyond  six  persons 
other  than  the  Bank  of  England  to  carry  on  the  banking  business.^ 
Such  legislation  is  sometimes  founded  upon  a  just  policy;  but 
often  it  is  for  the  purpose  of  securing  to  certain  favored  mo- 
nopolies the  sole  enjoyment  of  their  peculiar  business  with  all 
accruing  gains.  In  general,  partnerships  are  permitted  to  exist 
by  our  law  for  all  legitimate  purposes,  and  indeed  it  is  corpora- 
tions rather  than  partnerships  that  in  our  day  unite  numerous 
interests. 

The  agreement  to  constitute  a  partnership,  like  other  agree- 
ments, must  be  voluntary;  that  is  to  say,  each  and  every  partner 
must  of  his  own  free  will  enter  into  it.  But,  in  conformity  with 
general  principles,  the  assent  of  a  partner  need  not  be  testified 
in  express  terms,  for  it  may  be  tacit  aiul  inferable  from  the  acts 
and  conduct  of  the  parties.  And  simple  reluctance  to  enter  into 
a  partnership  is  superseded  by  the  fact  that  the  assent  to  enter 

3.  Pars.  Partn.,  §  7;  Story  Partn.,  5.  Bartle  v.  Coleman,  4  Pet.  184; 
§  86;  Smith  Com.  Law,  1D4.  Eastman    v.   Dunn,    34   R.   I.    516,   83 

4.  Pars.    Partn.,    §    8,    and    cases  Atl.  1057    (executory  aprrecment). 
cited.      See  as  to  winding  up   an   il-  6.  Stat.    6    Anne.   c.    22.   §   9.      See 
legal   partnership.   Brooks   v.   Martin.  Pars.  Partn.,  §  8  ;  Hodgson  v.  Temple, 
2  Wall.  70;   Sykes  v.  Beadon.   11  Ch.  .5   Taunt.   181;   Stat.   6  Geo.   I,  c.   18, 
D.  170;  120  Mass.  9,  18.  §   12. 

251 


§  171  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  n. 

was  finally  given/  A  mere  agreement  to  admit  a  new  partner 
does  not  of  itself  constitute  a  partnership,  though  the  breach  of 
it  might  lay  the  foundation  for  an  action  for  damages.  The 
choice  of  persons  is  favorably  regarded  in  the  formation  of  a 
partnership ;  and  fraud  or  coercion  would  certainly  vitiate  the 
contract  ^  and  justify  a  court  of  equity  in  rescinding  it  at  the  in- 
stance of  the  injured  party.^ 

§   171.  The   Same   Subject;   Competency  of   Parties   to  become 
Partners. 

As  to  the  personal  competency  of  parties  to  the  agreement  of 
partnership,  the  legal  disabilities  are  much  the  same  as  in 
ordinary  contracts ;  and  the  usual  exceptions  are  those  of  infants, 
married  women,  insane  persons  under  guardianship,  and  alien 
enemies;  to  which  may  be  added  corporations.  Infants,  being  in 
strictness  bound  only  by  their  contracts  for  necessaries,  would  of 
course  be  undesirable  partners,  even  if  possessed  of  good  business 
experience.^     As  to  married  women,  the  common-law  disability  to 

7.  Mason  v.  Connell,  1  WTiart.  381;  573  (partners  in  a  patent  right)  ; 
Pars.  Partn.,  §  9,  and  cases  cited;  Mogart  v.  Smouse,  112  Md.  615  (a 
Weinstein  v.  Welden,  80  Misc.  348,  land  speculation)  ;  Jennings  v.  Dark, 
142  N.  Y.  S.  406.  175  Ind.  332,  92  N.  E.  778;  Virginia- 

8.  Tattersall  v.  Groote,  2  Bos,  &  P.  Carolina  Co.  v.  Fisher,  58  Fla.  377, 
131;  Freeborn  V.  Smith,  2  Wall.  160;  50  So.  504;  Hutehins  v.  Page.  204 
Pars.  Partn.,  §  10;  145  U.  S.  578;  MasS.  285,  90  N.  E.  565  (defective 
Story  Partn.,  §  5;  Mason  v.  Connell,  limited  partnership);  Nichols  v. 
1  Whart.  381.  Buell,  157  Mich.  eOff,  122  N.  W.  217; 

9.  30  N.  Y.  S.  1106,  145  App.  Div.  Keuper  v.  Mette's  Unknown  Heirs, 
950  (a  rural  combination  for  tele-  239  111.  586,  88  N.  E.  218;  Swing  v. 
phone  purposes)  ;  Harrill  v.  Davis,  Richardson  Co.,  76  Ohio  St.  590,  81 
168    Fed.    187,    94    C.    C.   A.    47    (de-  N.  E.  1196. 

fective  corporate  organization  and  an  There  may  be  an  estoppel  to  deny 

enabling     act)  ;     Studebaker     Co.     v.  partnership.     Hamner  v.  Barker,  144 

Dodds    &    Runge,    161    Ky.    542,    171  S.   W.    1180    (Tex.   Civ.   App.    1312)  ; 

S.  W.  167;  Jones  v.  Gould,  209  N.  Y.  Bing  v.  Schmitt,  226  Pa.  622,  75  Atl. 

419,    103   N.    E.    720    (a   syndicate)  ;  854, 

Zimmerman    v.    Harding,    227    U.    S.  1.  See    Schoul.    Dom.    Rel.,    §    163; 

489,  33  S.  Ct.  387;  Freeman  V.  Lowell  Pars.    Partn.,    §§    11,    15.      But    see 

Specialty  Co.,  174  Mich.  59,  140  N.  W.  Avery  v.  Fisher,  28  Hun,  508. 

252 


CHAP.  IX.]  PARTNERS.  §     171 

trade  is  founded  in  the  peculiar  nature  of  the  marriage  relation 
rather  than  anv  presumed  business  incapacity  on  the  wife's  part; 
for  spinsters  and  widows  are  free  to  trade,  and  maj  enter,  we 
suppose,  into  the  partnership  relation  with  whomsoever  thej 
choose.  And  now  that  our  statutes  allow  even  married  women 
to  trade  with  considerable  freedom,  it  is  fair  that  thcv  should  be 
permitted  to  enter  into  partnership  relations  for  this  purpose.^ 
But  female  delicacy  suggests  strong  reasons  for  opposing  close 
partnership  combinations  with  those  of  the  opposite  sex;  while  a 
practical  difficulty  must  still  be  found  in  the  case  of  married 
women,  —  that  of  establishing  such  credit  as  may  induce  others 
to  trade  extensively  with  them ;  nor  in  general  has  woman's  taste 
been  found  to  favor  business  pursuits  hitherto  upon  a  business 
responsibility,  even  where  she  has  been  driven  to  earn  her  own 
living.  So  that,  except  it  be  as  a  limited  partner,  or  by  way  of 
an  investment,  or  in  certain  quasi  feminine  persuits,  a  women  of 
capital,  whether  married  or  single,  is  not  likely  to  embark  her 
fortunes  in  extensive  trade.  An  alien  friend  can  be  a  patrner ; 
but  an  alien  enemy  cannot.  This  is  a  doctrine  of  public  law. 
And  while  a  commercial  partnership  with  an  alien  in  times  of 
peace  is  not  uncommonly  found,  yet  if  war  broke  out  between  the 
two  countries  such  a  partnership  would  be  entirely  suspended,  if 
not  annulled  altogether,^  A  firm  consisting  wholly  of  aliens  may 
have  an  agency  in  this  country.'*  Insane  persons  under  guardian- 
ship, being  incapable  of  managing  their  owm  affairs,  are  of  course 
incapable  of  entering  into  a  valid  partnership,  and  the  same  may 
be  said  of  spendthrifts  subjected  to  the  condition  of  wards,  for 

2.  See  Schoul.  Dom.  Rcl.,  §  163.  ber^rr.  7  Pet.  SS.-i :  Co.  Lit.  ICO  b; 
and  cases  cited.  Pars.  Partn.,  §§  19-  Woods  v.  Wilder.  43  N.  Y.  164; 
21;  Rittenhouse  v.  Lei<xh,  57  Miss.  Mutual  Life  Ins.  Co.  v.  Hillyard,  37 
697;  Penn  v.  Whitehead.  17  Gratt.  N.  J.  L.  444;  Cohen  v.  N.  Y.  Mut. 
."SOS.  Validity  of  partnership  between  Life  Ins.  Co.,  50  N.  Y.  610:  Kershaw 
husband  and  wife.  Book  25,  N.  Y.  v.  Kelsey.  100  Mass.  r.61 ;  Pars. 
Rpts.,  Bender's  ed.,  note,  p.  317.  Partn.,  §  22. 

3.  Griswold  v.  Waddinpton,  15  4.  Ivocal  statutes  or  treaties  have 
Johns.  57;  Clementson  v.  Blcssinjr.  11  considerable  bearinjr  upon  the  rights 
Ex.     135,    n. ;     Scholefield    v.    Eichel-  of  aliens  in  any  country. 


§  172  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

like  reasons.^  As  to  a  corporation,  which  is  only  a  legal  person, 
though  it  may  incur  a  liability  to  third  persons  as  a  quasi  partner, 
it  would  seem  that  it  cannot  enter  into  a  full  copartnership  either 
with  another  corporation  or  with  an  individual,  unless  its  charter 
gives  adequate  power. *^ 

§  172.  The  Same  Subject;  Purposes  and  Scope  of  Partnership. 
The  purposes  for  which  a  partnership  may  be  formed  are 
manifold.  Such  combinations  are  usually  for  the  transaction  of 
some  particular  branch  of  trade  or  commerce ;  but  this  is  not 
essential  to  constitute  persons  legal  partners.  There  may  be  a 
partnership  in  almost  any  occupation.  It  may  exist  between 
lawyers,  conveyancers,  physicians,  artists,  brokers,  farmers,  and 
mechanics;  it  may  be  for  stage-driving,  fishing,  hunting,  mining, 
or  manufacturing.^  And,  subject  to  the  usual  local  formalities 
attending  such  property,  it  is  settled  that  there  may  also  be  a 
partnership  for  the  buying  and  selling  of  lands.^  But  there  can 
be  no  partnership  in  public  offices  filled  upon  the  principle  of 
personal  selection  and  involving  a  personal  responsibility;  nor  in 
such  an  office  as  that  of  guardian,  trustee,  or  executor,  though  the 
trust  be  jointly  assumed.^  Nor  are  joint  patentees  co-partners 
as  such;  ^  nor  the  mere  joint  purchasers  of  land. 

5.  Menkins  v.  Lightner,  18  111.  282.  v.  Carver,  2  H.  Bl.  235;  Pars.  Partn., 

6.  See  Sharon  Canal  Co.  v.  Fulton  §§  37,  38;  Allen  v.  Davis,  13  Ark. 
Bank,  7  Wend.  412 ;  c.  11,  post,  Cor-  28.  As  to  partners  in  a  ferry,  see 
porations;  Pars.  Partn.,  §  240,  notes;  Bo^yer  v.  Anderson,  2  Leigh,  550.  As 
Gunn  V.  Central  R.,  74  Ga.  SOff;  to  mining  partnerships  which  are  non- 
Whittenton  Mills  v.  Upton,  10  Gray,  trading,  see  §  204,  note. 

582;    Mallory  v.   Hanaur   Oil   Works,  8.  See  3  Kent   Com.   28,   and  cases 

86  Tenn.   598,  8   S.  W.  396;    12   Ore.  cited  in  notes;  Fall  River  Co.  v.  Bor- 

124.    But  its  charter  may  confer  such  den,  10  Cush.  458 ;  Dale  v.  Hamilton, 

power.  Butler   v.    Toy   Co.,    46    Conn.  5    Hare,    369;    Ludlow    v.    Cooper,    4 

136.     And  as  to  these  disabilities  in  Ohio  St.  1 ;   Chester  v.  Dickenson,  54 

general,  see  Pars.  Partn.,  §  23 ;  Story  N.  Y.  1 ;   ShaeflFer  v.  Blair,  149  U.  S. 

Partn.,  §§  7,  9,  11,  et  seq.;  Lindley,  248,  13  S.  Ct.  856. 

74,  77,  79.  9.  Pars.  Partn.,  §  39.     See  Caldwell 

7.  3    Kent    Com.    28;    Cowp.    814;  v.  Lieber,  7  Paige,   483. 

Coope  V.  Eyre,  1  H.  Bl.  37;  Waugh  1.  Pitts  v.  Hall,   3   Bl.   C.   C.    201. 

254 


CHAP.  IX.]  PAETNEKS.  §    172 

It  is  manifest  that,  according  to  the  range  of  the  undertakings 
assumed  by  those  who  come  together  as  partners,  a  partnership 
may  be  what  is  called  either  general  or  special;  that  is,  may 
embrace  all  things  within  the  general  scope  of  a  line  of  business, 
or  it  may  be  limited  to  a  special  subject  in  that  line  or  a 
particular  transaction ;  though  such  a  distinction  as  this  is  rather 
one  of  degree  than  of  kind.^  There  are  many  cases  of  qiiasi 
partnership,  as  we  shall  presently  see,  where,  though  no  partner- 
ship may  be  properly  said  to  have  been  created,  yet  persons  are 
considered  to  have  held  themselves  out  to  the  world  as  partners 
and  are  made  liable  in  consequence.  There  is  such  a  thing 
too,  theoretically  speaking,  as  a  universal  partnership,  where 
persons  own  everything  in  common  without  the  reservation  of 
any  private  and  exclusive  rights  of  ownership  to  either;  and 
a  case  in  point  was  that  of  a  sort  of  religious  society 
called  the  "  Separatists,"  composed  of  persons  who  emigrated 
some  years  since  from  Germany  and  settled  in  Ohio."'  The  civil 
law  distinguished  between  universal  partnerships  'which  applied 
to  all  property  existing  or  to  be  subsequently  acquired,  and  those 
applying   to    all    future   acquisitions   only,    and    made   provision 

Buying  a  threshing-machine  jointly  among  co-tenants  raises  no  presump- 
to  do  a  threshing  business,  &c.,  con-  tion  of  a  partnership,  which  is  rather 
stitutes  a  partnership.  Aultman  v.  for  buying  and  selling.  Taylor  v. 
Fuller,  53  Iowa,  60.  But  a  mere  Fried,  161  Penn.  St.  53,  28  Atl.  993. 
joint  ownership  in  property  does  not  As  to  land  purchase,  see  Clark  v.  Sid- 
constitute  a  partnership.  Quacken-  way,  142  U.  S.  682. 
bush  V.  Sawyer,  54  Cal.  439.  Nor  an  2.  3  Kent  Com.  30;  Ripley  v.  Colby, 
ownership  in  common.  Taylor  v.  3  Fost.  438;  Willett  v.  Chambers, 
Fried,  161  Penn.  St.  53,  28  Atl.  983.  2  Cowp.  814.  See  Willes  v.  Gn-en. 
A  joint  undertaking  and  community  5  Hill,  232;  Pars.  Partn.,  §  40.  Tliat 
in  profit  and  loss  in  the  results  of  there  maybe  a  partnership  as  to  some 
the  business  constitute  a  partnership,  adventure,  see  Meador  v.  Hughes,  14 
although  each  partner  should  retain  Bush,  652 ;  Hall  v.  Edson,  40  Mich, 
the  exclusive  ownership  of  the  sepa-  651.  And  see  infra,  §  167  a. 
rate  property  by  him  contributed  to  3.  Gfoesele  v.  Bimeler,  14  How.  589. 
the  partnership  use.  McCrary  v.  But  perhaps  this  should  bo  styled 
Slaughter,  58  Ala.  230.  See  also  rather  a  joint  or  common  ownership. 
Hankey  v.  Becht,  25  Minn.  212;  c.  8,  See  also  Murrcll  v.  Murrell  4  Fuller, 
supra.       A    division    of    the    product  33   La.   Ann.   1233. 

255 


§  173  THE  LAW  OF  PEESONAL  PROPERTY.       [PART  II. 

accordingly.'*  But  for  ordinary  purposes  we  shall  find  such  dis- 
tinctions between  universal,  general,  and  special  partnerships  of 
little  consequence. 

It  would  seem  that,  in  order  to  constitute  a  partnership,  there 
must  be  a  community  of  interest  for  business  purposes,  under 
which  we  mean  to  include  skilled  labor,  and  not  the  pursuit  of 
trade  alone,  nor  the  mere  beneficial  enjoyment  of  a  capital  fund. 
Clubs  for  social  and  charitable  purposes  do  not  in  general  con- 
stitute the  members  partners,  though  failing  of  such  organization 
as  to  be  properly  considered  corporations.^ 

§  173.  The  Same  Subject;  Essentials  of  a  Partnership  as  to  the 
Parties;  Community  of  Profits,  etc. 
A  community  of  profits  is  essential  to  every  partnership, 
though  there  may  be  a  participation  in  profits  without  a  partner- 
ship at  all.  As  a  general  rule,  there  is  a  community  of  losses  as 
well  as  profits;  for  while  a  common  benefit  is  the  object  in  view, 
losses  are  necessarily  incurred  in  may  instances,  whether  the 
partnership  transactions  be  viewed  as  a  whole  or  upon  periodical 
computation;  and  yet  the  weight  of  authority  has  been  in  favor 
of  regarding  a  partnership  legal  and  valid,  although  one  or  more 
of  the  partners  should   be  guaranteed  against   loss.^     We  here 

4.  Note  to  3  Kent  Com.  30.  The  partnership.  Ward  v.  Brigham,  127 
"  universal  partnership,"  so-called,  Mass.  24.  See  also,  as  to  "  granges," 
has  been  applied  to  husband  and  wife  Edgerly  v.  Gardner,  9  Neb.  130.  And 
under  Spanish-American  law.  Fuller  see  Marseilles  Co.  v.  Aldrieh,  86  111. 
V.  Ferguson,  26  Cal.  546.  504;    First   Nat.   Bank   v.   Almy,    117 

5.  See  Pars.  Partn.,  §  37,  and  notes;  Mass.  476;  Fay  v.  Noble,  7  Cush.  188; 
Story  Partn.,  §  18;  Fleming  v.  Hec-  Irvine  v.  Forbes,  11  Barb.  587.  Cow- 
tor,  2  M.  &  W.  172;  Beaumont  v.  tra,  Whipple  v.  Parker,  29  Mich.  370; 
Meredith,  3  Ves.  &  B.  180;  Richmond  Manning  v.  Gasherie,  27  Ind.  399. 

v.  Judy,  6  Mo.  App.  465.     So  a&  to  6.  Pars.    Partn.,   §    59,   and   notes; 

members  of  a  Masonic  lodge.     Ash  v.  Story  Partn.,  §§  18,  23.  27,  32  ;  Smith 

Guie,    97    Penn.    St.    493.       Transac-  Cora.  Law,  1st  Am.  ed.  195.    Who  are 

tions  by  an  inchoate  or  imperfect  cor-  partners.     Book     23,     N.     Y.     Rpts., 

poration   are  not   readily   to  be   con-  Bender's  ed.,  note,  p.  1071. 
strued    into    constituting   inter   se    a 

256 


CHAP.  IX.] 


PARTNERS. 


§  173 


speak  of  partners  as  between  themselves.  But  almost  invariably 
the  law  of  partnership  in  its  broadest  relations  requires  a 
community  of  interest  in  the  net  profits  resulting  from  the  busi- 
ness or  work  done ;  and  this  community  as  to  net  profits  has  been 
taken  as  perhaps  the  best  test  for  determining  whether  or  not  a 
partnership  has  been  created,  especially  where  there  is  to  be  a 
corresponding  share  in  the  losses.  Thus,  in  Uoare  v.  Dawes, 
where  several  persons  had  employed  a  broker  to  purchasee  a 
quantity  of  tea,  of  which  each  was  to  have  a  separate  share,  it 
was  decided  that  they  were  not  partners,  because  there  was  no 
community  of  profit  and  loss  in  sales  between  them,  but  merely 
an  undertaking  for  a  particular  quantity.^  But  where  in  a  con- 
tinuous business  of  selling  one  is  to  share  in  net  profits  and  losses 
he  is  readily  found  a  partner.^ 

As  between  themselves,  physicians  or  lawyers  would  be 
partners  if  their  earnings  came  into  a  common  stock  or  fund,  and 
were  not  until  then  divided  and  held  in  severalty;  but  if  each 
charges  and  may  demand  from  others  what  he  earns  himself,  they 
are  not  partners  inter  se.^ 


7.  Hoare  v.  Dawes,  1  Doug.  371. 
But  where  one  who  owned  a  lime- 
kiln agreed  that  another  should  fur- 
nish material  and  do  the  work,  and 
the  lime  was  to  be  equally  divided  be- 
tween them,  it  was  held  that  a  tech- 
nical partnership  had  been  created. 
Musier  v.  Trumpbour,  5  Wend.  274. 
And  see  Pars.  Partn.  44,  and  notes ; 
Story  Partn.,  §§  18,  23,  27,  32.  It  is 
said  that  to  be  a  partner  one  must 
share  profits  as  such,  with  a  proprie- 
tary interest  in  them  before  a  di- 
vision, lb.,  §  49;  Denny  v.  Cabot,  6 
Met.  82;  Loomis  v.  Marshall,  12 
Conn.  69. 

8.  See  Paul  v.  Cullum,  132  U.  S. 
539. 

9.  Bond  V.  Pittard,  3  M.  &  W.  357: 
Darracott  v.  Pennington,  34  Ga.  388. 

17  2 


That  a  joint  undertaking  and  com- 
munity of  net  profit  and  loss  usually 
constitute  a  partnership  inter  se,  see 
58  Ala.  230;  Pawsey  v.  Armstrong, 
18  Ch.  D.  698.  A.'s  contract  with  C. 
to  share  A.'s  profits  and  losses  does 
not  constitute  C.  a  partner.  Burnett 
V.  Snyder,  81  N.  Y.  550.  It  is  fair 
to  presume  that  losses  are  intended 
to  be  borne  In^ween  partners  in  the 
same  proportion  that  profits  are  to 
be  enjoyed.  In  re  Albion  v.  Life  As- 
sur.  Co.,  16  Ch.  D.  83.  But  for  a 
peculiar  case  of  lial)ility  for  losses, 
though  not  participating  in  profits, 
see  Mandeville  v.  Mandeville,  35  Ga. 
243 ;  Huguley  v.  Morris  &  Tumlin.  65 
Ga.  666.  But  where  there  is  no  com- 
munity, so  that  one  might  gain  and 
the  other  lose,  there  is  no  partnership. 


57 


§  173a 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  IL 


An  equality  of  profit  is  not  necessary  to  constitute  a  partner- 
ship. ISTor  need  the  contributions  be  of  the  same  kind;  for  one 
partner  may  contribute  all  the  capital  or  all  the  labor,  as  in  the 
instances  just  noticed.  And  if  a  person  should  go  into  a  specu- 
lation with  a  broker,  he  furnishing  all  the  funds,  while  the  broker 
only  rendered  services,  and  the  mutual  intent  being  that  they 
shall  divide  the  proceeds,  a  partnership  might  exist  both  as  to  the 
property  purchased  and  the  profits.^  On  the  whole,  we  may 
repeat  that  while  the  test  of  community  of  net  profits  is  still  well 
approved  for  deteraiining  who  are  partners,  there  may  be  such 
sharing  of  profits  while  yet  the  relation  formed  was  not  a  partner- 
ship at  all.^ 

§  173a.  Community  in  Profits  and  Losses;  Latest  Cases. 

While  some  of  the  latest  cases  state  that  community  of  profits 
is  the  test,  others  rule  that  there  must  be  a  community  not  only 


Flint  V.  Eureka  Marble  Co.,  53  Vt. 
669.  And  see  Beecher  v.  Bush,  45 
Mich.  188;  Eager  v.  Crawford,  76 
N.  Y.  97;  Hankey  v.  Becht,  25  Minn. 
212. 

As  between  himself  and  members 
of  a  firm,  the  sharing  of  profits  of  a 
business'  in  payment  for  services  does 
not  constitute  an  agent  or  servant  a 
partner.  Holbrook  v.  Oberne,  56  Iowa, 
324;  Le  Fevre  v.  Castagnis,  5  Col. 
564;  Nicholaus  v.  Thielges,  50  Wis. 
49'1;  Smith  v.  Bodine,  74  N.  Y.  30; 
Boyce  v.  Brady,  61  Ind.  432.  But  as 
to  the  presumption  in  such  cases,  see 
Niehoff  V.  Dudley,  40  111.  406.  See 
also  Moore  v.  Davis,  L.  R.  11  Ch.  D. 
261. 

1.  See  Pars.  Partn.  49-51,  and  cases 
cited;  Story  Partn.,  §§  30,  52.  Paul 
V.  Cullum,  132  U.  S.  539. 

The  important  case  of  Cox  v.  Hick- 
man, 8  H.  L.  C.  268  (1860),  has  been 
considered  as  rendering  the  test  ap- 


proved in  earlier  authorities  obsolete. 
See  Pars.  Partn.,  §  43,  4th  edition. 
The  decision  was  simply  to  the  effect 
that  creditors  of  an  insolvent  debtor 
w^ho  agree  to  carry  on  his  business  and 
to  apply  the  net  profits  to  the  pay- 
ment of  the  debts  are  not  to  be  con- 
sidered partners  even  as  to  third  par- 
ties. The  case  here  was  a  sort  of 
complicated  agency  on  the  solvent 
debtor's  behalf,  such  as  his  assignees 
might  have  undertaken ;  the  facts 
were  peculiar,  and  such  as  most 
likely  must  have  aflfected  the  third 
parties  with  actual  notice.  See  fur- 
ther, BuUen  v.  Sharp,  L.  R.  1  C.  P. 
86;  L.  R.  4  P.  C.  419.  A  manager 
for  the  mere  security  of  a  creditor  is 
no  partner.  Davis  v.  Patrick,  122 
U.   S.   138. 

2.  Such  seems  to  be  the  true  result 
of  Cox  V.  Hickman,  8  H.  L.  Cas.  268, 
whose  reasoning  ought  not  to  be  ex- 
tended  beyond   the   peculiar   facts   in 


258 


CHAP.  IX.] 


PAETNEBS. 


§  174 


of  property  and  its  profits,  but  also  of  losses  in  order  to  constitute 
a  partnership;  and  this  test  appears  the  preferable  one.^  It  is 
true  that  an  agreement  to  share  profits  implies  a  consent  to  share 
losses.'*  Yet  special  agreement  may  be  made  to  the  contrary ;  and 
wherever  this  is  the  case,  one  whose  community  does  not  extend 
to  the  risk  of  bearing  losses  is  rarely  to  be  found  in  the  full  sense 
a  partner.^ 

§   174.  Conclusion  as  to  Nature  and  Creation  of  Partnership. 

It  is  not  easy,  then,  to  determine  the  true  limits  of  a  legal  part- 
nership. Persons  frequently  become  partners  without  being  aware 
of  it ;  they  make  a  bargain  together  in  some  special  business  trans- 
action, involving  a  venture  for  profit,  but  having  no  other  mutual 
dealings  together;  or  one  employs  another,  and  the  compensation 


question.  Corporations  share  profits; 
so  may  joint  and  common  tenants,  all 
agreeably  to  tlieir  several  relations. 
See  Walker  v.  Hirsch,  27  Ch.  D.  460. 

3.  Bartelt  v.  Smith,  145  Wis.  31, 
129  N.  W.  782;  Bowman  &  Cockrcl 
V.  Ed.  Blanton  Co.,  141  Ky.  417,  132 
S.  W.  1041 ;  Weiland  v.  Sell,  83  Kan. 
229,  109  Pac.  771;  Watson  v.  Ham- 
ilton, 180  Ala.  3,  60  So.  63;  Jackson 
V.  Hooper,  76  N.  J.  E.  185,  74  Atl. 
130;  Citizens'  Nat.  Bank  v.  Mitchell, 
24  Okla.  488,  103  Pac.  720;  L.  Bald- 
win &  Co.  V.  Patrick,  39  Colo.  347,  91 
Pac.  828. 

Cf.  Arnold  v.  Maxwell,  223  Mass. 
47,  111  N.  E.  687;  Drake  v.  Hall, 
220  Fed.  905,  136  C.  C.  A.  471;  In  re 
De  Haven's  Estate  248  Penn.  271,  93 
Atl.  1013;  Meafjlicr  v.  Fogarty,  129 
Minn.  417,  152  N.  W.  833;  Filer's 
Music  House  v.  Reine,  65  Ore.  598, 
133  Pac.  788;  In  re  Campbell,  223 
U.  S.  561,  33  S.  Ct.  796;  Chappell  v. 
Chappell,  193  N.  Y.  653,  86  N.  E. 
1122. 


4.  Whitley  v.  Bradley,  13  Cal.  App. 
720,  110  Pac.  596 ;  Leeds  v.  Towusend, 
228  III.  451,  81  N.  E.  1069,  13  L.  R. 
A.  N.  s.  191  n. ;  Bentley  v.  Brossard, 
33  Utah,  396,  94  Pac.  736. 

5.  Norment  v.  Wittmann,  157  App. 
Div.  708,  142  N.  Y.  S.  717;  American 
Seeding  Mach.  Co.  v.  John  Conklin, 
145  App.  Div.  950,  130  N.  Y.  S.  1104; 
Rosenblatt  v.  Weinman,  225  Pa.  200, 
74  Atl.  54;  Phipps  v.  Little,  213 
Mass.  414,  100  N.  E.  615;  Wagner  v. 
Buttles,  151  Wis.  6r)8,  139  N.  W.  425; 
Lyden  v.  Spohn-Patrick  Co.,  155  Cal. 
177.  100  Pac.  236;  Miller  v.  Simpson, 
107  Va.  476,  59  S.  E.  378,  18  L.  K.  A. 
N.  s.  962  n. 

See  Williams  v.  Milton,  215  Mass. 
102  N.  E.  355  (trustee  distin- 
guished) ;  Buie  v.  Kennedy,  164  N.  C. 
290,  80  S.  E.  445  (capital  impaired)  ; 
Smiley  v.  Smih'v's  Adm'.x,  112  Va. 
490,  71  S.  E.  532:  Moscowitz  v.  Ras- 
sulsky,  141  App.  Div.  763.  126  N.  Y. 
S.  513;  Tyson  v.  Bryan,  84  Neb.  202, 
120  N.  W.  940. 


259 


§  175  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  II. 

paid  bein£^  in  the  first  place  contingent  upon  the  business  profits, 
the  contract  for  hire  slides  gradually  into  a  partnership  agree- 
ment.^ The  same  person  may  be  a  partner  in  several  distinct 
firms,  for  general  business,  to  say  nothing  of  the  special  trans- 
actions in  which  he  may  be  engaged  with  others.^  And  it  is 
upon  the  winding-up  of  the  business  which  they  have  thus  legally 
combined  to  transact,  whether  because  of  bankruptcy  or  the 
fulfilment  of  their  purposes,  that  the  parties  often  find  them- 
selves involved  in  doubt  as  to  whether  they  were  or  were  not 
partners.  Even  though  it  be  concluded  that  their  mutual  in- 
tention consisted  actually  with  a  partnership,  both  had  not 
clearly  that  relation  in  view,  nor  is  it  material  in  point  of  fact, 
to  prove  such  mutual  intention. 

§   175.  Creation  of  Partnership   as  to  the  Public;   Partnership 
Liability,  how  incurred. 

But  if  the  liabilities  of  a  partnership  relation  are  frequently 
assumed  unconsciously  as  between  the  parties  themselves  to  some 
business  transactions  for  a  common  benefit,  still  more  frequently 
is  this  the  case  with  the  partnership  liability  as  toward  the  public. 
Persons  may  be  partners  or  quasi  partners,  as  to  the  world,  by 
construction  of  law  for  its  own  convenience,  though  not  partners 
iiiter  se.  For,  as  the  writers  on  partnership  inform  us,  partner- 
ship liability  rests  upon  either  or  both  of  two  distinct  grounds: 
one,  that  the  person  is  actually  a  partner  and  shown  to  be  such ; 
the  other  (which  is  quite  sufficient  for  a  third  person  dealing 
with  the  combination),  that  he  has  of  his  own  knowledge  and 
consent  been  held  out  as  a  partner  to  the  public  generally  or  to 

6.  Where  two  jointly  undertook  to  cerned  a  stable  and  an  hostler  hired 

procure  a  cargo  for  a  vessel,  the  com-  and  kept  by  them   together.      Ripley 

missions  to  be  divided  between  them,  v.  Colby,  3  Fost.  438.     And  see  as  to 

they  were   pronounced  to  be  to  that  joint  adventurers,  supra,  §  167  a. 

extent  partners.    Bovill  v.  Hammond,  7.  Swan  v.  Steele,  7  East,  210 ;  Rua- 

6  B.  &  C.  149.     And  the  same  prin-  sell   v.   Leiand,   12   Allen,   349;   Pars, 

ciple  has  been  applied  to  proprietors  Partn,  52-54. 
of  distinct  stage  lines,  so  far  as  con- 

260 


CHAP,  ixj  PAETNEES.  §    176 

the  person  having  a  claim.^  Let  us,  then,  examine  this  rule  of 
partnership  liability  as  to  third  persons  more  closely,  and  thus 
complete  our  investigation  into  the  nature,  creation,  and  extent 
of  a  legal  partnership;  for  it  is  here  that  the  principles  of  partner- 
ship are  more  completely  developed,  though  the  decisions  are 
found  conflicting  as  well  as  cumbersome. 

§  176.  Partnership  as  to  the  Public;  Ostensible,  Nominal,  Silent, 
Secret,  etc.,  Partners. 
Now  we  find  dili'erent  classes  of  partners  mentioned  in  the 
books.  There  is  the  ostensible  or  public  partner ;  that  is,  the  per- 
son who  is  shown  forth  to  the  world  as  a  partner,  and  who  thus 
incurs  the  ordinary  liabilities  of  partnership.^  This  ostensible 
or  public  partner  may  be  an  actual  partner  by  being  likewise  a 
partner  as  concerns  the  parties  to  the  combination ;  or  he  may  be 
a  merely  nominal  partner.  A  nominal  partner  is  understood  to 
be,  in  strictness,  one  who  by  his  acts  and  conduct  suffers  himself 
to  incur  a  partnership  liability  to  the  public,  by  lending  his  name 
or  credit  to  the  concern,  though  he  is  not  an  actual  partner  as 
regards  the  parties  to  the  combination.^  Then  again,  there  is 
the  silent,  secret,  or  dormant  partner ;  who,  to  speak  concisely,  is 
a  person  participating  in  the  net  profits  of  the  business  while 
concealing  his  name;  though  there  is  a  possible  shade  of  differ- 
ence in  the  significance  of  these  several  epithets  which  we  need 
not  trace.  Such  a  partner,  when  found  out,  is  legally  liable  to 
third  parties,  not  because  he  was  held  out  as  a  partner,  but,  re- 

8.  Pars.    Partn.    9,    61,    and    cases  9.  Goddard  v.  Pratt.  16  Pick.  428; 

cited;    Hodgson   v.   Temple,   5   Taunt.  State  v.  Jackson.  69  So.  751.  137  La. 

181;    3    Kent.    Com.    27,    31;    Story  9^1 ;  Pars.  Partn.,  §  27 ;  3  Kent  Com. 

Partn.,    §    63    et  seq.      Some   writers  31. 

appear  dissatisfied  with  any  such  dis-  1.  3  Kent  Com.  31,  32;  Smith  Com. 

tinction,  and  assert  tliat  there  can  be  Law,  199 ;  Story  Partn.,  §  64 ;  Martin 

no    partnership    except    one    founded  v.   Gray,    14   C.   B.    N.   8.   824;    Pars, 

upon    the    intention    of    the    parties.  Partn.,   §§   26-36;    Wauph   v.   Carver, 

The   weight   of   judicial    authority    is  2  H.  Bl.  235.     Liability  as  a  partner 

against   this  assumption.      See   Pars..  by  holding  out.    Book  13,  N.  Y.  Rpts., 

§  48,  4th  edition,  with  citations.  Bender  ed.,  note,  p.  44. 

261 


§  177  THE  LAW  OF  PERSONAL  PROPERTY.       [ PART  II. 

garding  the  parties  to  the  combination  inter  se  and  with  an 
application  of  results  such  as  we  find  in  the  general  law  of  agency, 
because  he  was  a  partner  and  a  principal.^ 

Here,  then,  the  two  grounds  of  partnership  liability  to  the 
public  are  plainly  indicated:  the  one,  that  of  actual  partnership, 
however  secret;  the  other,  that  of  ostensible  partnership,  whether 
actual  or  not.^  In  the  latter  class  of  cases  (which  also  harmonizes 
with  the  law  of  agency),  or  certainly  in  many  instances  which 
are  to  be  found  under  that  head,  it  would  be  seen  to  be  more 
exact  to  say  that  a  quasi  partnership  existed,  than  that  there  was 
a  legal  partnership.  But  we  defer  in  this  respect  to  the  language 
of  the  courts  and  the  text-writers. 

§  177.  Secret  Partnership;   Liability  of  Actual  Partner  to  the 
Public. 

Xow,  let  us  elaborate  these  doctrines  somewhat  at  length.  The 
cases  which  establish  the  proposition  that  one  incurs  a  partner- 
ship, liability  to  third  persons  if  an  actual  partner,  however 
carefully  his  name  may  have  been  concealed  and  kept  secret,  are 
not  always  to  be  easily  reconciled.  Chancellor  Kent  lays  down 
the  rule  as  substantially  that  each  individual  member  of  a  part- 
nership is  answerable  in  solido  to  the  whole  amount  of  debts  with- 
out reference  to  the  proportion  of  his  interest,  or  to  the  nature  of 
the  stipulation  between  him  and  his  associates ;  that  even  if  it 
were  the  intention  of  the  parties  that  they  should  not  be  partners, 
and  the  person  to  be  charged  was  not  to  contribute  either  money 

2.  Pars.  Partn.,  §§  30,  31,  and  cases  cealment  of  facts  or  by  deceptive  ap- 
eited;  Story  Partn.,  §  63 ;  3  Kent  pearances.  Beecher  v.  Bush,  45  Mich. 
Com.  31.  And  see  Baldwin,  J.,  in  188.  This  doctrine  seems  to  consist 
Winship  v.  Bank  of  the  United  States,  with  the  facts  in  Cox  v.  Hickman, 
5  Pet.  573;  Gilmore  v.  Merritt,  62  8  H.  L.  Cas.  268.  See  further, 
Ind.  525.  Downey  v.  Savage,  72  Wash.  164,  129 

3.  There  can  be  no  such  thing  as  Pac.  1096;  Loosen  v.  Schissler,  149 
a  partnership  as  to  third  persons,  Wis.  449,  135  N.  W.  1008.  The  rule 
when  as  between  the  parties  them-  of  estoppel  might  here  be  set  up  in 
selves   there    is   none,   and   the    third  aid  of  a  suit. 

persons  have  not  been  misled  by  con- 

262 


CHAP,  ix]  PARTNERS.  §    177 

or  labor,  or  to  receive  any  part  of  the  profits,  yet  if  he  lends  his 
name  as  a  partner,  or  suffers  his  name  to  continue  in  the  firm 
after  he  has  ceased  to  be  an  actual  partner,  he  is  responsible  to 
third  persons  as  a  partner,  for  he  may  induce  third  persons  to 
give  that  credit  to  the  firm  which  otherwise  it  would  not  receive 
nor  perhaps  deserve."^  Such  a  principle  of  law  as  this,  the  reader 
will  perceive,  inculcates  honest,  open,  and  fair  dealing,  and  regards 
not  so  much  the  question,  what  was  the  mutual  understanding  of 
the  parties  when  the  debt  was  contracted,  as  what  from  their 
mutual  situation  had  the  creditor  a  just  right  to  know  and  to 
rely  upon  for  securing  payment.  It  is  therefore  admitted,  in 
the  jurisprudence  of  this  country  as  well  as  in  England,  that 
secret  or  dormant  partners,  when  discovered,  are  equally  liable 
upon  the  partnership  engagements  as  if  their  names  had  never 
been  concealed,  although  they  were  unknown  by  the  creditor  to 
be  partners  at  the  time  of  the  creation  of  the  debt.  And  the 
weight  of  authority  is  in  favor  of  carrying  the  secret  partner's 
liability  to  the  full  extent  of  the  acting  partner's  contracts  made 
within  the  usual  scope  of  the  partnership  business,  whether  such 
contracts  are  really  on  the  partnership  account  or  not.^  The  fact 
that  one  has  been  able  to  hide  his  partnership  connection  from 
the  world  furnishes  no  sufficient  reason  why  he  should  not  share 
in  the  liabilities  as  he  does  in  the  benefits  of  the  concern.^ 

Yet  it  must  be  manifest  that  this  principle,  when  carried  out 
without   qualification,    often   works    injustice   to    the    debtor   for 

4.  3  Kent  Com.  31-33,  and  cases  persons  whon  discoverod.  Allen  v. 
cited.  Davids.  70  S.  C.  260,  49  S.  E.  846. 

5.  lb.;  Pars.  Partn.,  §§  80,  81,  and  6.  Marshall,  C.  J.,  in  Winship  v. 
citations  in  notes;  Lloj'd  v.  Ashby,  Bank  of  tlie  United  States,  5  Pet.  561. 
2  B.  &  Aid.  23;  Ross  v.  Decy,  2  Esp.  And  see  Hoare  v.  Dawes,  2  Douff. 
469;  Chamberlain  v.  Madden,  7  Rich.  371;  Saville  v.  Rolxrtson,  4  T.  R. 
395;  Gilmore  v.  Merritt,  62  Ind.  525;  725.  Where  a  business  is  carried  on 
Robertson  v.  Smith,  18  Johns.  459;  ostensibly  by  one  alone  upon  the  capi- 
Martin  v.  Gray.  14  C.  B.  n.  s.  824.  tal  put  in  by  another,  the  secret  part- 
But  see  Etheridge  v.  Binney,  9  Pick.  ner  is  liable,  thoupfh  his  money  was 
272;  Shechy  v.  Mandeville,  6  Cr.  253.  misused.  Gavin  v.  Walker,  14  Lea, 
Dormant  partners  are  liable  to  third  643.      And    see    Wallace   v.    Wallace, 

125  Md.  1,  92  Atl.  1033. 

263 


§  177  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

the  creditor's  undue  advancement.  We  have  seen  that  parties  are 
often  betrayed  into  some  kind  of  a  partnership  combination  \vith- 
out  being  fully  aware  of  it  at  the  start,  nor  intending  at  any  time 
that  responsibilities  so  vast  should  come  upon  their  own  shoulders. 
Such  must  be  the  case  even  with  secret  or  dormant  partners,  in 
many  instances;  their  primary  intention  being,  perhaps,  to  help 
on  some  speculation  or  to  aid  a  friend  with  their  capital,  or  to 
lend  a  certain  sum  of  money  upon  what  promised  a  fair  recom- 
pense; and  their  motives  for  secrecy  being  entirely  honorable, 
so  far  at  least  as  might  concern  the  parties  with  whom  the  ostensi- 
ble partner  was  dealing.  Shall  the  dormant  partner,  thus  meaning 
to  act  in  good  faith,  incur  liabilities  for  his  associate's  mismanage- 
ment or  dishonesty,  so  far  out  of  proportion  to  his  own  actual 
interest  in  the  venture,  and  that,  too,  as  to  creditors  who  had 
relied  solely  upon  the  other's  ability  to  pay?  The  Roman  law, 
as  Mr.  Justice  Story  tells  us,  did  not  create  a  partnership  between 
the  parties  as  to  third  persons  without  their  consent,  or  against 
the  stipulations  of  their  own  contract.^  And  he  is  of  opinion  that 
the  common  law  has  pressed  its  principles  on  this  subject  beyond 
the  requirements  of  natural  justice.^  But  a  later  text-writer, 
who  does  not  share  in  this  opinion,  reviews  the  earlier  and  later 
cases,  and  finds  that  the  common  law  still  maintains  much  of  its 
old  ground ;  though  he  admits  the  extreme  difficulty  of  reconciling 
all  the  cases  and  extracting  from  them  a  precise  principle.^  As 
the  tendency  of  this  age  is  in  favor  of  limitations  upon  those  vast 
and  ill-defined  responsibilities  which  the  old  law  of  partnership 
threw  upon  persons  seeking  to  invest  capital  in  a  business  and  not 
to  share  in  its  active  management, —  as  we  shall  see  hereafter 
when  examining  the  growth  of  limited  partnerships  and  corpora- 
tions in  the  United  States  and  England, —  so  we  think  the  ten- 

7.  Dig.    17,    2,    44;    Story    Partn.,  of  the  most  interesting,  and  perhaps 
§§  36,  37.  one  of  the  most  difficult,  in  the  whole 

8.  lb.  law  of  partnership.     Pars.  Partn.  71. 

9.  Pars.  Partn.  71,  and  eases  cited.  3d.  ed. 
Prof.  Parsons  thinks  this  subject  one 

264 


CHAP.  IX]  PAKTNEKS.  §    178 

dency  is,  and  will  be,  to  relax  somewhat  the  liability  of  secret 
and  doi-mant  partners  who  had  not  stealthily  sought  unreasonable 
advantages,  but  were  betrayed  unwittingly  into  a  business  com- 
bination. And  this  tendency  seems  to  have  manifested  itself  in 
the  judicial  confusion  which  prevails  over  the  criteria  of  a  part- 
nership as  respects  third  persons ;  for  we  find  some  very  fine,  and 
not  always  satisfactory,  distinctions  set  forth  in  that  connection. 

§  178.  The  Same  Subject. 

Thus  community  of  profit  has  been  usually  taken  to  be  the  true 
criterion  for  deteraiining  whether  any  combination  for  carrying 
on  a  business  constitutes  a  partnership  as  to  third  persons.  But 
a  liability  founded  upon  a  true  common  interest  in  the  profits 
must  be  somewhat  vague  after  all ;  for  general  creditors  have  an 
interest  in  the  profits;  and  so  might  one  advancing  money  to  a 
firm  for  its  business,  or  a  clerk  in  its  employ.^  Publisher  and 
author  may  agree  to  divide  the  profits  of  a  proposed  work  which 
the  former  is  to  publish  at  his  own  expense ;  but  publisher  and 
author  are  not  thereby  made  partners.^  If  one  receives,  by  way 
of  compensation  for  his  services,  a  stated  portion  of  the  profits, 
as  a  measure  of  the  amount  of  his  salary,  in  whole  or  in  part,  or 
the  mode  of  its  payment,  he  will  not,  on  that  account,  be  liable 
as  a  partner. •^  In  all  agreements  with  sailors  who  receive  for 
wages  a  share  in  the  profits  of  the  voyage,  the  English  and  Amer- 
ican rule  is  that  they  are  not  thereby  made  partners  cither  as  to 
rights  or  liabilities.'*  An  agreement  to  give  one  who  lends  money 
part  of  the  business  profits  of  a  concern  by  way  of  bonus,  in 
addition  to  interest,  does  not  make  such  creditor  a  partner.^  And 
there  are  other  instances  where  persons  who  join  in  an  enterprise 

1.  Bigelow  V.  Elliot,  1  Cliff.  28;  Partii.  145;  su}>ra.  §  173,  n.;  §  173  a. 
Pars.  Partn.  71  et  seq.,  and  notes.  4.  Rico   v.    Austin.    17    Mass.    197; 

2.  Wilson  V.  Wliithead,  10  M.  &  W.      Purs.  Partn.  76,  pa-ssim. 

503.  5.  Wilson    v.    Edmonds.    130    U.    S. 

3.  Brightly  Fod.  Dig.  Suppl.  139;  472;  Moohan  v.  Valentine,  145  U.  S. 
Vanderburgh  v.  Hull,  20  Wend.  70;  611.  Cf.  Weasels  v.  Weiss,  166  Penn. 
3  Kent  Com.  33,  34,  and  notes;  Pars.  St.  4TO. 

265 


§  178  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

or  transaction  are  not  treated  as  partners,  though  interested  in 
the  net  profits.^  Sometimes  the  principle  is  asserted  that  thej 
only  are  partners  who  are  jointly  interested  in  the  profits  as 
profits,  and  not  by  way  of  pa;)Tnent  for  labor  or  work  performed. 
Mr.  Justice  Story  deduces  as  a  principle  from  all  the  authorities 
that  a  participation  in  profits  raises  a  presumption  of  partnership, 
which,  however,  is  not  conclusive,  but  may  be  overcome  by  other 
circumstances.^  The  rule  of  Waugh  v.  Carver,  which  is  also 
approved  by  Chancellor  Kent,  is  that  an  indefinite  participation 
in  profits  makes  one  a  partner  as  to  third  persons,  because  by  such 
participation  the  fund  on  which  the  creditors  rely  is  diminished.^ 
Again,  it  has  been  asserted  by  eminent  jurists,  that  one  is  liable 
as  partner  to  third  parties  when  his  interest  in  the  profits  is 
such  as  gives  him  the  right  to  an  account ;  but  this  test  is  clearly 
unsatisfactory,  and  a  mere  begging  of  the  question.^  Again,  the 
distinction  is  sometimes  made  between  sharers  in  gross  receipts 
and  sharers  in  net  profits ;  but  this,  as  a  conclusive  test,  seems 
inexact.^ 

A  late  writer  of  eminence  comes,  perhaps,  most  nearly  to  the 
mark,  when  he  draws  a  distinction  between  accruing  or  unascer- 
tained profits,  and  profits  which  have  been  ascertained  and  di- 
vided ;  and  he  lays  it  down  that  persons  not  held  out  to  the  pub- 
lic as  partners  incur  the  partnership  liability,  both  as  to  third 
persons  and  inter  se,  only  when  they  have  some  ownership  in  or 
of  the  profits  as  they  accrue  and  are  not  ascertained  or  divided 
into  portions.  This  community  in  unascertained  and  undivided 
profits  he  deems  to  be  the  true  test  of  a  partnership.^     But  in 


6.  Parker  v.  Fergus,  43  111.  438 
Waugh  V.  Carver,  2  H.  Bl.  235 
Hesketh  v.  Blanchard,  4  East,  144 
Loomis    V.    Marshall,    12    Conn.    69 


9.  3  Kent  Com.  25,  note;  ex  parte 
Hamper,  17  Ves.  412;  Champion  v. 
Bostvvick,  18  Wend.  184;  Pars.  Part. 
92;   Bisset  Partn.   14. 


Denny  v.  Cabot,  6  Met.  82 ;  Berthold  1.  See  Pars.  Partn.,  §  50,  and  notes ; 
V.  Goldsmith,  24  How.  536.  And  see  Dry  v.  Boswell,  1  Campb.  329;  Par- 
Cox  V.  Hickman,  cited  §  173,  notes.  ker.  v.  Canfield,  37  Conn.  250. 

7.  Story  Partn.,  §  38  et  seq.  2.  Pars.  Partn.,  §   50;   Dry  v.  Bos- 

8.  Waugh  V.  Carver,  2  H.  Bl.  235;  well,  1  Campb.  329;  Turner  v.  Bissell, 
3  Kent  Com.  27,  and  cases  cited. 

266 


CHAP.  LX]  PARTNERS.  §    179 

practice  this  test  likewise  will  be  found  a  difficult  one  to  apply. 
On  the  whole,  it  must  be  admitted  that  there  is  a  great  mass  of 
decisions  which  are  irreconcilable  on  any  one  of  these  principles. 
Even  participation  in  the  profits  may  not  be  decisive  proof  of  a 
partnership  where  other  facts  contradict  this  assumption.''  And 
as  to  a  secret  or  dormant  partner,  secrecy  on  his  part  and  want 
of  knowledge  on  the  part  of  the  creditor  have  been  deemed  essen- 
tial elements  of  the  liability.'*  The  intention  of  the  partnership 
is  to  be  considered  in  all  cases;  though  we  should  admit  that  if 
parties  secretly  make  an  agreement  whose  plain  effect  is  to  bring 
them  into  the  partnership  relation,  they  will  be  deemed  partners 
as  to  third  persons,  and  generally  as  to  external  liabilities,  even 
though  such  were  not  their  intention  in  making  the  agreement.^ 
And,  on  the  other  hand,  while  participation  in  accruing  profits 
is  a  most  convenient  test  of  the  partnership  relation,  it  establishes 
no  such  liability  where  the  legal  effect  of  the  arrangement  entered 
into  was  not  to  create  a  partnership. 

§  179.  Ostensible  Partnership;  Nominal  Partner's  Liability. 

But  partnership  liability  is,  as  we  have  said,  also  incurred  in 
cases  of  ostensible  partnership,  whether  actual  or  not.  Here  we 
come  from  the  secret  or  dormant  partner  to  his  counterpart,  the 
nominal  partner.  The  general  principle  is,  that  if  one  holds  him- 
self out  to  the  world  as  partner  in  a  firm,  he  is  liable  as  such, 
though  he  have  no  interest  in  it.  But  this  principle  is  qualified 
by  another;  namely,  that  a  creditor  who  had  no  reason  to  believe 
that  the  person  so  held  out  was  a  partner  cannot  recover. "^  The 
decisions  are  somewhat  conflicting  as  to  a  nominal  partner's  lia- 

14   Pick.   192;    Ambler   v.   Bradley,   6  notes  at  leii<?th :  Harjrravo  v.  Conroy, 

Vt.  119.  4  Green,  281;  Looniis  v.  Marahall,  12 

3.  Bullen  v.  Sharp,  L.  R.  1  C.  P.  86;  Conn.  69;  Denny  v.  Cabot.  6  Met.  82; 
Cox  V.  Hickman,  8  H.  L.  Cas.  268.  Hickman  v.   Cox,   3   C.   B.   N.   s.   523. 

4.  Bigelow    V.    Elliot,    1    ClifT.    28.  6.  3  Kent  Com.  32.  and  notes;  Story 
And  see  Palmer  v.  Elliot.  1  Cliff.  63.  Partn.,    §    64;    Wood    v.    Pennell.    15 

5.  See   Bigelow   v.   Elliott,    1    Cliff.  Me.  52. 
28 ;  Pars.  Partn.  71,  and  cases  cited  in 

267 


§  179  THE  LAW  OF  PERSONA!,  rKOPERTY.        [  PART  II. 

bility;  some  holding  that  one  put  forth  to  the  world  as  a  partner 
is  for  that  cause  and  on  considerations  of  public  policy  liable  to 
the  creditors  of  the  firm;  others  again,  with  better  reason,  that 
one  is  liable  only  because  he  was  a  parnter  in  fact  and  interest, 
or  at  least  because  the  creditor  may  justly  have  regarded  him  as 
such,  and  dealt  with  the  firm  from  regard  to  the  identity  of  inter- 
est, or  the  additional  credit  which  such  a  name  furnished.  It 
would  seem  to  come  back  properly  to  a  question  of  actual  circum- 
stances :  the  true  rule  being,  perhaps,  that  a  nominal  partner,  who 
by  his  authority,  consent,  or  connivance  was  held  out  to  the  pub- 
lic as  a  partner,  must  sufl^er  the  general  consequences  to  every 
creditor  or  customer;  while  if  nothing  more  than  negligence  can 
be  imputed  against  him  in  such  a  connection,  only  the  creditor 
who  was  actually  misled  by  tne  improper  use  of  his  name  as  a 
partner  should  hold  him  liable/  In  the  case  of  the  nominal  as 
well  as  the  secret  partner,  we  seem  to  trace  a  disposition  of  the 
courts  to  screen  from  the  harshest  legal  consequences  those  who 
were  found  to  have  strayed  carelessly,  but  unintentionally,  into 
partnership  combinations,  especially  as  to  third  persons  who  were 
not  actually  misled  in  consequence. 

In  general,  conversations,  admissions,  assertions,  or  acts  tend- 
ing to  show  a  partnership  interest,  though  they  might  be  quite 
insufficient  to  establish  an  actual  partnership  between  the  parties, 
would  often  be  conclusive  of  liability  so  far  as  concerned  third 
persons.  One  cannot  safely  allow  outside  parties  to  believe  him 
a  partner  and  let  them  rely  on  his  credit,  if  he  would  avoid  a 
partnership  liability;  though  an  unsupported  conjecture  of  the 
public  is  insufficient.^  Long  and  public  manifestation  is  held  to 
justify  the  inference  of  one's  general  liability,  so  as  to  dispense 

7.  Spencer  v.  Billing,  3  Campb.  310 ;  to  constitute  one.     Beall  v.  Lowndes, 

Swan   V.    Steele,    7    East,    210;    Pars.  4  S.  C.  258. 

Partn.,   §   82,  and  cases  cited;    Wood  8.  Pars.  Partn.,  §  82;  Goode  v.  Har- 

V.  Pennell,  51  Me.  42;  Fitch  v.  Har-  rison,    5    B.    &   Aid.    147;    Button    v. 

rington,    13    Gray,    468.      Two    firms  Woodman,  9  Cush.  255. 
will  be  held  to  be  one  if  they  assume 

268 


CHAP.  IX]  PARTXEES.  §179 

with  direct  testimony  that  the  partv  dealing  with  the  firm  relied 
upon  it.^ 

Here  it  may  be  remarked  that  the  partnership  name  and  style 
has  much  to  do  with  the  question  of  a  nominal  partner's  responsi- 
bilities ;  not  that  a  partnership  may  not  exist  without  any  firm 
name,  but  because  a  firm  name  is  usual  and  eminently  proper. 
Though  the  agreement  of  partnership  adopts  no  firm  name,  yet 
if  the  business  be  transacted  in  a  particular  style,  as  H.  &  J., 
this  becomes  the  legitimate  name  of  the  firm.'  Sometimes  a 
single  individual  doing  business  uses  the  words  "  and  Co.,"  by 
way  of  amplifying  his  sole  credit  with  the  public;  but  this  prac- 
tice, though  often  harmless,  is  improper;  and  in  New  York  and 
some  other  States  we  find  legislation  which  makes  the  transac- 
tion of  business  in  the  name  of  a  fictitious  firm  a  penal  offence 
or  imposes  special  requirements,  as  a  condition  of  doing  such 
business.^  Even  where  a  partnership  name  and  style  are  agreed 
upon  and  have  been  used,  this  will  not  prevent  persons  from  being 
bound  by  their  dealings  under  some  other  partnership  name  which 
they  habitually  use  besides.^  But  the  use  of  such  a  name  as 
usually  indicates  partnership,  while  it  may  be  prima  facie  evi- 
dence of  partnership,  affords  but  slight  proof  that  it  legally  ex- 
isted."* Our  latest  tendency  in  many  States  is  to  allow  any  name 
to  be  adopted  as  the  firm  name,  even  though  in  a  form  suggestive 

9.   Sun  Ins.  Co.  v.  Kountz,  12;?  I'.  S.  liunison   v.   Johnson.    1    B.    &    C.    146; 

583.  Rogers   v.    Coit,    6    Hill.    322;    Mifflin 

1.  Le  Roy  v.  Johnson,  2  Pet.  186;  v.  Smith,  17  S.  &  R.  165;  Beall  v. 
Ripley   v.   Colby,   3    Fost.    443;   Pars.  I>owndes,  4  S.  C.  258. 

Partn.,  §  176.  4.  Chamian  v.   Honshaw,   15  Cray, 

2.  See  3  Kent  Com.  31.  and  notes;  293.  Vice  versa,  if  the  name  of  the 
8  Abb.  N.  C.  76;  70  Cal.  194.  This  firm  be  merely  that  of  an  individual 
New  York  penal  statute  is  laxly  in-  partner,  it  is  not  presumed  that,  where 
terpreted  by  the  courts.  97  N.  Y.  the  individual  signed  his  name  to  a 
472,  476;  83  N.  Y.  74.  See  further,  hill,  he  did  so  on  behalf  of  the  firm. 
as  to  "Co."  Zemon  v.  Trim.  181  Yorkshire  Banking  Co.  v.  Boatson.  4 
Mich.  530,  147  N.  W.  540;  Drohan  C.  P.  D.  204:  United  States  Bank  v. 
V.  Norton,  67  Misc.  159,  121  N.  Y.  S.  Binney,  5  Mason,  176;  Oliphant  v. 
59g.  Mathews,  16  Barb.  608. 

3.  See   3   Kent  Com.   31,   32:    Wil- 

2no 


§  181  THE  LAW  OF  PEESONAL  PROPERTY.        [PART  II. 

of  a  corporation,^  since  there  may  be  a  trade-mark  value  in  a 
partnership  style  long  used  successfully. 

§  180.  The  Same  Subject. 

The  question  of  a  nominal  partner's  liability  may  be  usually 
referred  to  his  acts  and  conduct.  As  was  observed  in  Fox  v. 
Clifton,  the  holding  one's  self  out  to  the  world  as  a  partner,  as 
contradistinguished  from  the  actual  relation  of  partnership,  im- 
ports at  least  the  voluntary  act  of  the  party.^  It  is  the  lending 
of  one's  name  to  the  concern,  not  the  improper  use  of  that  name 
by  others,  which  the  court  usually  regards.  Declarations  of  the 
actual  partners  carry  no  great  weight  of  themselves  when  unsup- 
ported by  circumstances  evincing  the  nominal  partner's  concur- 
rence; but  if  the  latter  knows  that  his  name  is  used  on  the  sign- 
board, in  the  advertisements  and  business  circulars  of  the  firm, 
or  otherwise,  he  may  become  liable  to  customers,  unless  he  season- 
ably repudiates  and  disavows  all  connection  with  the  firm.''  The 
knowledge  that  his  name  is  so  used,  and  his  consent  thereto,  is 
the  ground  upon  which  he  is  estopped  from  disputing  his  liability 
as  a  partner.^ 

§  181.  Modern  Legislation  Affecting  Partnership  Liability  to  the 
Public. 

The  general  uncertainty  which  thus  prevails  concerning  part- 
nership liability  in  its  legal  sense  has  led,  in  England,  to  the  pas- 

5.  Holbrook  v.  Ins.  Co.,  25  Minn.  For  example,  where  a  father  and 
229;  Pars.  Partn.,  §  97.  son   did   business   together   under   the 

6.  6  Bing.  776.  See  Bourne  v.  firm  name  of  D.  &  Son.  and  the 
Freeth,  9  B.  &  C.  632 ;  Pars.  Partn.,  plaintiff,  who  had  been  a  customer  be- 
§§   84-97;    Story  Partn.,   §§   64,   80.  ^^^^    y^^    withdrawal    of    the    father, 

7.  Dolman  v.  Prichard,   2   C.   &  P.  ^^^^   j^^^   ^^^   ^^^^^  ^^^^^   ^^^   ^^.^^^_ 


drawal   and  was   injured,   the   father 
is   liable  where  the  plaintiff  did   not 


104;    Gill  V.   Kuhn,   6   S.   &   R.    338; 
Tuttle  V.  Cooper,  5  Pick  414 

8.  So  a  retiring  ostensible  partner 
is  liable  to  creditors  who  have  no  no-       ^^""^  "^  '"^  withdrawal.     Jewison  v. 
tice    of    his    retirement.      Stewart   v.      Dieudonne,  127  Minn.  163,  149  N.  W. 
Sonneborn,  51  Ala.  126;  Shamburg  v.      20. 
Ruggles,  83  Pa.  148. 

270 


CHAP.  IX]  PART^^ERS.  §    1S2 

sage  of  an  explanatory  act,^  which  is  substantially  to  this  effect : 
that  neither  the  advance  of  money  on  contract  to  receive  a  share 
of  profits,  nor  the  remnneration  of  servants  and  agents  by  a  share 
of  profits,  nor  the  receipt  of  profits  by  certain  annuitants  (such 
as  the  widow  and  child  of  deceased  partners),  nor  the  acceptance, 
of  profits  in  consideration  of  the  sale  of  good-will,  shall  constitute 
the  party  so  benefited  a  partner.  But  English  courts  of  high 
authority  have  since  observed  that  the  common  law  is  to  the  same 
effect,  and  that  nothing  has  been  really  gained  by  this  legislation.' 

§  182.  Liability  of  Partners  to  Third  Parties  Affected  by  Notice 
of  Stipulations,  Etc. 
But  the  liability  of  partners  to  third  parties  may  sometimes  ba 
affected  by  stipulations  between  themselves  of  which  such  third 
persons  had  knowledge.  And  while  private  or  secret  stipulations 
cannot  control  the  liability  of  members  composing  a  firm  as  con- 
cerns those  without  proper  notice  who  dealt  with  them,  there  are, 
nevertheless,  cases  which  tend  to  make  reasonable  stipulations 
between  partners  qualifying  their  partnership  liability,  operative 
and  obligatory  upon  third  parties  to  whom  those  stipulations 
were  made  known.^  This  doctrine  is  quite  analogous  to  that  of 
credit  given  to  one  partner  only;  namely,  that  if  a  creditor  sells 
goods  or  loans  money  on  the  sole  credit  of  one  of  the  partners,  or 
othenviso  deals  with  him  as  an  individual,  and  not  as  a  member 
of  the  firm,  the  other  partners  are  exonerated  from  liability; 
though  the  presumption  would  be  that  business  within  the  usual 
scope  of  a  partnership  is  transacted  with  a  partner  as  such,  and 
not  in  his  private  capacity,  and  vice  vcrsaJ     Further,  as  we  shall 

9.  28  &  29  Vict.,  c.  86,  July  5, 1865;  Parker    v.    Canfield,    37    Conn.    250 

Smith's   Man.   Com.   Law,   197.      This  Knox    v.    BufTinrrton,    50    Iowa.    320 

is  known  as  "  Bovill's  Act."  Kinibro    v.     Bullitt.     22     How.     256 

1.  See  per  curiam,  MoUwo,  March  Crouirhton  v.  Forrest.  17  Mo.  131;  5 
&  Co.  V.  Court  of  Wards,  L.  R.  4  Pet.  .^)29 ;  3  Kent  Com.  44.  45.  Effect 
P.  0.  419;  Pooley  v.  Driver,  5  Ch.  D.  of  assifniment  by  one  partner  to  an- 
458.  Cf.  the  local  code  of  a  State  other.  Book  23,  N.  Y.  Rpts..  Ben<l.T 
on  the  subject  of  Partnership.  ed.,  note,  p.  706. 

2.  See  Pars.  Partn.,  §  84  and  notes;  3.  Barton  v.  Hanson,  2  Canipb.  97; 

271 


§  183  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

presently  see,  knowledge  by  one  who  deals  with  one  partner  that 
such  partner  acts  outside  the  scope  of  his  partnership  authority, 
or  is  defrauding  his  associates,  may  invalidate  the  transaction  as 
concerns  the  firm  itself. 

§  183.  Articles  of  Co-partnership. 

We  have  seen  that  a  partnership  is  frequently  to  be  inferred 
from  the  acts  and  conduct  of  the  parties  combining  for  business 
purposes.  But  parties  usually  execute  some  distinctive  agree- 
ment when  they  mean  to  establish  a  firm  for  regular  partnership 
transactions  with  the  public ;  and  a  formal  contract  of  this  kind, 
reduced  to  writing  and  signed  by  all  concerned,  is  familiarly 
known  as  "  articles  of  co-partnership."  Articles  of  co-partner- 
ship usually  designate  the  partnership  name,  and  may  embrace 
a  great  variety  of  stipulations,  like  other  contracts;  and  we  fre- 
quently find  in  them  restrictions  imposed  by  way  of  mutual  pro- 
tection, as  for  instance,  in  signing  negotiable  paper ;  and  sometimes 
provisions  for  the  expulsion  of  members  in  certain  cases,  or  for 
the  reference  of  differences  which  may  arise  to  arbitration,  or 
for  liquidated  damages  where  a  member  of  the  firm  is  guilty  of 
misconduct.'^  These  articles  usually  come  for  consideration  be- 
fore courts  of  equity,  whose  province  it  is  to  adjust  the  mutual 
accounts  of  partners  and  compose  their  strifes;  and  their  pro- 
visions are  regarded  with  much  favor,  and  upheld  even  to  the 
silent  renewal  of  a  partnership  at  the  close  of  the  stipulated 
period  for  its  continuance ;  the  presumption  being  that  a  partner- 
ship is  renewed  on  the  same  terms  as  before,  unless  something 
can  be  shown  to  the  contrary.^     Partners  may  make  new  terms 

Le  Roy  v.  Johnson,  2  Pet.  186;  Lafou  v.  Ralli,  5  E.  &  B.  132;  Patterson  v. 

V.    Chinn,   6   B.    Mon.    305;    Ex   parte  Silliman,  28  Penn.  St.  304;   Gillett  v. 

Hunter,    1    Atk.    223 ;     Pars.    Partn.  Thornton,  L.  R.  19  Eq.  599. 
104-115.  5.  Crawshay  v.  Collins,  15  Ves.  218; 

4.  Story  Partn.,   §§   187-215;   Pars.  Bradley   v.    Chamberlin,    16    Vt.    613. 

Partn.,  §§   159-174,  and  notes;   Gred-  In  various  ways,  equity  upholds  rights 

dies  V.  Wallace,  2  Bligh,  295;   Wood  under    such    contracts.       But    special 

V.  Scoles,  L.  R.  1  Ch.  369 ;  Livingston  and  unusual  provisions  will  not,  by  a 

272 


CHAP.  IX ]  PAETXE2S.  §    135 

or  new  arrangements  at  anj  time  on  mutual  concurrence ;  and  the 
substantial  rights  of  each  partner,  though  not  expressly  defined, 
are  to  be  sedulously  regarded.^  As  already  intimated,  the  pro- 
visions in  such  articles  bind  only  parties  to  the  instrument  and 
third  parties  having  notice ;  and  their  interpretation  should  be 
in  connection  with  the  general  law  of  partnership/ 

§  184.  Time  When  a  Partnership  Begins. 

The  time  when  a  partnership  begins  is  usually  to  be  determined 
by  the  terms  of  the  contract  or  mutual  agreement ;  and  if  no  date 
is  established  by  written  articles,  the  date  of  their  execution  will 
be  presumed.  Where  the  law  infers  a  partnership  from  the  con- 
duct of  parties  over  certain  joint  transactions,  and  there  is  no 
express  agreement  to  this  effect,  written  or  oral,  between  them, 
the  date  of  the  transaction  or  of  the  agreement  to  enter  into  the 
transaction  will  be  taken,  as  circumstances  may  justify.^ 

§   185.  Rights  and   Duties   of   Partners;   Rights   in   Partnership 
Property. 
Secondly.     As  to  the  rights  and  duties  of  partners  to  them- 
selves and  to  the  public. 

strict  construction,   be   considered   as  Hill,    124    Mass.    588;    Goldsniitli    v. 

in  force  after  the  term  stated  has  ex-  Sachs,  17  Fed.  7"C. 

pired.     Clark  v.  Leach,  8  L.  T.  N.  s.  6.  England  v.  Curling,  8  Beav.  129 ; 

40;   Noonan  v.  McNab,  30  Wis.   277.  Pars.  Partn.,  §  100. 

See  Harvey  v.  Varney,  ffS  Mass.  118.  7.  Pars.  Partn.,  §§  160,  161. 

While  equity  will,  under  strong  cir-  8.  Pars.  Partn.,  §  12;  Fox  v.  Clif- 

cumstances,    decree    specific    perform-  ton,    6   Bing.    776;    Murray   v.    Kich- 

ance  of  a  co-partnership  contract,  it  ards,  1  Wend.  58 ;   Aspinwall  v.  Wil- 

usually    refuses    to   do   so.      Scott   v.  lianis,  1  Oliio,  38;  Gardiner  v.  Childs, 

Raj-mcnt,  L.  R.  7  Eq.  112.     But  one  8  Car.  &.  P.  345.     Tliis  might  not  l)e 

partner  may  be  enjoined  from  engag-  until    the    proi>erty   witli    which    they 

ing  in  business  prejudicial  to  the  firm.  were    to    do    business    was    obtained. 

Marshall  v.  Johnson,  33  Ga.  500.    See  Snodgrass  v.   Reynolds.  79  Ala.   452; 

also  Hayes  v.  Fish.  36  Ohio  St.  498.  Meagher  v.  Reed.  14  Cnl.  335,  24  Pac. 

A  mere  executorj^  agreement  does  not  681,  9  L.  R.  A.  455.     But  where  joint 

establish  a  partnership.     Beekford  v.  action   is  to  begin   at  once,   tlie   parl- 

18  273 


§  185  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

What  most  immediatelj  concerns  us,  in  the  present  connection, 
is  the  consideration  of  their  rights  in  the  partnership  property. 
By  partnership  property  is  meant  whatever  belongs  to  a  partnership, 
whether  personal  or  real ;  thelatterkindof  property  being,  however, 
treated  in  a  measure  as  personal  under  the  operation  of  peculiar 
rules.  The  personal  property  of  a  partnership  chiefly  consists  in 
what  is  known  as  the  goods  and  merchandise  or  stock  in  trade ; 
and  this,  where  the  business  is  that  of  selling  and  buying,  must 
be  often  of  great  as  well  as  especial  value;  the  horses  and  car- 
riages or  motor  cars  of  a  firm;  furniture,  books,  safes,  and  all 
other  chattels  bought  by  the  partnership  with  partnership  funds 
and  for  partnership  purposes;  outstanding  accounts,  debts,  and 
claims,  whether  with  or  without  security,  and  whether  evidenced 
by  writing  or  not;  cash  in  hand  and  balances  at  the  bank;  also 
shares  in  companies  or  scrip  bought  or  turned  into  the  partner- 
ship, and  not  belonging  to  the  individual  partners  or  placed  to 
their  separate  accounts.^  All  such  partnership  property  is  owned 
not  by  the  individual  partners  but  by  the  firm;  and  the  title 
should  stand  or  be  transferred  accordingly.^ 

The  "  good-will "  of  a  prosperous  partnership  is  a  valuable 
interest ;  but  it  seems  to  be  recognized  as  of  pecuniary  importance 
only  when  referred  to  the  place  where  the  partnership  business 
has  been  carried  on ;  for,  as  Lord  Eldon  says,  "  the  good-will  of 
a  trade  is  nothing  more  than  the  probability  that  the  old  customers 
will  resort  to  the  old  place."  ^     Good-will  is  the  benefit  which 

nership   begins   at   once.      Kerriek   v.  St.   530 ;    82   Cal.   474;    11   Wall.   624. 

Stevens,  55  Mich.  167,  20  N".  W.  888;  See  §   189.     Rights  in  property  pur- 

Beauregard   v.    Case,    91    U.    S.    134;  chased  in  firm  name.     Book  13,  N.  Y. 

Latta  V.  Kilbourn,   150  U.   S.  524,  4  Rpts.,  Bender  ed.,  note,  p.  735. 

S.  Ct.  201.  2.  Cruttwell   v.    Lye,    17    Ves.    335, 

9.  See    Pars.    Partn.,    §§    177-183;  346;     Pars.     Partn.,     §     181;     Story 

Story  Partn.,  §  98.  Partn.,  §§  99,  211 ;  Shackle  v.  Baker, 

1.  Pars.  Partn.,  §   178.     But  while  14  Ves.   468.     See  Warfield  v.  Booth, 

a  partner  has  no  interest  in  specific  32   Md.   63.     But  the  firm's  business 

property  of  the  firm,  but  only  an  un-  may  be  moved  from  one  place  to  an- 

divided  and  distributive  interest,   he  other  or  be  carried  on  in  more  than 

may  sell,  mortgage,  or  pledge  this  in-  one  place, 
terest.    lb.,  and  cases  cited ;  107  Penn. 

274 


CHAP,  ix]  PARTNERS.  §    185 

results  from  good  reputation  and  connections  where  the  business 
has  been  built  up.  Courts  are  sometimes  disposed  to  disregard 
the  claim  of  a  deceased  partner's  personal  representatives  in  the 
good-will  of  a  business  as  against  surviving  partners;  but  where 
the  interest  is  really  valuable,  as  it  often  must  be,  the  better  opin- 
ion is  that  equity  will  order  it  sold  with  the  other  effects  for  the 
common  benefit.''  The  good-will  of  professional  partner.ships  is 
rarely  important  in  such  a  sense,  since  those  dealing  with  lawyers, 
physicians,  and  artists,  regard  personal  qualifications  as  of  far 
greater  consequence  than  the  place  where  they  do  business.'' 
Good-will  is  firm  property,  and  a  sale  of  all  interest  in  a  business 
or  its  assets  transfers  it  as  an  incident.^ 

The  rights  of  partners  to  the  partnership  property  are  much 
like  those  of  joint  owners:  that  is,  they  are  jointly  interested 
therein ;  but  they  have  not  inter  se  that  right  of  survivorship  which 
is  the  peculiar  characteristic  of  joint  tenancy.^  In  the  absence 
of  evidence  to  the  contrary,  partners  are  deemed  to  be  equally 
interested  in  the  partnership  stock  and  effects  and  the  profits ; 
yet  the  members  may  agree  to  own  in  any  proportions;  skill  may 
be  contributed  by  one,  and  capital  in  money  by  another;  and 
partnership  combinations  are  constantly  formed  among  persons 
whose  interests  are  manifestly  made  unequal.^     So  long,  indeed, 

3.  lb. ;  Dougherty  v.  Van  Nostrand,  cumstanccs  "  good-will  "  is  not  a 
1  HoflF.  Ch.  68 ;  3  Kent  Com.  64 ;  partnor.ship  asset  susceptible  of  valu- 
Crawshay  v.  Collins,  15  VeS.  224.  See  ation.  Steuart  v.  Gladstone,  10  Cb. 
Sheldon  v.  Houghton,  5  Bl.  C.  C.  285.  D.  626.     See  also  45  L.  T.  303;   I^g- 

4.  Hoyt  V.  Holley,  39  Conn.  326;  gott  v.  Barrett,  15  Ch.  D.  306. 
Farr  v.  Pearce,  3  Madd.  78.  The  5.  Hoxie  v.  Chaney,  143  Mas.<^.  592 ; 
trade  name  or  trade  mark  appears  Merry  v.  Hooper.  Ill  N.  Y.  415,  19 
often  a  valuable  interest  in  connec-  N.  E.  714;  Crues.-?  v.  Fessler.  3?  Cal. 
tion  with  the  "good-will,"  and  on  va-  336;  Wallingford  v.  Burr.  17  Xeb. 
rious  considerations  it  cannot  be  used  137,  22  N.  W.  350.  S*^'  4  Chamber- 
by  one  carrying  on   the  business,  re-  layne  Evid.,  §  2140. 

gardless  of  the  interests  of  a  retiring  6.  Story    Partn..    §§    88-91  ;     Pars, 

or    deceased    partner.      McGowan    v.  Partn.   168.  258.  259;   Lindley  Partn. 

McGowan,    22    Ohio    St.    370;    Hook-  573;    3   Kent  Com.   36,   37;    Aultman 

ham  V.  Pottage,  L.  R.  8  Ch.  91 ;  Pars  v.  Fuller,  53  Iowa.  60.     And  see  pre- 

Partn.,  §   182.      See  T^vy  v.  Walker,  ceding  chapter. 

10   Ch.    D.    436.      Under    certain    cir-  7.  Pars.  Partn.   168,  258,  259.     See 

275 


§  186  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

as  the  community  in  profit  or  loss  exists  as  to  the  enterprise,  it 
is  held  that  each  partner  may  retain  by  special  agreement  the 
exclusive  ownership  of  the  things  contributed  by  him  to  the  part- 
nership use,^  and  one  may  be  partner  without  being  partner  or 
part-owner  in  the  property  with  which  the  enterprise  is  carried 
on.^  And  in  equity  a  partner  may  even  be  found  indebted  to  the 
concera,  since  partners  may  buy  or  borrow  from  the  firm,  and 
the  firm  from  each  partner.^ 

Where  a  partnership  is  dissolved  by  the  death  of  some  member 
of  the  firm,  the  case  is  peculiar;  for  here  the  representatives  of 
the  deceased  partner  become  tenants  in  common  with  the  sur- 
vivor; while  in  the  collection  of  outstanding  debts  and  the  gen- 
eral winding  up  of  the  partnership  business,  survivorship  so  far 
exists  at  law  that  the  surviving  partners  have  exclusive  possession 
and  management;  not,  however,  for  their  own  exclusive  benefit, 
but  as  trustees  for  all  concerned,  for  themselves,  for  the  creditors 
of  the  firm,  and  for  the  representatives  of  their  late  fellow- 
partner.^ 

§  186.  The  Same  Subject;  Rights  in  Real  Estate. 

It  was  formerly  deemed  that  partners  could  not,  as  such,  own 
real  estate,  nor  indeed  transact  business  in  lands  at  all.  But  the 
law  in  this  respect  has  changed  with  the  wants  of  trade,  I^ot 
only  does  a  partnership  find  real  estate  suitable  for  the  purposes 
of  investment,  but  lands  and  buildings  are  frequently  desired  for 

Story  Partn.,   §  24,  n. ;   Thompson  v.  2.  3  Kent  Com.  37,  and  cases  cited; 

Williamson,  7  Bligh,  n.  s.  432;  Farr  Pars.    Partn.    440-442;    Story   Partn., 

V.   Johnson,   25    111.    522;    Stewart   v.  §  177;  post,  §  192,  as  to  dissolution. 

Forbes,  1  Macn.  &  G.  137,  146.  Where  a  firm  transfers  all  its  assets 

8.  Champion  v.  Bostwick,  18  Wend.  to  a  corporation,  and  each  partner 
183;  McCrary  v.  Slaughter,  58  Ala.  receives  corporate  stock  in  proportion 
230.  Cf.  Stumph  v.  Bauer,  76  Ind  to  his  share  in  the  concern,  the  stock 
157.  is    the    individual    property    of    each 

9.  Hankey  v.  Becht,  25  Minn.  212;  partner;  for  a  new  relation  is  cre- 
22  Pick.  151.  ated.      Singer   v.   Carpenter,    125   111. 

1.  Story  Partn.,  §  91;Pars.  Partn.      117. 
258,  259. 

276 


CHAP,  is] 


PARTNERS. 


§    187 


stores,  warehouses  and  factories,  in  immediate  connection  with 
the  partnership  pursuits;  and,  besides,  real  estate  mortgaijed  to 
.secure  debts  to  the  firm,  or  attached,  may  come  into  the  hands  of 
the  partners  as  such,  bj  foreclosure  or  sale  on  execution.  The 
English  and  American  rule,  as  now  established,  is  that  real  estate 
purchased  with  partnership  funds  and  held  as  partnership  pmp- 
crty  is  to  be  so  viewed  in  equity;  it  is  subjected  to  all  the  part- 
nership incidents,  and  treated  as  personalty  so  far  as  the  partner- 
ship necessities  make  this  proper.^  And  as  to  whether  real  or 
personal  property  was  so  purchased,  actual  intention  must  prevail 
in  equity  over  external  appearances."* 

§  187.  Right  of  Partner  to  Bind  the  Firm  as  to  the  Public. 

As  to  the  acts  by  which  one  partner  may  bind  the  firm,  Chan- 
cellor Kent  finds  that  the  books  abound  with  numerous  and  subtle 


3.  See  Bright.  Fed.  Dig.  G02 ;  3 
Kent  Com.  38-40,  and  n. ;  Story 
Partn.,  §  9'3 ;  Ashton  v.  Robinson,  L. 
R,  20  Eq.  25;  Wilcox  v.  Wilcox,  13 
Allen,  252;  Bowker  v.  Smith,  48 
X.  H.  Ill;  Pars.  Partn.,  §§  263-278, 
and  cases  cited;  Fairchild  v.  Fair- 
child,  64  N,  Y.  471;  Sherwood  v.  St. 
Paul,  &c.,  21  Minn.  127;  Bowling  v. 
Exchange  Bank,  145  U.  S.  512.  This 
topic  does  not  properly  fall  within 
the  limits  of  this  treatise;  but  we  may 
add  that  Wilcox  v.  Wilcox,  supra,  lim- 
its the  extent  to  whicli  partnership 
real  estate  ought  to  be  considered  as 
personal  property.  Prof.  Parsons,  cit- 
ing various  equity  authorities,  con- 
cludes that  the  English  rule  goes  be- 
yond the  American  in  giving  to  real 
estate,  purchased  with  partnership 
funds,  the  essential  incidents  of  per- 
sonal property.  Pars.  Partn.,  §  270. 
and  cases  cited;  Essex  v.  Essex,  20 
Beav.  442.  But  where  tenants  in  com- 
mon, who  owned  land,  treated  it 
throughout  as  real  estate  in  carrying 

277 


on  a  quarrying  business,  the  land  is 
held  to  remain  realty.  Steward  v. 
Blakeway,  L.  R.  4  Ch.  603.  Cf.  Mur- 
tagh  V.  Costello,  7  L.  R.  Ir.  428. 
Rights  of  surviving  partner  in  n-al 
estate.  Book  28,  N.  Y.  Rpts.,  Bender 
ed.,  note,  p.  269. 

Though  the  legal  title  to  partner- 
ship real  estate  stands  in  the  name  of 
one,  equity  will  treat  the  property  as 
partnership  personalty  .so  far  as  may 
be  just.  Shanks  v.  Klein,  104  U.  S. 
18;  Causler  v.  Wharton.  62  Ala.  358. 
If  a  partner  has  the  firm  land  in  his 
own  name,  equity  gives  the  firm  the 
benefit.  A  partnership,  as  such,  can- 
not, however,  in  the  firm  name,  take 
the  legal  title  to  real  estate.  Tidd  v. 
Rines,  26  Minn.  201.  See  further. 
Pars.  Partn..  §  265.  and  latest  cita- 
tions. Books  V.  Williams,  120  Md. 
436,   87   Atl.   692. 

4.  See  Partridge  v.  Weils,  30  N.  J. 
Eq.  176;  Johnson  v.  Hogan.  158  Mich. 
635.  123  N.  W.  891. 


§  187  THE  LAW  OF  PERSONAL  i'KOI'ERTY,       [PART  II. 

distinctions.^  It  is  the  extent  of  one  partner's  legal  authority  to 
make  all  liable  to  the  public  which  produces  so  much  mischief; 
for  so  close  is  the  partnership  combination,  that  one  rogue  may 
in  this  respect  ruin  many  innocent  associates.  In  general,  the  act 
of  each  partner,  in  transactions  relating  to  the  partnership,  is 
considered  the  act  of  all,  and  binds  all.  If  one  makes  an  admis- 
sion, acknowledgment,  or  representation,  with  respect  to  the  firm 
business,  his  partners  are  generally  bound  by  it.  And  where 
notice  is  given  by  or  to  one  partner  respecting  the  partnership 
business,  it  is  equivalent  to  notice  given  by  or  to  all.  This  vast 
power  is  not  confined  to  buying  or  selling,  but  extends  as  con- 
cerns the  public,  to  all  acts  and  contracts  which  may  fairly  be 
considered  within  the  scope  of  the  partnership  business.^ 

And  as  each  partner  may  contract  to  this  extent,  so,  too,  he  has, 
as  to  the  public,  the  absolute  jus  disponendi,  or  right  to  dispose 
of  any  and  all  of  the  partnership  effects ;  and  he  may  sell,  assign, 
or  transfer  any  or  all  of  the  personal  property  belonging  to  the 
concern  (the  transfer  of  its  real  estate  being  otherwise  restricted 
by  law)  in  the  way  of  regular  business,  though  in  fraud  of  his 
partners,  so  long  as  knowledge  of  the  fraud  is  not  brought  home 
to  the  purchaser.''  If  such  full  transfer  be  hona  fide  on  his  part, 
the  equities  of  his  co-partners  are  extinguished  correspondingly.^ 
But  all  such  transactions,  in  order  to  be  binding,  should  be  done 
in  the  regular  and  ostensible  course  of  business  of  the  firm;  and 
third  parties  are  not  absolved  from  the  necessity  of  prudent  in- 
quiry and  caution  when  dealing  with  an  individual  who  professes 
to  act  on  behalf  of  the  partnership,  especially  where  the  transac- 
tion is  such  as  ought  of  itself  to  excite  suspicion,^ 

5.  3  Kent  Com.  41.  Locke  v.  Lewis,  124  Mass.  1.     But  as 

6.  lb.  40-46,  and  cases  cited;  Story  to  such  transfers  outside  the  scope  of 
Partn.,  §§  107,  108 ;  Pars.  Partn.,  §§      busines.?,  see  §  188,  -post. 

114-130.  8.  Huiskamp    v.    Wagon    Co.,    121 

7.  Bright.    Fed.    Dig.    Partnership,      U.  S.  310. 

IV.;    Lambert's    Case,    1    Godb.    244;  9.  Wells  v.   March,   30  N.  Y.   344; 

Marshall,  C.  J.,  in  Anderson  v.  Tomp-  Rogers    v.    Batchelor,    12    Pet.    221 ; 

kins,  1  Brock.  460;  Story  Partn.,  §  94;  Cadwallader  v.  Kroesen,  22  Md.  200. 

Pars.  Partn.,  §  108;  3  Kent  Com.  41;  See  further,  §  189,  post. 

27S 


CHAP,  ix] 


PARTNERS. 


§    188 


§  188.  The  Same  Subject;  Instances  Considered. 

Thus,  there  are  numerous  instances  in  which  it  is  held  that  a 
partner  may  bind  the  firm  by  borrowing  money,'  even  though  he 
should  misapply  after  receiving  it ;  and  by  lending  money.^  One 
partner  may  bind  the  firm  by  effecting  insurance  on  the  partner- 
ship property.-'  And  all  the  members  of  a  trading  firm  are  re- 
sponsible for  bills  of  exchange  or  promissory  notes  drawn  and 
signed  or  accepted  by  one  of  its  members  in  the  firm  name.'*  But 
a  farming  or  non-trading  partnership  implies  no  such  authority. 
Sanction  or  usage  should  appear.^  Nor  can  one  member  of  a 
firm  of  attorneys,  as  such,  bind  the  firm  by  a  post-dated  check 
drawn  in  its  name.*^  And  the  surrender  of  shares  of  stock,  part- 
nership property,  to  the  corporation  issuing  them,  has  been  held 
fraudulent  and  void,  when  made  by  one  partner  under  suspicious 
circumstances.^  One  partner  has  power  to  represent  and  act  for 
the  firm  in  legal  proceedings.^ 

From  the  mere  fact  that  the  partnership  relation  exists,  one 
partner  has  no  implied  authority  to  bind  the  firm  to  others  by 


1.  Winship  v.  Bank  of  United 
States,  5  Pet.  52?;  Whitaker  v. 
Brown,  16  Wend.  505;  Etheridge  v. 
Binney,  9  Pick.  272;  Rothwell  v. 
Humphreys,  1  Esp.  406.  Obligation 
for  acts  of  other  partners.  Book  3.3, 
N.  Y.  Rpts.,  Bender  ed.,  note,  p.  589. 

2.  Alexander  v.  Barker,  2  Cr.  &  J. 
133. 

3.  Hooper  v.  Lusby,  4  Campb.  66 ; 
Foster  v.  United  States  Ins.  Co.,  11 
Pick.  85 :  Hillock  v.  Traders  Ins.  Co., 
54  Mich.  531,  20  N.  W.  571. 

4.  Kimbro  v.  Bullitt,  22  How.  256; 
Tolman  v.  Hanrahan,  44  Wis.  133; 
Wagner  v.  Simmon.s,  61  Ala.  143. 
Borrowing  money  on  the  credit  of  a 
partner's  individual  note  does  not  cre- 
ate by  presumption  a  partnership 
debt,  though  the  money  be  applied 
to  partnership  purposes.     Peterson  v. 


Roach,  32  Ohio  St.  374.  Unless  the 
firm  name  is  used  in  the  same  con- 
nection in  an  apparently  proper  way. 
Rixllon  V.  Cliurchill,  73  Me.  146.  Sec 
also  Van  Brunt  v.  Matlier,  48  Iowa, 
503;  Tolman  v.  Hanrahan,  44  Wis. 
133;  Pars.  Partn.,  SS  131-146. 

5.  McCrary  v.  Slaughter,  58  Ala. 
230:  Kimbro  v.  Bullitt.  22  How.  256; 
Benedict  v.  Thompson,  33  La.  Ann. 
196;  Bowling  v.  Bank,  145  U.  S.  512. 
Forster  v.  Mackreth,  L.  R.  2  Ex. 


6 

163 
7 

127 


Corastock  V.  Buchanan,  57  Barb. 


8.  Pars.  Partn.,  §  118;    8  T.  R.  25. 

In  absence  of  statute*  a  partnership 
cannot  sue  or  be  sued  apart  from  its 
members.  Yarbrough  v.  Pugh,  68 
Wash.  140,  114  Pac.  918. 


279 


«  188         THE  LAW  OF  PERSONAL  PROPERTY.       [ PART  11. 

opening  a  bank  account  in  his  own  name.^  Nor  to  draw  a  bill 
of  exchange  or  note  in  his  own  name,  even  though  he  apply  the 
proceeds  for  partnership  purposes.^  Nor  to  pay  his  private  debt 
by  a  check  in  the  firm's  name.^  For  a  creditor  may  be  charged 
with  constructive  knowledge  that  the  transaction  is  out  of  the 
partnership  scope ;  and  whenever  a  person  deals  with  one  of  the 
partners  in  a  transaction  of  this  sort,  the  law  concludes,  unless, 
there  are  circumstances  or  proof  in  the  case  sufficient  to  destroy 
the  presumption,  that  he  deals  with  him  on  the  partner's  private 
account,  not^vithstanding  the  partnership  name  be  assumed."' 
The  attempt  of  a  partner  to  apply  the  partnership  property  in 
payment  of  his  private  debt  will  not  therefore,  under  all  circum- 
stances, divest  the  title  of  the  firm  in  favor  of  the  creditor,  even 
though  the  latter  had  no  express  notice  of  fraud.'*  The  rule  is 
otherwise  where  a  partner  acts  in  fraud  of  his  associates  with 
strangers  in  a  matter  within  the  apparent  scope  of  the  partnership 
authority.^  And  it  is  a  material  circumstance  against  the  other 
partners  that  they  so  entrusted  goods  or  the  transaction  to  the 
partner  in  question  as  to  enable  him  to  deceive  the  public  as  to 
his  authority  in  the  premises,  and  that  he  did  deceive  the  third 
person  accordingly.^ 

As  to  negotiable  paper  in  general,  which  bears  the  firm  name, 
the  act  of  one  partner  binds  all,  whether  it  be  by  drawing,  accept- 
ing, or  indorsing,  so  far  as  third  persons  acting  in  good  faith  and 

9.  Alliance  Bank  v.  Kearsley,  L.  R.  cited;    Ellston  v.  Deacon,  L.  R.   2   C. 

6  C.  P.  433.  P.  20;   Story  Partn.,  §   172  et  seq. 

1.  Le  Roy  v.  Johnson,  2  Pet.  186.  3.  3  Kent  Com.  43,  and  notes;  Story 
See  Pars.  Partn.,  §  138  ;  Gansevoort  Partn.,  §  133  ;  Doty  v.  Bates,  11  Johns. 
V.  Williams,  14  Wend.  133;  Peterson  544. 

V.   Roach,    32    Ohio   St.    374 ;    Lill    v.  4.  See  Rogers  v.  Batehelor.  12  Pet. 

Egan,  89  III.  609.  221:   Union  Xat.   Bank  v.  Underhill, 

2.  Davis  V.  Smith,  27  Minn.  337.  21  Hun,  178:  Forney  v.  Adams,  74 
A  presumption  of  fraud  arises  in  cases  Mo.  138. 

where  one  partner  uses  the  name  and  5.  3  Kent  Com.  46,  citing  Willet  v. 

credit  of  the  firm  in  settling  up  what      Chambers.  Cowp.  814.  &e.     See  Hutch- 
are  manifestly  his  own  private  trans-      ins  v.  Turner.  8  Humph.  415. 
actions.   Pars.  Partn.,  §  112,  and  cases  G.Locke    v.    Lewis,    124    Mass.    1; 

Kelton  V.  Leonard,  54  Vt.  230. 
280 


CHAP,  ix]  PAETNERS.  §    188 

without  due  notice  are  concerned,  provided  once  more  the  trans- 
action appear  to  have  been  fairlj  within  the  partnership  scope/ 
But  there  are  instances  where  the  presumption  of  authority  would 
be  negatived  bj  the  facts;  as  in  the  case  where  paper  is  indorsed 
which  does  not  belong  to  the  firm,  by  way  of  accommodation  or  as 
an  interchange  of  credit,  which  is  much  like  attempting  to  place 
the  firm  in  the  position  of  a  surety.  Of  course  the  firm  is  liable 
where  such  use  of  its  name  was  authorized;  and  even  accommo- 
dation paper  bearing  an  indorsement  by  a  single  partner  would 
be  binding  in  the  hands  of  a  honu  fide  holder  for  value  without 
knowledge  of  the  circumstances  under  which  it  was  procured.^ 
A  note  given  by  a  firm  is  not  technically  a  joint  and  several  obli- 
gation; the  partners  in  all  cases  assume  joint  liabilities.^  So  too 
a  note  payable  to  A.  and  B.  prima  facie  imports  a  note  to  a  part- 
nership.' 

Among  the  general  rights  of  each  partner  as  concerns  the  part- 
nership property  are  those  of  making  payment  for  the  firm  of  the 
partnership  debts,  and  of  receiving  pa^>Tnent  of  any  and  all  debts 
due  to  the  firm.  And  incidentally  one  partner  may  compromise 
a  debt,  or  authorize  legal  proceedings  for  its  recovery.^  The  lia- 
bility of  all  the  members  of  a  firm  in  a  suit  prosecuted  to  judgment 
against  them  on  the  partnership  account,  with  or  without  attach- 
ment of  the  partnership  property,  will  be  strictly  enforced.''  One 
partner  may  appoint  an  agent  with  authority  to  transact  the  joint 
business.'^  And  a  firm  being  by  name  empowered  to  act  for  a 
third   party,   one  partner  may  sufficiently  execute  the   agency.^ 

7.  Michigan  Bank  v.  Eldred,  9  Wall.  1.  Murphy  v.  Stewart.  2  How.  263. 
544;  Arden  v.  Sliarpe,  2  Esp.  523;  2.  Pars.  Partn.,  §  116.  But  see 
Ethoridpe  v.  Binney,  D  Pick.  272;  Hamridge  v.  Dp  La  Croupe,  3  M.  G. 
Pars.   Partn.,   §§   131-146,  and  notes;  &  S.  742. 

Story  Partn.,  §§  102,  126;  infra.  Bills  3.  Th. ;  Tnlnisch  v.  Fannell,  1  Black, 

and  Notes,  §§  443-462.  566. 

8.  Early  v.  Reed,  6  Hill,  12:  Waldo  4.  Tillier  v.  Whitohead.  1  Dall.  269; 
Bank  v.  Lumbert,  16  Me.  416.  Lucas  v.  Bank  of  Darien.  2  Stew.  280; 

9.  Mason  v.  Eldred,  6  Wall.  231;  Cameron  v.  Blackman.  39  Mich.  108. 
Perring  v.  Hone,  4  Bing.  28.  See  5.  Kennebec  Co.  v.  Augusta  Ins.  & 
Doty  V.  Bates,  11  Johns.  544.  Bank  Co.,  6  Gray,  204. 

281 


§  188  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

But  from  a  general  power  granted  to  one  of  two  partners,  the 
other  can  derive  no  authority.*^ 

The  rule  has  been  that  one  partner  cannot  submit  the  interests 
of  the  firm  to  arbitration;  the  submission  binding  only  himself.^ 
The  same  exception  seems  to  have  existed  at  the  civil  law.  But 
why  a  partner  should  be  specially  restrained  in  this  respect,  it 
is  hard  to  say.^ 

There  are,  however,  technical  objections  to  the  power  of  a 
partner  to  bind  the  firm  by  executing  a  deed ;  the  ancient  rule  of 
our  law  being  that  a  partnership  has  no  seal,  while  authority  to 
seal  should  be  conferred  by  seal.  A  general  partnership  agree- 
ment under  seal  could  confer  no  such  authority.^  But  this  does 
not  prevent  one  partner  from  executing  a  valid  deed  on  behalf  of 
the  firm  if  his  co-partners  are  present  and  consent.^  And  the  old 
rule  is  now  greatly  relaxed  in  American  practice,  through  the 
intervention  of  equity  doctrines.  Even  an  absent  partner  is  held 
bound  by  a  deed  executed  on  behalf  of  the  firm  by  his  co-partner, 
if  he  gave  either  a  previous  parol  authority  or  subsequently  con- 
firmed the  act.^  So  the  seal  to  an  instrument  is  sometimes  held 
mere  surplusage,  as  in  the  case  of  a  mortgage  of  personal  prop- 
erty, or  an  assigTiment  for  the  benefit  of  creditors,  or  the  release 
of  a  debt."'     And  though  one  partner  for  want  of  authority  may 

6.  Edmiston  v.  Wright,  1  Campb.  1.  Harrison  v.  Jackson,  7  T.  E.  207. 
88.  2.  See    Kent    and    Parsons,    supra; 

7.  Karthaus  v.  Ferrer,  1  Pet.  222;  Anthony  v.  Butler,  13  Pet.  423,  433; 
Buchanan  v.  Curry,  19  Johns.  137.  Story  Partn.,  §§  119'-122;  Worrall  v. 
In  some   States  a   partner  may  thus  Munn,  1  Seld.  221. 

bind,   as   matter   of   law,   by   his   un-  3.  Milton   v.   Mosher,   7   Met.    244 ; 

sealed  agreement.     McKee  v.  Buford,  Harrison  v.  Sterry,  5  Cr.  289;  Wood- 

3  B.  Mon.  435;  12  S.  &  K.  243;  Pars.  ruflf  v.  King,  47   Wis.   261;   Wells  v. 

Partn.,  §  121,  n.  Evans,     20     Wend.     251;     Ex    parte 

8.  See  Pars.  Partn.,  §  121;  South-  Hodgkinson,  19  Ves.  291;  Schmertz  v. 
ard  V.  Steele,  3  B.  Mon.  435 ;  Taylor  Shreever,  62  Penn.  St.  457.  Our  local 
V.  Coryell,  12  S.  &  R.  243 ;  3  Kent  statutes  now  largely  reduce  the  former 
Com.  49 ;  and  n. ;  Story  Partn.,  §  114.  requirement  of  seals   in  legal   instru- 

9.  2  Kent  Com,  47,  48,  and  n. ;  Pars,  ments. 
Partn..  §§  122-124,  and  notes;  Tom  v. 
Goodrich,  2  Johns.  213. 

282 


CHAP.  IX]  PAETNERS.  §    189 

not  bind  his  co-partners  by  the  execution  of  a  sealed  instrument 
in  the  name  of  the  firm,  yet  in  conformity  to  the  general  doctrines 
of  agency  he  necessarily  binds  himself/  Yet  in  several  modern 
American  cases  tihe  general  power  of  one  to  bind  the  others  of 
his  firm  by  a  specialty  is  still  emphatically  denied,  and  he  binds 
accordingly  only  himself,  unless  authorized.^ 

§  189.  The  Same   Subject. 

The  power  to  dispose  of  the  partnership  property  may  be  exer- 
cised by  a  single  partner  in  a  variety  of  ways;  always  assuming 
that  the  case  is  free  from  collusion,  and  the  transaction  within 
the  general  scope  and  ordinary  objects  of  the  partnership.  A 
partner  may  pledge,  or,  if  no  seal  be  requisite,  mortgage,  the 
personal  eifects  as  well  as  sell  them,  and  under  corresponding 
restraints.  Fraud  and  collusion  would  perhaps  be  more  readily 
presumed  in  case  of  an  assignment  of  the  stock  by  way  of  pledge 
or  mortgage  by  a  single  partner,  than  where  goods  are  sold  on 
delivery,  or  money  paid  over ;  and  yet  there  are  instances  where 
a  pledge  or  mortgage  of  the  whole  stock  in  trade  by  one  of  the 
partners  to  secure  a  firm  creditor  has  been  upheld,  the  creditor 
having  acted  reasonably  and  in  good  faith.^  It  should  be  observed 
that,  as  a  partner's  own  interest  in  the  copartnership  property  is 
his  due  proportion  of  a  residue  to  be  found  upon  a  final  balance, 
he  can  hardly  transfer  his  own  interest  in  the  partnership  stock 

4.  Bowker  v.  Burdekin,  11  M.  &  W.  Partn.,  §§  177-183,  n.;  Swectzer  v. 
128;  Elliot  v.  Davis,  2  Bos.  &  P.  338.  Mead,  5   Mich.   107;   Roid  v.   TTollins- 

5.  Gibson  v.  Warden,  14  Wall.  244;  head,  4  B.  &  C.  867;  s.  c.  7  1).  &  R. 
Walton  V.  Tusten,  49  Miss.  569;  Wil-  444.  As  to  a  niortRagf.  tlie  nt-cc^isity 
Hams  V.  Gillies,  75  N.  Y.  197;  Rus-  of  formalitios  under  seal  may  sottip- 
sell  V.  Annable,  109  Mass.  72;  Pars.  times  affeet  the  question.  A  partner 
Partn.,  §  124.  It  is  held  that  a  part-  may  assent  to  the  tran.nfer  of  a  part- 
ner may  bind  the  firm  by  a  sealed  note  ner-ship  debt  from  one  banker  to  an- 
executed  in  the  name  of  the  firm ;  at  other.  See  Beale  v.  Caddick.  2  II.  & 
least  to  a  certain  extent.  Walsh  v.  N.  326;  Arnold  v.  Brown.  24  Pick. 
Lennon,  9'8  111.  27.  83;  Win.ship  v.  Bank  of  United  States, 

e.  See  3  Kent  Com.  46,  and  n. :  Tap-       5  Pet.  561. 
ley  V.  Buttcrriold.  1   Met.  515;   Pars. 

283 


§  189  THE  LAW  OF  PERSONAL  PROPEETY.       [ PART  II. 

effectually  to  a  stranger  without  dissolving  the  partnership 
altogether/ 

As  a  general  rule,  and  with  but  rare  exceptions  on  familiar 
principles  as  to  a  bona  fide  purchaser  or  transferee  for  value 
without  notice,  the  purchaser,  pledgee,  or  transferee  of  one 
partner's  interest  can  acquire  no  title  to  assets  beyond  the  latter's 
share  in  such  surplus  as  may  remain  upon  a  winding  up  of  the 
firm  business ;  ^  and  where  a  partner  thus  disposes  of  firm 
personalty  without  the  knowledge  of  his  copartners  and  in  fraud 
of  their  rights,  for  his  individual  debt,  the  purchaser  is  held  to 
acquire  no  full  title  thereto  as  against  the  partnership  creditors.^ 

The  admissions,  representations,  and  misrepresentations  of  a 
partner  are  binding  on  the  firm,  provided  they  relate  to  and  are 
made  in  the  course  of  the  partnership  business  and  within  its 
proper  scope  and  contemporaneously.  And  even  the  acknowledg- 
ment of  an  existing  debt  by  a  single  partner,  while  the  partner- 
ship continues,  will  take  the  case  out  of  the  Statute  of  Limitations ; 
though  on  principle  such  an  acknowledgment  made  after  the 
partnership  is  dissolved  can  have  no  such  effect.^  One  partner 
cannot,  in  the  absence  of  usage  or  special  circumstances,  bind  the 
firm  by  the  guaranty  of  a  third  person's  debt,  nor  make  his 
fellow-partners  liable  as  mere  sureties  without  their  consent.^ 

7.  Pars.  Partn.,  §  306;  Van  Sector  1.  3  Kent  Com.  50,  51;  Story 
v.  Lefforts,  11  Barb,  140;  Tarbell  v.  Partn.,  §  107;  Pars.  Partn.,  §§  126- 
West,  86  N".  Y.  280.     See  §  185,  note.  129,   and  notes;    Bell   v.   Morrison,   1 

8.  Staats  v.  Bristow,  73  N.  Y.  264.  Pet.    351;    Shoemaker   v.   Benedict.    1 

9.  This  rule  applies  most  strongly  Kern.  176;  Turner  v.  Smart,  6  B.  &  C. 
if  the  transferee  was  cognizant  of  the  603.  See  Baker  v.  Seavey,  163  Mass. 
fraud.     But  even  the  transferee's  in-  527,  40  N.  E.  863. 

nocence  will  not  here  avail  him.    Tar-  2.  3   Kent   Com.   47,  and  n.;   Pars, 

bell   V.  West,  86  N.   Y.  280;   Liberty  Partn.,  §§  119,  144;  Story  Partn..  §§ 

Savings    Bank    v.    Campbell,    75    Va.  127,   245;    Foot   v.    Sabin,    19    Johns. 

534;   Forney  v.  Adams,  74  Mo.   138;  154;   Rollins  v.  Stevens,  31  Me.  454: 

59    Ala.     338.       And    see    Drake    v.  Russell  v.  Annable,  109  Mass.  72.   But 

Thyng,  37  Ark.  228 ;  Hartley  v.  White,  as  to  a  guaranty  of  profits  under   a 

94  Penn.  St.  31.     And  as  to  the  right  sale,  see  Jordan  v.  Miller,  75  Va.  442. 

of    the    firm    itself    to    recover    saich  A  guaranty   may  become   binding  on 

property,  see  Johnson  v.  Crichton,  56  the  firm  by  ratification.    Clark  v.  Hy- 

Md.  108.  man,  55  Iowa,  14. 

284 


CHAP.  IX]  PARTNERS.  §     191 

§  190.  Liability  of  Firm  for  Fraud,  etc.,  of  Partner. 

Partnership  contracts  involving  fraud  and  deceit  are  closely 
allied  to  the  law  of  torts.  The  rule  is  that  partners  are  liable  in 
solido  for  the  tort  of  one,  if  that  tort  were  committed  by  the 
partner  as  such,  and  in  the  course  of  the  partnership  business; 
but  not  otherwise  unless  the  wrongful  act  were  authorized  or 
adopted  or  at  least  negligently  permitted  by  the  firm.-'  The 
connivance  of  copartners  in  a  fraudulent  transaction,  and  their 
voluntary  participation  in  accruing  profits,  are  circumstances 
which  would  justify  the  court  in  making  all  jointly  responsible.'* 
But  there  are  cases  which  tend  to  relax  the  rule  of  partnership 
liability  someWhat  more  in  torts  than  contracts,  agreeably  to  the 
general  rules  of  agency,  so  as  to  shield  innocent  partners  who  had 
no  actual  knowledge  of  the  wrong  committed,  nor  had  consented 
thereto  nor  had  negligently  permitted,  from  the  consequences  of 
a  partner's  misconduct;  though  this  holds  true  in  the  case  of  a 
pure  tort  rather  than  where  wrongful  transactions  grow  out  of 
a  contract.^ 

§  191.  Rights  and  Duties  of  Partners  as  between  themselves. 

Thus  far  we  have  considered  the  power  of  a  single  partner  as 
concerns  the  public.     The  rule  is  quite  different  when  we  come 

A  member   of   a   firm    cannot   con-  v.   Blackman,    39   Mich.    lOS;    Fry  v. 

fess  judgment  for  a  firm  debt.     Pars.  Sanders,  21  Kan.  26. 
Partn.,    §    125;    Hall    v.    banning,    91  As  to  liability  of  partners  for  rent 

U.  S.  170.     He  has  certainly  no  right  under  a  lease,  sec  Stillman  v.  Har\-ey, 

to  enter  appearance  for  his  firm  after  47  Conn.  26. 

its  dissolution.     Hall  v.  Lanning,  91  3.  Brydges  v.  BranfiU,  12  Sim.  369; 

U.  S.  160.    See  post  as  to  dissolution.  Locke  v.  Stearns,  1  Met.   564;  Pars. 

As  to  binding  one  partnership  by  Partn.,  §§  100,  102;  Graham  v.  Meyer, 

the  acts  of  another  having  a  common  4  Blatchf.  129;  Coll.  Partn.  Am.  ed., 

member,  see  Cobb  v.  Illinois  Central  §  738;  Story  Partn.,  §§  234,  256. 
R.,  38  Iowa,  601.  4.  lb.:    Castle  v.  Bullard,  23   How. 

One  partner  may  buy  goods  for  the  173:  Coleman  v.  Pearce.  26  Minn.  123; 

concern,  whether  for  cash  or  on  credit,  Tenney  v.  Foote.  9.')  Til.  9D. 
80  as  to  bind  the  firm.     Johnston  v.  5.  Floyd   v.    Wallace.    31    Ga.    688; 

Bernheim,    86    N.    C.    339;    Davis    v.  McKnlght   v.   Ratcliffe,   44    Penn.    St. 

Cook.  14  Nev.  265.    And  see  Cameron  156.    See  Kavanaugh  v.  Mclntyre,  216 

285 


§  191 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  II. 


to  apply  it  as  between  the  partners  themselves;  for  here  the 
power  of  a  single  partner  to  bind  the  firm  may  be  and  is  fre- 
quently modified  by  the  partnership  agreement.  If  there  be 
written  articles  constituting  the  partnership,  the  power  and 
authority  of  the  partners  inter  se  must  be  ascertained  and  regu- 
lated by  the  terms  and  conditions  of  those  articles.^  As  between 
themselves,  partners  may  control  and  appropriate  the  firm  assets 
in  the  adjustment  of  mutual  claims  in  any  manner  they  may 
choose.^  Nor  as  against  his  copartners,  can  a  partner,  without 
being  duly  authorized,  make,  accept,  or  indorse  negotiable  paper, 
unless  the  act  is  both  within  the  scope  of  the  partnership  business 
and  actually  on  account  of  the  firm.^  Equity  vsdll  enjoin  one 
partner  from  violating  the  rights  of  his  copartner  in  partnership 
matters,  although  no  dissolution  of  the  partnership  be  con- 
templated.' 


N.  Y.  175,  104  N.  E.  135;  Heiden- 
reich  v.  Bremner,  260  111.  439,  103 
N.  E.  275. 

But  as  to  crimes,  cf.  State  v.  Burns, 
25  S.  D.  364,  126  N.  W.  572. 

6.  Kimbro  v.  Bullitt,  22  How.  256 ; 
Story  Partn.,  §§  169-1S6,  and  cases 
cited.  Right  to  accounting  without 
dissolution.  Book  36,  N.  Y.  Rpts., 
Bender  ed.,  note,  p.  464. 

7.  MeCormick  v.  Gray,  13  How.  26. 

8.  See  supra,  §  188 ;  Etheridge  v. 
Binney,  9  Pick.  272. 

9.  Marble  Company  v.  Ripley,  10 
Wall.  339.  As  to  remedies  of  partners 
in  general,  see  Pars.  Partn.,  cs.  8-10. 

A  partner  is  impliedly  bound  to 
reasonably  devote  himself  to  the  ad- 
vancement of  the  firm's  business. 
Barclay  v.  Barrie,  209  N.  Y.  40,  102 
N.  E.  602,  47  L.  R.  A.  N.  s.  839-,  n. 

Special  compensation  to  a  partner  is 
not  presumed.  Sandberg  v.  Scougale, 
75  Wash.  313,  134  Pac.  1051;  Rug- 
gles  V.  Buckley,  175  Fed.  57,  101  C. 
C.  A.  547,  27  L.  R.  A.  N.  s.  541. 


But  as  to  special  outlay,  see  In  re 
Campbell,  229  U.  S.  561,  23  S.  Ct.  796; 
Mack  V.  Engel,  165  Mich.  540,  131 
N.  W.  92 ;  Talbert  v.  Hamlin,  86  S.  C. 
523. 

See  also  Persons  v.  Oldfield,  101 
Miss.  110,  57  So.  417  (as  to  guaranty 
or  surety)  ;  Feigenspan  v.  McDonnell, 
201  Mass.  341,  87  N.  E.  624  (borrow- 
ing money ) . 

One  partner  cannot  put  the  firm 
into  bankruptcy  against  the  consent 
of  the  others.  Steiner  v.  T.  S. 
Faulk,  222  Fed.  61,  137  C.  C.  A.  599. 
One  partner  cannot  sue  another  at 
law.  Kalamazoo  Trust  Co.  v.  Mer- 
rill, 159  Mich.  649,  124  Mich.  597; 
Merrill  v.  Smith,  158  Ala.  186,  48  So. 
495. 

As  to  ratification  of  a  partner's 
acts,  see  Banks  v.  McKinley,  129 
Minn.  481,  152  N.  W.  879  (deed  under 
seal)  ;  Lays  v.  Hurley,  215  Ma?s.  582, 
103  N.  E.  52;  Blake  v.  Third  Nat. 
Bank,  219  Mo.  644,  118  S.  W.  641. 

See    further,    Union    Land    Co.    v. 


286 


CHAP,  ix]  PARTNERS.  §    191 

Partners  should  observe  perfect  good  faith  with  one  another ; 
nor  should  any  member  of  a  firm  transact  independent  business 
to  the  material  injury  of  his  associates,  or  otherwise  place  him- 
self in  a  situation  where  his  bias  is  likely  to  be  against  the 
common  interests.^  A  partner  may  traffic  quite  outside  the  scope 
of  the  firm  business  for  his  own  profit  and  advantage ;  but  if  he 
secretly  engages  in  the  same  business  by  himself,  equity  will 
subject  his  gains  to  tlio  common  benefit  of  the  partnership.^  In- 
volved partnerships,  where  one  individual  connects  himself  with 
difi"erent  firms  engaged  in  the  same  kind  of  occupation  or  busi- 
ness, ought  not  to  be  greatly  favored;  for  when  one  undertakes 
to  serve  two  rivals  who  antagonize,  he  is  likely  to  transfer  his 
affections  from  one  to  the  other  according  to  the  dictates  of 
greedy  self-interest  rather  than  of  duty.  We  are  told  that  the 
Roman  lawyers  stigmatized  that  partnership  where  one  tries  to 
reap  all  the  advantages  for  himself  as  the  societas  leonina,  in 
allusion  to  the  fable  of  the  lion  who  went  hunting  with  the  other 
wild  animals,  and  took  all  the  prey  as  his  own  share.^  Each 
partner  owes  an  amount  of  time,  care,  and  trouble  to  the  concern 
commensurate  with  his  interest,  or  according  to  the  mutual 
intent  of  the  partnership.  One  partner  ought  not  to  exclude  the 
others  from  advice  or  management;  though,  as  controversies 
must  exist  even  when  all  have  been  consulted,  it  appears  to  be 
settled  that  a  majority  in  interest  of  the  firm  acting  in  good  faith 
may  bind  the  minority  in  interest-'* 

Gwynn,    216    N.    Y.    664,    110    N.    E.  Zimmerman,   113   N.   Y.   S.   33    (App. 

162;    Strode  v.  Gilpin,   187  Mo.   App.  Term,  1909). 

383;    Crownfield  v.  Phillips,   125   Md.  1.  Story   Partn.,   §§    123-125;    Pars. 

1,   92   Atl.    1033    (competing   business  Partn..    §§    150-156;    Murrell   v.   Mur- 

not  allowed)  ;   Axton  v.  Ky.  Bottlers  rell,  33  La.  Ann.  1233. 

Co.,  159  Ky.  51,  166  S.  W.  776;  Craig  2.  Latta  v.  Kilbourn,  150  U.  S.  524. 

V.  Warner,  216  Mass.  776,  103  N.  E.  14  S.  Ct.  201 ;  Kimberly  v.  Arms,  129 

1032 ;   Willard  v.   Wright,   203   Mass.  U.  S.  512. 

406,  Sg'  N.  E.  559  ;  Holden  v.  Thurber,  3.  Pothier   Contr.   de   Soc,   c.   3 ;    3 

72  Atl.   720    (R.   I.   1909)  ;   People  v.  Kent  Com.  29.  51.  52. 

Devlin.    63    Misc.    363,    118   N.    Y.    S.  4.  Pars.  Partn..   §   14D;   Peacock  v. 

478;    United    States    Exch.    Bank    v.  Cummings,    46    Penn.    St.    434;    Kirk 

287 


§  192 


THE  LAW  OF  PEESONAL  PROPERTY. 


[part  II. 


§  192.  Dissolution  and  Change  of  a  Partnership;  how  effected. 

Thirdly.  As  to  the  dissolution  and  change  of  a  partnership. 
A  partnership  may  be  dissolved  in  a  variety  of  ways:  by  limi- 
tation of  the  period  named  in  the  partnership  articles;  by  the 
voluntary  act  of  all  the  partners  whenever  they  may  choose; 
often  by  the  act  of  a  single  partner,  amounting  to  withdrawal, 
since  partnerships  formed  without  limitation  as  to  time  are  at 
will  only ;  ^  by  the  death  of  a  partner ;  generally  in  fact  by  a 
change  in  the  firm  membership ;  also  by  decree  of  a  court  of 
equity  or  proceedings  in  bankruptcy.^  A  partnership,  or  quasi 
partnership,  which  has  been  formed  for  a  single  purpose  or 
transaction,  ceases  as  soon  as  the  business  is  completed.'^  Where 
the  court  interferes  to  pronounce  a  dissolution,  the  cause  should 
be  a  weighty  one;  for  in  case  of  the  minor  misconduct  of  a  co- 
partner, and  general  grievances  requiring  redress,  the  milder 
remedy  of  injunction  which  puts  a  stop  to  further  mischief  is 


V.  Hodgson,  3  Johns.  Ch.  400:  Johns- 
ton V.  Button,  27  Ala.  245;  3  Kent 
Com.  45,  46;  Story  Partn.,  §§  IB?, 
175.  A  partner  cannot  by  purchase 
become  the  individual  owner  of  an 
outstanding  note  against  the  concern. 
Easton  v.  Strother,  57  Iowa,  506. 
A  partner  cannot  usually  charge  his 
firm  with  interest.  Topping  v.  Pad- 
dock, 92  111.  92.  But  one  may  be 
entitled  to  interest  on  money  ad- 
vanced for  the  firm's  use  under  fair 
circumstances.  Baker  v.  Mayo,  129 
Mass.  517.  As  to  one's  claiming  spe- 
cial allowance  for  services  to  the  firm 
(which  ordinarily  is  not  proper),  see 
Godfrey  v.  White,  43  Mich.  171;  8 
Daly  (N.  Y.),  176;  Cramer  v.  Bach- 
mann,  68  Mo.  310;  Heath  v.  Waters, 
40  Mich.  457.  An  attorney  repudiat- 
ing his  partnership  obligations  in  a 
cause  entrusted  to  his  firm  cannot 
claim  a  share  in  the  fees  subsequently 
earned   by  his  partners.      Denver   v. 


Roane,  99  U.  S.  355.  A  partner  may, 
for  his  delinquency,  be  chargeable  with 
interest  to  the  firm.  Coddington  v. 
Idell,  30  N.  J.  Eq.  540. 

The  powers  of  partners  are  co- 
ordinate, whether  the  partnership  is 
in  active  operation  or  subsists  only 
for  the  purpose  of  winding  up  its 
affairs;  and  each  partner  ought  to 
keep  precise  accounts  of  all  his  trans- 
actions for  the  firm,  and  keep  them 
ready  for  inspection.  Hall  v.  Clagett, 
48   Md.    223. 

5.  Karrick  v.  Hannaman,  168  U.  S. 
334,  18  Sup.  Ct.  135,  42  L.  ed.  484. 
Presumption  of  continuance  of  part- 
nership, see  Chamberlayne  Evid.,  § 
1046. 

6.  3  Kent  Com.  53:  Pars.  Partn.,  § 
280  €t  seq.;  Story  Partn..  §§  265-319. 
Settlement  of  affairs.  Book  38,  N.  Y. 
Rpts.,  Bender  ed.,  note,  p.  781. 

7.  3  Kent  Com.  52,  53. 


288 


CHAP.  IX.]  PARTNERS.  §    193 

preferred.^  A  legal  adjudication  of  bankruptcy  or  of  insolvency 
against  either  the  firm  or  a  partner  works  a  dissolution ;  but  not 
simple  insolvency,  or  mere  inability  to  pay.^  Fraud  in  the  orig- 
inal creation  of  the  partnership  is  ground  for  judicial  dissolu- 
tion; ^  and  so  is  the  culpable  miscounduct  or  insanity  of  a  partner, 
or  even  an  essential  change  of  circumstances  if  thereby  the  pur- 
poses of  the  partnership  become  incapable  of  fulfilment.^ 
Visionary  schemes  will  sometimes  be  dispelled  by  the  court,  and 
deluded  partners  released.^  And  of  course,  where  war  breaks  out, 
a  partnership  between  citizens  of  the  opposing  governments  must 
necessarily  come  to  an  end.'*  Courts  of  equity  exercise  a  liberal 
jurisdiction  over  granting  a  dissolution,  which  is  usually  for 
causes  arising  after  the  partnership  was  formed,  and  with  an 
incidental  accounting. 

§  193.     Consequences  of  Dissolution  as  to  Parties  and  Public. 

In  general,  a  dissolution  of  partnership  puts  an  end  to  the 
authority  of  one  partner  to  dispose  of  the  common  property;  it 
operates  as  a  revocation  of  all  power  to  make  new  contracts  or 
impose  new  liabilities  upon  the  late  firm ;  and  the  rights  of  the 

8.  Pars.  Partn.,  §§  206,  207 ;  Howell  son  v.   Tennant,   21   Bcav.   482 ;    Clai- 
V.   Harvey,   5   Ark.   278 ;    Goodman   v.  borne  v.  Creditors,  18  La.  501. 
Whitcomb,  1  Jac.  &  W.  569 ;   Fischer  3.  Baring  v.  Dix,  1  Cox,  213 ;  Beau- 
V.    Raab,    57    How.    (N.   Y.)    Pr.    87;  mont  v.  Meredith,   3   Ves.  &   B.   180; 
Lyon  V.  Tweddell,  17  Ch.  D.  529.  8  Ore.  84;  Pars.,  §  357. 

9.  3  Kent  Com.  58-60;  Pars.  Partn.,  4.3  Kent  Com.  62;  Griswold  v. 
§  368 ;  Siege!  v.  Chidsey,  28  Penn.  Waddington,  15  Johns.  57 ;  Pars., 
St.  279;  Crawshay  v.  Collins,  15  Ves.  §  357.  A  written  agreement  for  dis- 
217.  Where  partnership  and  individ-  .solving  a  partnership  supersedes  all 
ual  property  are  assigned  in  bank  prior  or  contemporaneous  agreements 
ruptcy,  the  court  prefers,  as  far  as  on  the  subject.  Bragg  v.  Geddes,  93 
practicable,  to  apply  partnership  as-  111.  39.  Any  partner  of  a  firm  formed 
Sets  to  the  partnership  debts,  and  in-  for  an  indefinite  time  may  retire  and 
dividual  assets  to  individual  debts.  dissolve  the  partnership  whenever  he 
133  U.  S.  670.  choo.se3,     if     his    act    be     bond    fide. 

1.  Hynes  v.  Stewart,  10  B.  Monr.  Fletcher  v.  Reed,  131  Mass.  312;  Neil- 
429;   Fogg  v.  Johnston,  27   Ala.   432.  son  v.  Moss  End  Co..  11  App.  Cas.  2ff8. 

2.  Story  Partn..  §§  291-294;  3  Kent  For  effect  of  his  assignment,  see  Rid- 
Com.   62;   Pars.,  §§   360,   361;    Harri-  die  v.  Whitehill,  135  U.  S.  C21. 

19  289 


§  193  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

partners  as  such  extend  no  farther  than  to  settle  the  partnership 
concerns  and  distribute  the  funds.^  This  right  may  be  restrained 
by  a  delegation  of  the  authority  to  one  of  the  late  partners ;  and 
frequently  either  the  original  articles  or  a  special  agreement  made 
upon  dissolution  provide  how  outstanding  accounts  shall  be  ad- 
justed, who  shall  collect  and  pay  the  old  debts,  and  how  the  con- 
cern in  fact  shall  be  wound  up.^  Independently  of  special  agree- 
ments, however,  each  of  the  late  partners  has  full  authority,  not- 
withstanding the  dissolution,  to  pay  up  and  settle  the  outstanding 
debts,  receive  payment  of  sums  owing  the  firm,  compromise,  dis- 
count, and  give  acquittance  much  the  same  as  before ;  though  here 
we  are  speaking  of  partners  inter  se,  for,  as  concerns  innocent 
third  parties,  a  single  partner  may  have  greater  power  to  bind  his 
late  associates.^  Where  the  equality  of  rights  on  dissolution  is 
restrained  by  agreement,  the  partner  delegated  to  wind  up  the 
concern  may  indorse  partnership  notes,  transfer  by  indorsement 
without  recourse,  sell,  compromise,  release,  pledge  collaterals,  and 
otherwise  do  such  acts  as  are  reasonable  and  incident  to  the  pur- 
pose of  winding  up,  not  renewing,  the  business.  He  is  a  trustee 
for  the  benefit  of  all,  and  will  be  treated  in  equity  accordingly.^ 
But  the  consequences  of  a  dissolution,  as  regards  third  persons, 
are  quite  different;  and  nothing  can  shield  the  members  of  the 
late  firm  from  liability  to  the  public  on  new  contracts  made  ap- 
parently on  the  partnership  account,  but  proper  notice  that  the 
partnership  exists  no  longer.     For,  until  notice  is  given,  the  situa- 

5.  Bell    V.    Morrison,    1    Pet.    352;  6.  Pars.  ib. ;  National  Bank  v.  Nor- 

Pars.    Partn.,    §    286    et   seq.;    Story  ton,  1  Hill,  572. 

Partn.,  §§  320-356.     See  Bank  v.  Car-  7.  Pars.  Partn.   §§  289-295;   Butch- 

rollton    Railroad,    11    Wall.    624;    91  art  v.  Dresser,  10  Hare,  453;   Wood- 

U.  S.   160.     Rights  of  members  after  ford  v.  Downer,  13  Vt.  522;   Darling 

dissolution   of   partnership.      Book   5,  v.    March,    22    Me.    184;    Bobbins    v. 

N.  Y.  Rpts.,  Bender  ed.,  note,  p.  779.  Fuller,  24  N.  Y.  570. 

Rights,  remedies  and  liabilities  of  sur-  8.  Pars.   ib. ;    Parker  v.   Macomber, 

viving  partner.    Book  22,  N.  Y.  Rpts.,  18  Pick.  505 ;  Bennett's  Case,  18  Beav. 

Bender  ed.,  note,  p.  801.     Title  upon  339;    Dunlap   v.    Watson,    124    Mass. 

division   of   assets.      Book   26,   N.   Y.  305.      A   decree   for   dissolution    of   a 

Rpts.,  Bender  ed.,  note,  p.  544,  firm  should  provide  for  an  accounting. 

290 


CHAP.  IX.]  PARTNERS.  §    193 

tion  of  each  individual  is  essentially  that  of  a  nominal  partner ; 
he  is  to  the  world  the  same  member  of  a  firm  that  he  was  before. 
An  outgoing  partner  can  discharge  himself  from  future  liability 
to  others,  and  indeed  the  partnership  liability  can  be  terminated 
altogether  as  to  the  public,  by  notice,  express  or  by  publication. 
Public  notice  is  conclusive  on  those  who  have  not  had  prior  deal- 
ings with  the  firm ;  and  as  to  others,  it  is  a  question  for  the  jury 
whether  it  amounted  to  notice  in  fact  under  all  the  circumstances.^ 
Furthermore,  we  must  remember  that  when  a  partnership  is  dis- 
solved, it  is  not  dissolved  with  regard  to  things  past,  but  only  with 
regard  to  things  future ;  ^  and  the  late  partnership  is  not  released 
from  its  liability  on  an  outstanding  and  unexecuted  transaction. 
But  the  reason  of  the  rule  requiring  notice  of  dissolution  to  be 
given  to  the  public  extends  only  to  the  duty  of  making  third  per- 
sons acquainted  with  the  fact  that  a  dissolution  has  taken  place, 
so  that  subsequent  dealings  with  members  of  the  late  firm  or  their 
successors  may  be  regulated  by  such  persons  understandingly. 
For  all  this,  the  question,  what  is  a  sufficient  notice  to  the  public, 
gives  rise  to  much  discussion  in  the  courts.  The  custom  and 
necessity  of  notice  is  recognized  generally  by  the  commercial 
world ;  and  sometimes  the  notice  is  given  orally,  sometimes  by 
advertisement,  sometimes  by  letter  to  those  dealing  with  the  firm, 
sometimes  by  a  change  of  name  on  the  sign-board ;  and  more  fre- 
quently by  two  or  more  of  these  methods  combined."  A  distinc- 
tion is  made,  in  such  cases,  between  old  customers  and  new  ones, 
founded  upon  an  obvious  propriety;  and  while,  as  to  members  of 
the  former  class,  either  express  notice  of  a  dissolution  must  be 

9.  Pars.  Partn.,  §  299  et  seq.;  Story  1.  Heath.  J.,  in  \Voo<I  v.  Braddick, 

Partn.,    §    160;    3    Kent    Com.    66-68.  1  Taunt.   104. 

Notice  of  dis.solution  of  partnership,  2.  See  BuIIer,  J.,  in  Tatloek  v.  Har- 
Book  25,  N.  Y.  Rpts.,  Bender  ed.  note,  ris,  3  T.  R.  180;  Story  Partn.,  §§  160, 
p.  743.  Sufficiency  of  notice  of  dis-  161;  3  Kent  Com.  66-68;  Pars, 
solution.  Book  32,  N.  Y.  Rpts.,  Bender  Partn.,  §§  299,  315  et  seq.;  Davis  t. 
ed.,  note,  p.  878.  Who  is  entitled  to  Keyes,  38  N.  Y.  94;  Lange  v.  Ken- 
notice  of  dissolution,  Book  .5,  N.  Y.  ncdy,  20  Wis.  279 
Rpts.,  Bender  ed.,  note,  p.  728. 

291 


§  193 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  TI. 


shown,  or  it  must  appear  that  there  was  actual  knowledge  on  their 
part,  or  at  least  adequate  means  of  obtaining  actual  knowledge,  in 
order  to  relieve  the  retiring  partner  from  liability,  the  latter  is 
sufficiently  protected'  against  new  customers  if  he  gives  notice  by 
public  advertisement,  or  otherwise,  in  the  usual  way  and  to  the 
usual  extent ;  since  of  course  one  does  not  know  who  are  going  to 
be  future  dealers  with  the  firm.^  Less  than  this  is  unsafe ;  though 
knowledge  of  the  dissolution,  however  .acquired,  by  an  individual, 
renders  notice  to  him  unnecessary/  Questions  of  notice,  we  may 
add,  usually  arise  in  determining  the  rights  and  liabilities  of  an 
outgoing  partner. 

A  partnership  agreement  of  dissolution,  which  throws  the  part- 
nership liability  upon  those  who  remain  or  the  successors  of  the 
old  firm,  may  be  made  binding  upon  a  creditor  by  his  making 


3.  Carter  v.  Whalley,  1  B.  &  Ad. 
11;  Benton  v.  Chamberlin,  23  "Vt. 
711;  Goddard  v.  Pratt,  16  Pick.  448; 
Cregler  v.  Durham,  9   Ind.  375. 

4.  Hart  v.  Alexander,  2  M.  &  W. 
484;  Merrit  v.  Pollys,  16  B.  Monr. 
355;  Uhl.  v.  Bingaman,  78  Ind.  365. 
Cf.  as  to  new  parties  becoming  cred- 
itors where  no  public  notice  of  dis- 
solution had  been  given,  but  only 
private  notice,  Polk  V.  Oliver,  56 
Miss.  566;  Richardson  v.  Snider,  72 
Ind.  425;  Richards  v.  Butler,  65  Ga. 
593.  Mere  rumor  of  a  dissolution  of 
the  firm,  whose  raiembers  act  incon- 
sistently with  such  an  idea,  will  not 
serve  as  actual  notice.  2  McCrary, 
307.  This  subject  of  notice  is  well  dis- 
cussed in  Polk  V.  Oliver,  56  Miss. 
566.  And  see  Dickinson  v.  Dickinson, 
25  Gratt.  321;  Clinchfield  Co.  v. 
Lundy,  130  Tenn.  135,  163  S.  W.  563. 

Contracts  prescribing  the  terms  on 
which  old  partners  retire  and  new 
ones  enter  are  frequently  made  at  the 
present  day,  but  such  contracts  are 
to  be  justly  and  equitably  construed 


as  between  themselves.  See  Lee  v. 
Davis,  70  Ind.  464;  Love  v.  Payne, 
73  Ind.  80 ;  Ayresi  v.  Gallup,  44  Mioh. 
13.  A  retiring  partner  should,  as 
to  the  public,  take  heed  not  to  per- 
mit the  continued  use  of  his  name  in 
the  firm.  Richards  v.  Hunt,  65  Ga. 
342;  Nicholson  v.  Moog,  65  Ala.  471; 
supra,  §§  177,  178;  Gammon  v.  Huse, 
100  111.  234;  Uhl  v.  Harvey,  78  Ind. 
365;  In  re  Kreuger,  2  Lowell,  60; 
Speer  v.  Bishop,  24  Ohio  St.  538. 
See  Scarfe  v.  Jardine,  7  App.  Cas. 
345,  as  to  the  creditor's  election  to 
sue  the  old  or  new  firm  in  such  a  case. 
When  a  partner  retiring  from  the 
firm  consents  that  his  co-partners 
shall  have  possession  of  the  old  place 
and  the  future  conduct  of  the  business 
under  the  old  name,  the  good-will 
and  the  firm's  trade  marks  go  to  the 
latter.  Merrendez  v.  Holt,  128  U.  S. 
514.  But  without  any  such  clear 
consent,  the  retiring  partner's  name 
cannot  be  used,  nor  is  the  good-will 
assigned  by  him.  Gray  v.  Smith,  43 
Ch.  D.  208. 


292 


CHAP.  IX.]  PAETNEES.  §     I93a 

himself  in  some  way  a  party  to  the  a^eement;  in  which  ease 
something  like  the  civil-law  doctrine  of  novation  of  the  debt  takes 
place.  The  creditor's  right  of  appropriating  payments  made  on 
account,  whether  to  the  old  debt  in  which  the  retiring  partner  is 
concerned,  or  to  the  new  debt  of  the  new  firm,  has  a  direct  bearing 
upon  the  discussion  of  this  principle.  Novation  by  agreement 
would  aifect  the  case  of  an  incoming  partner,  who  agrees  to  assume 
the  old  debts.^  In  general,  no  such  retrospective  liability  attaches 
to  a  new  partner;  though,  like  any  other  partner,  he  is  liable  for 
all  the  new  debts;  and  he  may,  by  his  acts  and  conduct,  as  well 
as  by  express  promise,  place  himself  in  a  like  position  with  refer- 
ence to  the  old  debts.^ 

§  193a,  Distribution  of  Firm  and  Individual  Assets  in  Bankruptcy. 
Many  difficult  questions  arise  in  case  of  insolvency  of  the  part- 
nership as  to  the  distribution  of  the  partnership  assets.  The  com- 
mon-law rule  was  that  partnership  assets  should  be  divided  among 
partnership  creditors  and  that  the  separate  assets  were  to  be  dis- 
tributed among  the  separate  creditors  and  the  excess  of  either 
estate  then  divided  among  the  creditors  of  the  other.''  That  is  the 
rule  adopted  by  the  Federal  Bankruptcy  Act  of  1898.^  There 
is  a  doctrine,  however,  that  the  partnership  creditors  should  get 
the  partnership  assets  and  should  share  equally  with  the  individual 
creditors  in  the  individual  estates.' 

5.  Pars.    Partn.,    §§    325,    326;    Ex  7.  In  re  Wilcox,  94  Fed.  84. 

pa/rte  Jackson,  1  Ves.  Jr.   131;   Hart  8.  Act  July  1,  1898,  c.  541.  §  5,  30 

V.    Tomlinson,    2    Vt.    101;    Lyth    v.  Stat.  547.    See  Collier  on  Bankruptcy. 

Ault,  7  Ex.  667.  9.  Robinson    v.     Security     Co.,     87 

6.  If  a  partner  absconds,  his  co-  Conn.  268,  87  Atl.  879.  Individual 
partner  may  take  exclusive  possession  property  and  firm  di^bts.  Book  21, 
of  the  firm  property  for  the  benefit  of  N.  Y.  Rpts.,  Bender  od.,  note,  p.  184. 
the  firm.  Hammill  v.  Hammill,  27  Firm  creditors  aj^ainst  individual  cred- 
Md.  679.  Liability,  of  one  who  sub-  itors.  Book  7,  N.  Y.  Rpts.,  Bender 
sequently  came  into  firm  contributing  od.,  note,  p.  209.  Priority  of  firm  debt 
his  services,  for  debts.  Book  16,  to  insolvent  partner  when  firm  insol- 
N.  Y.  Rpts.,  Bender's  ed.,  note,  p.  20.  vent.  Book  4,  N.  Y.  Rpts.,  Bender  ed., 
Liability    of    new   member    for    prior  note,  p.  385. 

debts.     Book  26.,  N.  Y.  Rpts.,  Bender 
ed.,  note,  p.  508. 

293 


§  194  THE  LAW  OF  PERSONAL  PROPERTY.        [ PART  II. 

§  194.  Dissolution  by  Death;  Surviving  Partner,  Etc. 

The  consequences  of  a  dissolution  are  quite  frequently  discussed 
in  case  ono  of  the  partners  has  died,  and  the  partnership  is  con- 
sequently brought  to  an  end.*  What  are  the  rights  and  liabilities 
of  the  surviving  partners,  and  upon  what  basis  shall  the  repre- 
sentatives of  the  deceased  partner  procure  a  settlement  ?  We  have 
observed  that  partnership  differs  from  joint  tenancy  in  having 
no  such  thing  as  survivorship.  There  is,  however,  a  species  of 
survivorship,  by  virtue  of  which  the  surviving  partners  are  per- 
mitted to  manage  the  firm  business,  so  far  as  pertains  to  the  wind- 
ing up  and  final  settlement  of  the  affairs  of  the  partnership ;  their 
powers  being  commensurate  with  their  duties  in  this  respect.^  It 
is  common  to  say  that  the  surviving  partners  are  for  these  pur- 
poses treated  as  trustees  for  all  parties  concerned;  and  courts  of 
equity  certainly  superintend  the  exercise  of  powers  of  this  kind, 
as  in  the  case  of  other  trustees ;  looking  carefully  after  the  inter- 
ests of  all  beneficiaries,  and  interposing  to  prevent  negligence, 
delay,  and  misconduct  generally  on  the  part  of  those  whose  duty 

1.  In  general,  the  death  of  a  part-  Heath  v.  Waters,  40  Mich.  457.  In 
ner  dissolves  the  firm.  Pars.  Partn.,  some  States  the  surviving  partner  is 
§§  299,  342,  343;  Jenness  v.  Carleton,  required  by  statute  to  give  bonds  for 
40  Mich.  343,  347.  But  the  business  the  faithful  performance  of  his  trust, 
may,  under  the  co-partnership  con-  Adams  v.  Marstella,  70  Ind.  381. 
tract,  continue  longer,  through  rep-  Where  a  partnership  is  dissolved,  and 
resentatives  of  the  deceased  partner.  one  partner  dies  before  the  partnership 
Scholefield  v.  Eichelberger,  7  Pet.  affairs  are  settled,  the  above  rule  of 
594 ;  2  Schouler  Wills,  Ex'rs  and  survivorship  also  applies.  Strange  v. 
Adm'rs,    §    1326;    Stanwood    v.    Suy-  Graham,  56  Ala.  614. 

dam,  14  Gray,  195.     Creditor's  right  The  surviving  partner  may  at  dis- 

after  death  of  one  partner.     Book  13,  cretion  mortgage  or  pledge  the  assets 

N.  Y.  Rpts.,  Bender  ed.,  note,  p.  590.  for  partnership  debts.    Bradford  Bank- 

2.  Story  Partn.,  §  342;  Pars.  Partn.,  ing  Co.  v.  Cure,  35  Ch.  D.  7.  And  in 
§§  344-352;  Burwell  v.  Mandeville,  2  general  manage  and  hold  the  firm 
How.  560;  Crawshay  v.  Collins,  15  property  for  closing  up  affairs.  Rid- 
Ves.  226;  Dyer  v.  Clark,  5  Met.  562;  die  v.  Whitehill,  135  U.  S.  621.  For 
Evans  v.  Evans,  9  Paige,  178;  1  Eq.  his  liability  to  the  representatives  of 
Ca.  Abr.  290 ;  Wickliffe  v.  Eve,  17  deceased  in  case  he  carries  on  the 
How.  468;  2  Schoul.  Wills.  §§  1325,  business  continuously,  see  Clay  v. 
1326;  Arnold  v.  Arnold,  90  N.  Y.  580;  Field,  138  U.  S.  464. 

294 


CHAP.  IX.]  PAKTNERS.  §    194 

it  is  to  be  honest,  prudent,  and  expeditious.  Yet  surviving  part- 
ners are  evidently  unlike  ordinary  trustees  in  many  respects;  for 
their  own  beneficial  interests  are  involved  in  the  trust ;  and  while 
a  sale  from  the  deceased  partner's  representatives  to  themselves 
would  be  strictly  scrutinized,  there  is  no  rule  which  prevents  them 
from  becoming  the  purchasers  under  such  circumstances."'  Some- 
times a  deceased  partner  gives  by  his  will  to  his  surviving  partner 
the  power  to'  carry  on  the  business  for  a  certain  time,  retaining 
meanwhile  the  interest  of  the  deceased  in  the  funds  of  the  partner- 
ship. In  this  case  the  surviving  partner  may  do  so,  complying 
with  the  directions  and  conditions  of  the  will.'*  But  while  the 
testator,  in  doing  so,  may  bind  all  or  only  a  specific  part  of  his 
estate,  an  intention  to  render  his  general  assets  liable  is  not  to 
be  readily  presumed.^  Partnership  articles  which  .provide  how 
the  business  of  the  firm  shall  be  closed  up  or  conducted  in  case 
of  the  death  of  a  partner,  should  always  be  regarded.^ 

The  choice  of  persons  is  an  essential  element  in  every  part- 
nership ;  and  as  a  new  partner  cannot  be  introduced  into  a  firm 
without  the  consent  of  every  member  of  the  firm,  the  executors 
of  a  deceased  partner  do  not  become  partners  in  his  stead  unless 
by  virtue  of  special  stipulations  in  the  original  articles  of  part- 
nership to  that  eifect.^  Nor  in  general  are  the  assets  of  a  deceased 
partner  liable  for  debts  contracted  after  his  death,  except  under 
the  direction  of  his  will  which  authorizes  the  trade  to  go  on.^  It 
would  appear,  from  various  late  authorities,  that,  ordinarily  speak- 
ing, one  cannot  sue  the  estate  of  a  deceased  partner  directly  for 
a  partnership  debt ;  he  must  first  resort  to  the  surviving  partner.' 

3.  Chambers  v.  Howell,  11  Beav.  6;  8.  Tb.      And    see    2    Sclioul.    Wills, 
Simmons    v.    Leonard,    il    Hare,    581  :       §§  325.  326. 

Pawsey  v.  Armstrong,  18  Ch.  D.  698.  9.  Wallace  v.  Fitzsimmona,  1    Dali. 

But  SCO  Rigourney  v.  Munn,  7  Conn.  11.  248  :   Rieliards  v.  Heather,  1  B.  &  Aid. 

4.  Tillotson  V.  Tinotson34Conn.335:  20;    Smyth    v.    Ilawthom,    2    Rawle, 
Story  Partn.,  §  346;  Pars.  Partn.  355.  355;  Voorhis  v.  Childs,  17  N.  Y.  359. 

5.  Burwell  V.  Mandeville,  2  How.  560.  But    modern    statutes    are    found    to 

6.  Suydam  v.  Owen,  14  Gray,  ID'S.      change    this    rule,    and   equity    disre- 

7.  Story  Partn.,  §   5;   3  Kent  Com.      gards  the  strict  rule  of  preference,  all 
57,  59.  rights     being     adjusted     finally.       2 

295 


§  105  THE  LAW  OF  PEESONAl.  PKOPERTY.       [PABT  II. 

But,  if  the  surviving  partner  has  paid  more  than  his  proportion 
of  the  firm  debts,  he  can  claim  payment  from  the  estate  of  the 
deceased.'  No  notice  need  be  given  by  the  representatives  of 
the  deceased  to  avoid  future  liabilities;  nor  as  a  rule  are  sur- 
viving partners  required  to  give  notice  of  such  dissolution  of 
the  firm.^  Whatever  powers  may  have  been  given  by  will  to 
an  executor  to  carry  on  the  trade  of  the  deceased, —  whether  to 
become  a  partner,  or,  as  a  partner,  to  conduct  the  business  for 
the  benefit  of  the  representatives  of  the  deceased, —  must  be 
strictly  construed;  and  under  ordinary  circumstances  an  executor 
who  undertakes  to  carry  on  the  testator's  business  after  his  death, 
though  only  on  behalf  of  the  persons  interested  in  the  estate,  will 
make  himself  liable,  both  in  person  and  estate,  for  its  engage- 
ments; ^  yet  he  incurs  no  such  hazardous  risk  by  merely  leaving 
the  decedent's  property  in  the  concern.'* 

§  195.  General  Conclusions  as  to  the  Ownership  of  Personal 
Property  as  Partners. 

For  combining  successfully  the  wealth  and  labor  of  individuals 
in  the  transaction  of  extensive  business  operations,  we  find,  then, 
that  the  partnership  relation  presents  some  decided  advantages 
over  that  of  joint  or  common  ownership,  which  is  adapted  rather 
to  mere  beneficial  investment.  A  large  capital  well  bestowed 
and  skilfully  managed  may  produce  wonderful  results  in  creat- 
ing, developing,  and  enlarging  a  business ;  and  with  an  increased 

Schouler  Wills,  Exrs.  &  Admrs.,  partner  carries  on  tlie  business  and 
§  1379.  the  concern  fails,  see  Hoyt  v.  Sprague, 

1.  Busby  V.  Chenault,  13  B.  Monr.       103  U.  S.  613. 

554.  4.  Pars.,    §    356,    notes;    Willis    v. 

2.  Marlett  v.  Jaekman,  3  Allen,  Sharp,  113  N.  Y.  586,  21  N.  E.  705, 
287 ;  Burwell  v.  Mandeville,  2  How.  4  L.  R.  A.  493 ;  Mattison  v.  Farnham, 
560;  Downs  v.  Collins,  6  Hare,  418.  44  Minn.  95,  46  N.  W.  347;  Citizens' 

3.  Pars.  Partn.,  §  355;  Ex  parte  Ins.  Co.  v.  Ligon,  59  Miss.  305; 
Garland,  10  Ves.  119;  Story  Partn.,  Avery  v.  Myers,  60  Miss.  367:  Wild 
§  106;  Alsop  V.  Mather,  8  Conn.  587;  v.  Davenport,  48  N.  J.  L.  129.  See 
2  Schouler  Wills,  Exrs.  &  Admrs.,  Vt.  Marble  Co.  v.  Spafford,  162  Mich. 
§  1326.  As  to  the  rights  of  a  deceased  549,  127  N.  W.  669.  In  re  :Moore's 
partner's  estate,  where  the  surviving  Estate,  228  Pa.  516,  77  Atl.  899.  902. 

296 


CHAP.  IX.]  PARTNERS.  §    195 

hazard  comes  the  hope,  if  successful,  of  larger  aggregate  gains. 
But  there  remains  this  decided  drawback  to  putting  personal 
property  into  partnership:  that  the  more  extensive  the  common 
operations,  the  greater  must  be  the  individual  liability;  while 
each  partner,  moreover,  is  too  much  in  the  power  and  at  the 
mercy  of  his  associates  as  concerns  the  public.  And,  besides, 
there  are  those  of  means  who  wish  to  invest  where  they  need 
not  be  under  the  necessity  of  exercising  a  constant  vigilance ;  who 
desire  to  embark  in  trade,  manufacture,  and  commerce  essen- 
tially, while  leaving  the  active  management  to  others  and  con- 
fining their  own  risk  to  the  capital  they  have  contributed. 

To  obviate  such  disadvantages,  we  find  other  modes  contrived 
for  enabling  the  owners  of  capital  to  combine  for  business  opera- 
tions and  to  invest  in  a  common  and  convenient  fund  which  may 
be  actively  employed  in  some  well-defined  pursuit  of  gain ;  yet 
without  incurring,  for  the  most  part,  a  hazard  of  loss  beyond  the 
amount  of  their  respective  investments,  and  with  better  facilities 
afforded  for  entering  or  leaving  the  common  concern  at  indi- 
vidual choice.  These  combinations  we  shall  consider  at  length 
in  the  next  two  chapters.^ 

5.  Upon     the     general     subject     of  As  to  surviving  partner,  see  Fried 

Partnership,   see  at  length  the  latest  v.    Burk,    125    Md.    500,    94   Atl.    86; 

editions  of  Prof.  Theophilus  Parsons  Murphy   v.    Murpliy,    217    Mass.    233, 

and  Mr.  Justice   Story'  on  that  sub-  104  N.  E.  466;    Costello  v.  Costello, 

j€ct,  or  of  Sir  N.  Lindley's  (English)  209  N.   Y.   252,   103   N.   E.    148;    An- 

work,  as  edited  with  American  notes;  drews  v.  Stinson,  254  111.  111.  98  N".  E. 

or  of  E.  A.  Gilniore.  222;  Drueke  v.  Boylon,  160  Mich.  522, 

See  also  4  Chamberlayne  Evid.,  §§  125  N.  W.  41G ;  Hewitt  v.  Hayes,  204 

2360,    2734,    2751 ;     G.    Burdick    on  Mass.  586,  90  N.  E.  985,  27  L.  R.  A. 

Partnership  (N.  Y.),  n.  s.  154. 

One  partner  may  purchase  his  co-  See,   as   to  dissolution,   Rapalee   v. 

partner's   interest  bond  fide.     Rankin  John  Malmquist,   165  Iowa,  249,   145 

V.  Kelly,  163  Ky.  463,  173  S.  W.  1151;  N.   W.   279;    Fooks  v.   Williams.    120 

Phillips   V.   Crownfield.    124    Md.    443,  Md.    436,   87   Atl.   602;    Filer's   Music 

92  Atl.  1030.     See  Axton  v.  Ky.  Bot-  House  v.  Reine,  65  Ore.  598,  133  Pac. 

tiers'  Co.,  159  Ky.  51,  166  S.  W.  776;  788;  Sandberg  v.  Scougiile,  75  Wash. 

Kanawha  Hardwood  Co.  v.  Evans,  65  312,  134  Pac.  1051;  Wiggins  v.  Brand, 

W.  Va.   662,   64   S.   E.   917;   Fouse  v.  202  Mass.  141,  88  N.  E,  840. 

Shelby,  641  W.  Va.  425,  643  S.  E.  208.  S(>e,  as  to  insolvency,  In  re  Robert.^, 

297 


CHAPTER  X 

MEMBEBS    OF    LIMITED    PARTNERSHIPS,    AND    OF    JOINT-STOCK 
COMPANIES,    AND    SHIP-OWNERS 

§  196.  Limited  Partnerships;  Their  Origin  and  Nature. 

I.  The  doctrine  of  limited  partnerships  was  imported  into 
the  United  States  within  a  comparatively  recent  period  from 
Continental  Europe.  By  the  ordinance  of  1673,  France  first 
established  partnerships  of  this  sort,  under  the  name  of  La 
Societe  en  Commandite;  and  New  York  was  the  earliest  of  the 
American  States  to  set  up  a  similar  system;  this  being,  as  Chan- 
cellor Kent  observes,  the  first  instance  in  the  history  of  its  legis- 
lation where  the  statute  law  of  any  other  country  than  that  of 
Great  Britain  has  been  closely  imitated  and  adopted.^  There 
is  now  scarcely  an  important  State  under  our  federal  government 
where  limited  partnerships  are  not  recognized;  and  although 
it  is  the  policy  of  legislation  in  some  parts  of  this  country  to 
prevent  them  from  being  formed  for  the  transaction  of  banking, 
insurance,  or  other  special  kinds  of  business,  yet  the  combination 
of  persons  as  limited  partners  in  the  ordinary  pursuits  of  trade 
is  almost  everywhere  favored  and  protected  in  America.  In 
England  the  limited  partnership  principle  is  not  adopted  as  to 
individuals ;  but  within  the  nineteenth  century  we  find  it  fre- 
quently applied  with  reference  to  joint-stock  companies.^  Where- 
ever  limited  partnerships  have  been  permitted,  the  system  is  found 
to  have  worked  well  and  to  have  given  universal  satisfaction. 

The  main  purpose  of  a  limited  partnership,  as  may  be  inferred 
from  what  we  said  at  the  close  of  the  last  chapter,  is  to  aid  and 
encourage  trade   and   commerce,   by   inducing  those   to   embark 

214  N.  Y.  369,  108  N.  E.  562;  Robin-  2.  Lethbridge   v.    Adams,   L.    R.    13 

son  V.  Security  Co..  87  Conn.  268,  87  Eq.    547;    Stats,    cited    Pars.    Partn., 

Atl.  879.  §   421,  n.     Our  latest   tendency  is  to 

1.  Coope  V.  Eyre,  1  H.  Bl.  48;  Po-  treat  limited   partnerships   with   still 

thier  Partn.,  n.  60;  Pars.  Partn.,  4th  increasing  favor.     White  v.  Eiseman, 

ed.,   §   421   et  seq.;  3   Kent  Com.   35,  134  N.  Y.  101,  31  N.  E.  276. 
36;  Troubat  Lim.  Partn.,  §  39. 

298 


CHAP.  X.]      MEMBERS    OF    LIMITED    PARTNERSHIPS,    ETC.  §    197 

their  wealth  or  a  portion  of  it  in  bnsiness  pursuits,  who  would 
shrink  from  encountering  the  risks  which  attend  the  ordinary 
partnership  combinations.  That  system  relieves  such  persons 
from  partnership  liability  beyond  the  extent  of  the  capital  fur- 
nished  by  each  to  the  concern.  And  a  limited  partnership,  in 
our  modern  sense,  may  therefore  be  defined  as  one  in  which  one 
at  least  of  the  partners  is  a  partner  in  the  ordinary  sense  as  to 
rights  and  liabilities,  while  at  least  one  other  person  invests  in 
the  business  and  is  liable  to  the  extent  of  his  investment,  and  no 
farther.^  With  us,  this  class  of  partnerships  is  usually  allowed 
by  general  statute;  but  in  England,  rather  by  charter.  In  such 
a  combination,  those  partners  whose  liability  is  unrestricted  are 
called  general  partners;  and  those  with  limited  liability,  special 
or  limited  partners.'* 

Of  course  there  is  danger  that,  when  partnership  liability  is 
relaxed,  an  adequate  check  to  speculation  will  be  wanting.  This 
danger  it  is  the  aim  of  our  legislation  to  guard  against.  Another 
danger  appears  in  the  temptation  thus  afforded  to  measure  lia- 
bilities by  the  limited  partnership  standard  after  gaining  undue 
credit  with  those  who  suppose  themselves  dealing  with  ordinary 
partners.  This,  too,  the  law  seeks  to  prevent.  Precautions  are 
thus  imposed  by  local  statutes,  to  which  all  who  propose  doing 
business  on  the  limited  partnership  plan  are  bound  to  conform. 

§  197.  The  Same  Subject. 

"  That  the  statutes  on  limitod  partnership  in  the  various  States 
should  be  in  substance  identical,"  says  Mr.  Troubat,  "  is  per- 
fectly natural ;  inasmuch  as  the  common  source,  the  commercial 
code  of  France,  the  work  of  the  jurists  of  the  Empire,  has  been 
largely  borrowed  from  by  them  all."  ^  The  statutes  of  the  vari- 
ous States  widely  differ  in  text;  and  yet  in  leading  details  they 

3.  Pars.  Partn.,  §  422;  Collyer  ship.  Liability  of  special  partner. 
Partn.  b.  1,  c.  1,  §§  3,  gO ;  3  Kent  Book  28.  N.  Y.  Rpts.,  Bcndor  ed., 
Com.  34.  note,   p.   304. 

4.  3  lb.     "  Limited  "  partnership  is  5.  Troubat  Lim.  Partn.,  §  39. 
sometimes  styled  "  special "  partner- 

299 


§  197  THE  LAW  OF  PERSONAL  rROrERTY.        [pART  II. 

are  quite  similar.  There  is  usually  a  certificate  to  be  recorded 
at  the  outset, —  this  more  especially  by  way  of  caution  to  the 
public;  and  such  certificate  is  to  be  published  in  some  newspaper. 
Whenever  the  partnership  is  renewed  or  continued  beyond  the 
time  originally  agreed  upon,  a  new  certificate  mu^t  be  recorded 
and  published  in  like  manner.  Provisions  are  also  made  as  to 
the  manner  in  which  the  partnership  shall  be  conducted.  And  a 
public  record  of  the  fact  of  dissolution,  with  printed  notice  in  the 
newspapers,  is  also  requisite  to  make  the  dissolution  eifectual  as 
against  the  world.  Such  are  the  principal  features  of  our  stat- 
utes of  limited  partnership.^ 

In  some  States  there  are  no  restrictions  imposed,  apparently, 
concerning  the  purposes  for  which  individuals  may  enter  into  a 
limited  partnership ;  but  in  others  the  kinds  of  business  to  be 
thus  pursued  are  distinctly  enumerated  by  statute.  And  in  New 
York,  Massachusetts,  and  the  I^ew  England  and  Middle  States 
generally,  together  with  Ohio,  California,  Tennessee,  Georgia, 
and  numerous  other  Western  and  Southern  States,  the  business 
of  banking  is  specially  excepted,  as  well  as  insurance,  or  at  all 
events,  one  of  these  two  classes;  the  reason,  doubtless,  being  that 
pursuits  of  this  kind,  involving  large  hazards,  requiring  consider- 
able capital,  and  exercising  a  potent  influence  upon  society,  are 
thought  to  be  unsuitable  to  partnerships  with  a  diminished  respon- 
sibility, if  indeed  they  should  be  conducted  by  partnership  com- 
binations at  all.''  Banking  and  insurance  business  is  for  the  most 
part  in  this  countiy  monopolized  by  chartered  corporations. 

The  legal  existence  of  a  limited  or  special  partnership  does  not 
depend  upon  the  public  notice  of  its  formation:  the  practical 
effect  of  failure  to  publish  as  the  statute  requires  being  that  the 
partnership    becomes    a    general    one    as    concerns    the    public ;  ^ 

6.  See  e.  g.  Mass.  Rev.  Laws,  c.  71.  essentially   a   limited   partnership,   of 

7.  Pars.  Partn.,  §§  421-430.     As  to  similar  French  derivation,  see  32  La. 
the    Louisiana    partnership    m    com-  Ann.  657 ;   33  La.  Ann.   812. 
mendam,   under   the    CJode,    which    is  8.  Tracy  v.  Tuffly,  134  U.  S.  206. 

300 


CHAP.  X.]      MEMBEKS    OF    LIMITED    PARTNERSHIPS,    ETC.  §    198 

though  a  person  may  still  remain  a  special  partner  towards  his 
co-partners.^ 

§  198.  Limited  Partnership;    Preliminaries;    Certificates,  etc. 

The  preliminary  certificate  of  a  limited  partnership  is,  in  gen- 
eral, to  be  signed  bj  all  the  parties  to  the  combination ;  to  specif  j 
the  name  or  firm  under  which  the  partnership  is  to  be  conducted ; 
to  give  the  name  and  residence  of  each  general  or  special  partner, 
distingiiishing  who  are  general  and  who  are  special  partners;  to 
state  the  amount  of  capital  which  each  special  partner  has  con- 
tributed to  the  common  stock,  the  nature  of  the  business  to  be 
transacted,  and  the  time  when  the  limited  partnership  is  to  com- 
mence and  when  it  is  to  terminate.  This  certificate  must  be 
acknowledged  before  a  magistrate  and  recorded  with  the  public 
records,  in  the  place  where  the  parties  reside,  or  where  the  firm 
is  to  do  business,  or  both,  according  to  the  terms  of  the  local 
statute.  And  the  method  of  advertising  this  certificate  in  the 
newspapers  is  also  designated  bj  statute.^ 

All  of  these  statute  preliminaries  must  be  strictly  pursued; 
for  they  are  all  measures  of  precaution,  upon  which  the  public, 
whose  ordinary  means  of  security  are  diminished,  have  a  right 
to  insist;  and  a  mistake  of  substance,  or  an  intended  omission  or 
error,  whether  by  a  general  or  special  partner,  throws  all  alike 
into  the  condition  of  an  ordinary  partnership.  By  this  we 
mean  that  they  are  thereby  made  liable  as  ordinary  partners  to 
the  public;  for,  as  between  themselves,  notwithstanding  the  false- 
hood or  error,  their  agreements  might  still  bo  valid;  the  general 
principles  applying  which  we  discussed  in  tho  last  chapter.^ 

9.  Guillou  V.  Peterson,  89  Penn.  St.  6   Hill,   479 ;    Henkcl   v.   Hcyman,  91 

163;    Abcndroth   v.   Van    Dolson,    131  111.   96.      Articles   do   not   take   effect 

U.  S.  66.  until    recorded;    and,   as  to  previous 

1.  See  Pars.  Partn.,  §  424 ;  Trou-  transactions,  a  general  partnership 
bat,  e.  4.  liability    is    incurred.     T^evy   v.   Lock, 

2.  Pars.  Partn.,  §§  424-426;  Rich-  5  Daly  (N.  Y.),  46.  Tf  the  partner- 
ardson  v.  Hogf?,  38  Pcnn.  St.  153;  ship  inovos  into  another  county.  &C., 
Bowen  v.  Arfjall,  24  Wend.  490) ;  Van-  a  now  certificate  is  requisite,  within 
dike  V.  Ros'skam,  67  Penn.   St.   330:  the  intendment  of  legislation  in  many 

301 


§  198  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

So,  too,  it  is  common  for  our  statutes  to  require  the  payment 
by  the  special  partner  of  his  specific  sum  "  in  cash,"  by  way  of 
partnership  capital.  A  requirement  so  plain  and  so  reasonable 
cannot  be  evaded  or  disregarded  with  safety.  Where  the  special 
partner  pays  in  notes,  though  they  were  treated  as  cash  by  the 
firm,  he  incurs  the  liability  of  a  general  partner.^  iSTor  is  a 
contribution  of  goods,  or  of  credits  or  the  assets,  of  other  firm, 
or  even  of  government  bonds  a  "  cash  "  payment.'*  Where  the 
ostensible  special  partner  invests,  not  his  own,  but  another  per- 
son's capital,  the  result  appears  to  be  held  similar,  and  devices 
generally  prove  disastrous.^ 

But  mere  defects  in  the  certificate,  or  record,  or  advertisement, 
do  not  vitiate,  if  merely  formal,  and  honestly  made,  and  if  thereby 
a  third  party  cannot  be  injuriously  misled;  for  it  is,  after 
all,  the  possible  injury  to  a  third  person  which  the  courts  mainly 
regard  in  matters  of  this  kind.  And  as  to  the  time  of  record  or 
publication  a  reasonable  rule  is  favored.^  But  in  speaking  of 
an  injury  to  third  parties  as  possible,  we  speak  of  a  logical  pos- 
sibility; for  it  has  been  held  that,  where  the  certificate  was  pub- 
lished in  two  newspapers,  and  in  one  of  them  the  sum  contributed 
was  said  to  be  five  thousand  dollars,  when  in  fact  it  was  but  two 

States.      Kiper    v.    Poppenhausen,    43  expressed   if  "  cash "   is  not  the   sole 

N.  Y.  68.  prerequisite.     Maloney   v.    Bruce,    94 

3.  Pierce  v.  Bryant,  5  Allen,  91;  Penn.  St.  249;  3  Col.  342.  The  spe- 
Haggerty  v.  Foster,  103  Mass.  17,  cial    partner's    capital    is    of    course 

4.  Lineweaver  v.  Slagle,  64  Md.  protected  against  misappropriation  or 
465 ;  Allen  Re,  41  Minn.  430.  undue    loss   upon   contracts   made   by 

5.  Metropolitan  Bank  v.  Sirret,  97  the  general  partners  so  far  as  the 
N.  Y.  320.  See  Bulkley  v.  Marks,  15  policy  and  scope  of  legislation  sane- 
Abb.  Pr.  454.  Contribution  in  "  cash  tions,  he  being  free  from  blame.  See 
and  goods "  is  not  a  "  cash "  contri-  Snyder  v.  Leland,  127  Mass.  29'1 ; 
bution  in  compliance  with  the  statute  Seibert  v.  Bakewell,  87  Penn.  St. 
expression.     Van  Ingen  v.   Whitman,  506. 

62  N.  Y.   513.     And  see  Haggerty  v.  6.  lb.;   Lachaise  v.  Marks,  4  E.  D. 

Foster,    103    Mass.    17.      In    general.  Smith,    610;    Madison    County    Bank 

property    contributed    by     a     special  v.  Gould,   5  Hill,  309 ;   Bowen  v.  Ar- 

partner  should  comply  with  the  local  gall,    24    Wend.     496;     Bradbury    v. 

statute  as  to  character,  and  the  sched-  Smith,    21    Me.    117;    White   v.    Eise- 

ule   and  valuation  should  be   clearly  man,  134  N.  Y.  101,  31  N.  E.  276. 

302 


CHAP.  X.]      MEMBERS    OF    LIMITED    PAKTNERSIIIPS,    ETC.  §     199 

thousand  dollars,  the  error  being  that  of  the  printer,  the  special 
partners  are  liable  as  general  partners ;  and  this,  too,  without 
proof  that  the  creditors  were  misled  by  the  misprint.^ 

§  199.  Limited  Partnership;  Business,  how  Conducted. 

The  business  of  a  limited  partnership  is  usually  to  be  con- 
ducted under  a  firm  in  which  the  names  of  the  general  partners 
only  shall  be  inserted,  without  the  addition  of  the  word  "  com- 
pany "  or  any  other  general  term.  N"or  must  the  special  partner 
make  personally  any  contract  with  third  persons  relative  to  the 
business  of  the  firm.  And,  contrary  to  the  rule  of  ordinary 
partnerships,  all  suits  respecting  the  partnership  business  are  to 
be  prosecuted  by  and  against  the  general  partners  only;  cases,  of 
course,  being  excepted,  where  the  special  partners  have  laid  them- 
selves open  to  the  liabilities  of  general  partners.  Provisions  of 
this  sort  will  frequently  be  found  among  the  local  statutes  which 
set  forth  the  manner  in  which  the  concerns  of  a  limited  partner^ 
ship  shall  be  managed,  so  as  to  shield  those  whose  purpose  it  is 
to  risk  only  a  specific  sum  in  the  hazards  of  trade.^  It  must 
hence  follow  that  the  special  partner  can  take  no  active  part 
in  the  firm  transactions,  nor  even  allow  his  name  willingly  to  be 
used  in  any  partnership  contract,  without  incurring  those  very 
responsibilities  which  he  has  sought  to  avoid.^  It  is  held,  more- 
over, that  a  special  partner  can  neither  transact  firm  business 
nor  bind  the  firm  by  attempting  to  do  so.^  And  as  a  matter  of 
further  wise  precaution,  our  legislators  expressly  forbid  the  re- 
duction of  the  capital  stock,  during  the  continuance  of  such  a 
partnership,  below  the  sum  stated  in  the  certificate,  whether  by 
a  direct  withdrawal,  or  indirectly,  imdor  pretence  of  a  division 

7.  Smith  V.  Argall,  6  Hill,  479.  5   Hill,   309;    Jonau   v.   Blanchard,   2 

8.  See    Mass.    Rev.    Laws,    c.    71;  Rob.  (T>a.)   51.1.    He  should  not  repre- 
Pars.  Partn.,  §§   426,  427;    Schoulten  sent    himself    as    a    peneral    partner. 
V.  Lord,  4  E.  D.  Smith,  206;  Capp  v.  Barrows  v.  Downs,  9  R.  I.  446. 
Lacey,  35  Conn.  463.  1.  Columbia   T^nd   Co.   v.   Daly,   46 

9.  Madison  County  Bank  v.  Gould,  Kans.  504,  26  Pac.  1042. 

303 


§  200  THE  LAW  OF  PERSONAL  PROPEETY.       [PART  11. 

of  interest  and  profits.^  And  special  statutes  are  to  be  found 
respecting  the  insolvency  of  a  limited  partnership,  and  the  pref- 
erence among  creditors.^  The  prescribed  penalty  for  a  disregard 
of  the  statute  regulations  is,  for  the  most  part,  that  the  special 
partner  shall  be  held  liable  as  a  general  partner ;  but  whether  he 
ought  or  can  be  made  to  suffer,  whenever  the  fault  was  that  of 
the  general  partner  alone,  and  he  neither  knew  nor  consented  to 
the  act  of  disobedience,  is  quite  another  thing.  The  limited  part- 
nership statutes,  being  exceptional  in  their  nature,  cannot,  at  all 
events,  be  enlarged  by  construction ;  and  it  is  safe  to  presume  that 
in  all  things  where  the  partnership  liability  is  not  distinctly  lim- 
ited, the  business  combination  is  that  of  ordinary  partners,  and 
the  mutual  rights  and  liabilities  are  to  be  adjusted  accordingly.'* 

§  200.  Limited  Partnership;  Dissolution  and  Its  Consequences. 
A  limited  partnership  is  dissolved  in  the  usual  manner:  by 
effluxion  of  time,  death  of  a  partner,  judicial  decree,  or  other- 
wise, according  to  the  legal  methods  indicated  in  the  last  chapter. 
But  no  dissolution  is  effectual,  according  to  the  policy  of  our 
legislation,  where  the  parties  to  the  limited  partnership  volun- 
tarily put  an  end  to  it  before  the  time  specified  in  their  published 
certificate,  unless  public  notice  is  given,  by  registry  and  adver- 
tisement, after  the  method  of  the  original  certificate,  l^o  such 
formality  is  requisite,  when  the  time  limited  in  the  original  cer- 
tificate has  expired,  nor  in  general  where  the  partnership  is  ter- 

2.  Singer  v.  Kelly,  44  Penn.  St.  155.  4.  See  Lacliaise  v.  Marks,  4  E.  D. 
See  Pars.  Partn.,  §§  426,  427.                     Smith,  610;  Singer  v.  Kelly,  44  Penn. 

3.  See  Artisans'*  Bank  v.  Treadwell,      St.  145;  Mass.  Rev.  Laws,  c.  71. 

34  Barb.  553;  Mass.  Rev.  Laws,  c.  71.  See  Lobsitz  v.  Lissbeger,   168  App. 

A  special  partner  cannot  as  such  be-  Div.   840,  154  N.  Y.  S.   1130    (equity 

come  party  to  a  transfer  of  all   the  procedure)  ;  Patterson  v.  Youngs,  154 

firm    assets   to   one    creditor   for    the  App.    Div.    536,    139    N.    Y.    S.    670; 

benefit  of  the  rest,   under  Massachu-  Beach    v.    Business    Man's    Pub.    Co.. 

setts  Statutes.     Farnsworth  v.  Board-  163  Mich.  226,  128  K  W.  177:  Skobiy 

man,  131  Mass.  115.     But  it  is  held  v.    Richter,    139    App.    Div.    534,    124 

that  all  should  join  in  an  assignment  N.   Y.   S.   152 ;   Wood  v.  Sloman,   150 

for  creditors  generally.     In  re  Allen,  Mich.  177,  114  N".  W.  317   (third  per- 

41  Minn.  430,  43  N.  W.  383.  son  misled). 

304 


CHAP.  X.]  JOINT-STOCK    COMPANIES.  §    201 

minated  by  act  of  the  law ;  though  in  case  of  dissolution  by  death 
or  bankruptcy  it  would  certainly  be  safer  to  give  the  notice. 
And  these  formalities  having  been  complied  with,  a  special  partner 
has  no  further  responsibility  save  that  connected  with  a  winding- 
up  of  the  concerns,  unless  indeed  by  his  conduct  he  has  lent  him- 
self substantially  to  a  now  partnership  combination  after  the  old 
one  has  expired.^ 

§  201.  Joint-Stock  Companies;  Nature  and  Origin;  English 
Statutes. 
II.  Personal  property  may  also  be  invested  for  business  pur- 
poses by  means  of  that  combination  known  as  a  "  joint-stock 
company."  Joint-stock  companies  are  not  very  common  in  this 
country,  since  our  policy  largely  favors,  as  the  oifset  of  an  ordi- 
nary  trading  partnership,  limited  partnerships  and  corporations, 
the  latter  being  under  special  or  general  statute,  as  the  case  may 
be.  But  in  England,  where  it  has  been  difficult  and  expensive  to 
procure  an  act  or  charter  of  incorporation  from  the  government, 
and  where  the  limited  partnership  system  has  hardly  yet  gained 
a  foothold,  those  who  wish  to  unite  for  business  purposes,  secur- 
ing the  co-operation  of  a  larger  number  of  individuals  than  can 
safely  or  conveniently  combine  as  ordinary  partners,  with,  if 
possible,  a  diminished  personal  responsibility  for  the  common 
debts,  bring  their  capital  together  into  that  rather  clumsy  con- 
cern known  as  a  joint-stock  company, —  an  organization  which  is 
in  the  main  a  partnership  sui  generis,  though  subject  to  peculiar 
statutes,  and  in  its  methods  of  executive  management  not  unlike 
a  corporation,^     The  English  statutes  on  this  subject  are  quite 

5.  See  Mass.  Rev.  Laws,  e.  71;  Pars.  St.  372.     An  increase  in  the  amount 

Partn.,    §    428;    Haggerty   v.    Taylor.  of   capital    makes   the   partnership   a 

10  Paige,  261 ;    Ames  v.   Downing,   1  new    one.      Linoweaver   v.    Slaglo.    64 

Brad.   321.      Statute   roquirements   as  Md.  46.5.     See  further,  I.')?  Mich.  609. 

to   public   certificate,   &c.,   of  dissolu-  122  N.  W.  217. 

tion  must  be  strictly  complied   with.  6.  .Toint-stoclc  companies,  under  our 

In   re   Terry,   5   Biss.    110.      As   to  a  American    aspect,    though    authorized 

renewal,  see  120  N.  Y.  381 ;  109  Penn.  by    statute,    are    in    effect    (limited) 

20  305 


§  202  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

numerous;  the  most  important  being,  however,  what  is  called 
"  The  Companies  Act  of  1862,"  an  act  designed  to  consolidate 
the  entire  law  of  joint-stock  companies  and  to  regulate  their  con- 
stitution, government,  and  winding  up.''  The  principle  of  limited 
liability  is  to  some  extent  recognized  by  this  act;  and  the  Eng- 
lish policy  is  here  to  require  every  company,  association,  or  part- 
nership, consisting  of  more  than  ten  persons,  which  is  formed 
for  the  purposes  of  banking,  or  of  more  than  twenty  persons  for 
"  carrying  on  any  other  business  that  has  for  its  object  the  acqui- 
sition of  gain,"  to  be  incorporated  under  the  Companies'  Act.^ 

§  202.  Joint-Stock  Companies;  The  Subject  Continued. 

Unlike  a  partnership,  the  joint-stock  company  is  managed  by 
a  few  chosen  individuals  whose  powers  and  functions  resemble 
those  of  corporation  directors ;  while  the  shareholders  at  large 
appoint  these  managing  officers  and  hold  them  accountable.  Such 
is  the  general  tenor  of  legislation  on  this  subject;  yet  if  there 
be  no  statutory  provisions  regulating  the  subject,  the  majority 
of  the  shareholders  of  the  company  must  fundamentally  deter- 

partnerships    and    not    corporations ;  ized  in  compliance  with  the  act ;  that 

there  is  no  intermediate  class.     Such  the    deed    of    settlement   was    not    in 

a  company  cannot  sius  as  a  corpora-  object  such  as  to  authorize  the  earry- 

tion.      Imperial   Refining   Co.   v.   Wy-  ing  on  of  business  bj'  directors ;   but 

man,  38  Fed.  574 ;  Davison  v.  Holden,  rather  so  as  to  provide  a  trust  fund, 

55  Conn.  103,  10  Atl.  515;   Eicker  v.  to   be  managed   by   trustees.     James, 

American    Loan     &    Trust    Co.,     140  L.  J.   (p.  273),  commenting  upon  the 

Mass.  346;   48  Ohio  St.  513.  words      "company,      association,      or 

7.  See  Cox's  Joint-Stock  Compa-  partnership"  limiting  the  business 
nies,  7th  ed.,  1,  4;  25  &  26  Vict.,  (used  in  the  text  above),  expresses 
c.  69;  Pars.  Partn.,  §  431.  See  also  the  opinion  that  the  act  was  intended 
English  act  1890  on  the  subject  of  to  prevent  the  mischief  arising  from 
companies.  Registry  is  a  feature  large  trading  undertakings  being  ear- 
under  the  "  Companies  Act"  of  1880.  ried  on  by  large  fluctuating  bodies,  so 

8.  lb.  The  nature  and  purposes  of  that  persons  dealing  with  them  did 
the  "  Companies  Act "  are  largely  not  know  with  whom  they  were  con- 
discussed  in  an  English  case.  Smith  tracting,  and  might  be  put  to  great 
V.  Anderson,  15  Ch.  D.  247.  Here  it  difficulty  and  expense,  which  was  a 
was  held  that  a  certain  submarine-  public  mischief  to  be  repressed, 
telegraph  association  was  not  organ- 

306 


CHAP.  X.]  JOINT-STOCK    COMPANIES.  §    202 

mine  how  and  bj  whom  its  affairs  shall  be  conducted.^  In  other 
respects  joint-stock  companies  imitate  corporations,  both  as  to 
their  organization  and  the  methods  of  conducting  their  business. 
They  have  a  common  name  (though  not,  apparently,  a  common 
seal)  and  by-laws  of  their  own;  and  they  issue  certificates,  or 
scrip,  which  are  to  be  transferred  and  registered  like  certificates 
of  stock.  In  short,  the  "  English  companies  acts  "  are  very  much 
like  our  general  statutes  relative  to  corporations ;  and  even  where 
the  two  systems  differ,  it  is  rather  because  local  legislation  pro- 
vides  for  the  one  what  it  has  failed  to  provide  for  the  other. ^ 
It  is  probable  that  in  England,  under  the  statutes  which  regulate 
this  subject,  a  partner  in  a  joint  company  which  had  adopted 
certain  rules  would  not  be  liable  to  third  persons  acquainted  with 
those  rules  beyond  the  limits  so  defined.^  But  in  this  country 
joint-stock  companies  must  assimilate  more  closely  to  the  ordinary 
partnership;  and  such  companies  cannot  ordinarily  be  supposed 
capable  of  taking  to  themselves  the  privileges  of  a  diminished 
personal  liability,  any  more  than  those  who  associate  together 
for  the  purposes  of  a  general  partnership.  It  is  the  law-making 
power  which  must  grant  immunities  of  the  kind.  This  we  assert 
as  founded  upon  reason  and  principle,  even  if  precedents  are 
wanting.^ 

9.  1  Lind.  Partn.  556  et  seq.  See  mality  or  the  want  of  legislative 
Dow  V.  Moore,  47  N.  H.  419 ;  Melting  sanction,  they  constitute  general  part- 
Co.  V.  Reese,  118  Penn.  St.  355;  nershipg.  See  Pars.  Partn.,  §  431; 
McFadden  v.  Leeka,  48  Ohio  St.  513.  Whipple    v.    Parker,    29-    Mich.    370; 

1.  See  ib. ;  Pars.  Partn.,  §  432;  Manning  v.  Gashario,  27  Ind.  399; 
Regina  v.  Registrar,  10  Q.  B.  839;  National  Bank  v.  Landon,  4r,  N.  Y. 
Wordsw.  Joint-Stock  Companies,  c.  419;  Taft  v.  Ward,  106  Mass.  518; 
1;  Lethbridge  v.  Adams,  L.  R.  13  Eq.  Logan  v.  McNaughor,  88  Ponn.  St. 
547.  103.       See     Gott     v.     Dinsmore,     111 

2.  Blundell  v.  Winsor,  8  Sim.  601;  Mass.  45;  Taft  v.  Warde,  111  Mass. 
Walburn  v.  Ingilby,  1  Myl.  &  K.  51.  518.     A  joint-stock  company  has  been 

3.  See  Hess  v.  Werts,  4  S.  A  R.  held  legal  at  common  law.  Phillips  v. 
366;  Bright.  Fed.  Dig.  Joint-Stock  Blatchford.  137  Mass.  510.  See 
Company;  Pars.  Partn.,  §  432  et  seq.  Macombor  v.  Endion  Grape  Juice  Co., 

Where  joint-stock  associates  fail  to       160  Mich.   54,   125   N.   W.   26    (fraud 
become    properly    and    legally    consti-       in  selling  stock) . 
tuted  as  a  company  from'  some  infer- 

307 


§  204  THE  LAW  OF  PERSONAL  PEOPERTY.        [PART  II, 

§  203.  Joint-Stock  Company  and  Partnership   Compared  as  to 
Dissolution. 

There  is,  however,  one  decided  advantage  which  a  joint-stock 
companj  may  be  said  to  have  over  an  ordinary  partnership.  It 
is  not  so  readily  dissolved  at  the  choice  or  by  the  death  of  a 
member.  For,  as  it  was  observed  in  an  English  case:  "A  joint- 
stock  company  is  not  an  agreement  between  a  great  many  persons 
that  they  will  be  co-partners,  but  is  an  agreement  between  the 
owners  of  shares,  or  the  owners  of  stock,  that  they  or  their  duly 
recognized  assigns,  the  owners  of  the  shares  for  the  time  being, 
whoever  they  may  be,  shall  be  and  continue  an  association 
together,  sharing  profits  and  bearing  losses."  '^  Hence  it  is  that 
the  stock  is  transmissible  and  transferable ;  and  even  when  a 
shareholder  dies,  the  presumption  is  that  his  executors,  in  their 
representative  capacity,  succeed  to  his  full  liability  as  well  as  his 
rights.^  Thus  the  partnership,  if  such  it  be,  goes  on  without  the 
strict  choice  of  personal  association  which  prevails  in  a  partner- 
ship proper. 

§  204.  Joint-Stock  Company  Compared  with  Corporation ;  Amer- 
ican Decision. 

To  courts  of  this  country,  accustomed  to  deal  with  partners 
and  corporations  simply,  the  joint-stock  company  must  present 
itself  as  a  somewhat  anomalous  institution.  And  in  the  highest 
tribunal  of  this  land,  in  ISYl,  where  the  question  for  decision 
was,  whether  "  an  insurance  company,  incorporated  or  associated 
under  the  laws  of  any  government  or  State  other  than  one  of  the 
United  States,"  could  be  made  to  pay  a  tax,  under  a  Massachu- 
setts statute,  for  the  privilege  of  conducting  its  corporate  busi- 
ness within  the  State,  the  characteristics  of  an  English  joint- 
stock  company  under  its  "  deed  of  settlement "  or  "  articles  of 

4.  Baird's  Case,  L.  R.  5  Ch.  725,  out  several  particulars  in  which  the 
734.  transfer  of  shares  would  subject  the 

5.  lb.  See  Pars.  Partn.,  §  435,  and  parties  concerned  to  the  law  of  ordi- 
cases  cited.     But  Mr.  Parsons  points  nary  partnership. 

308 


CHAP.  X.] 


PAKT-OWNEKSllIP    IN    SHIPS. 


§  205 


association  "  received  considerable  attention.  The  tax  was  held 
to  be  lawful;  and  this,  as  the  court  viewed  the  statute,  because 
the  insurance  company  was,  under  the  laws  and  policy  of  the 
United  States,  no  more  and  no  less  than  a  corporation.^  In  truth 
a  joint-stock  company  may  readily  resemble  a  corporation  in  one 
phase,  and  a  partnership  in  another;  and  partaking  more  or  less, 
as  may  happen,  of  the  incidents  of  either  of  those  two  distinct 
relations,  American  law  refuses  to  recognize  it  as  a  separate  and 
independent  relation, 

§  205.  Part- Ownership  in  Ships  or  Vessels;  Its  Nature. 

III.     Before  passing  to  the  subject  of  corporations,  we  may 


6.  It  was  a  corporation,  because  it 
had  (1st)  a  distinctive  artificial 
name  by  which  it  could  make  con- 
tracts; (2d)  a  statutory  authority  to 
sue  and  be  sued  in  the  name  of  its 
officers  as  representing  the  associa- 
tion, though  not  in  the  artificial 
name;  (3d)  a  statutory  recognition 
of  the  association  as  an  entity  distinct 
from  its  members,  by  allowing  it  to 
sue  the  shareholders  and  be  sued  by 
tbem;  (4th)  a  provision  for  perpet- 
ual succession  by  transfers  of  its 
shares,  st)  that  new  members  are  in- 
troduced in  place  of  those  who  die 
or  sell  out.  Nor  did  the  court  deem 
that  the  association  was  any  the  less 
a  corporation  because  its  members 
were  liable  individually  for  the  debts 
of  the  company ;  since  the  principle 
of  personal  liability  is  applied  by 
express  statute  to  no  small  propor- 
tion of  the  corporations  of  this 
country.  Liverpool  Ins.  Co.  v.  Mas- 
sachusetts, 10  Wall.  560.  per  Miller, 
J.  Mr.  Justice  Bradley  dissented 
from  the.se  views. 

In  California  there  is  a  species  of 
qualified    partnership,    known    as    a 


mining  partnership,  and  recognized 
in  numerous  instances  where  persons 
associate  for  the  purpose  of  working 
a  mine  together  and  di\nding,  but 
not  for  trading  together  on  its  pro- 
ducts. Combinations  of  this  char- 
acter unite  some  of  the  incidents  of 
ordinary  partnerships  with  those  of 
tenancies  in  common.  Settembre  v. 
Putnam,  30  Cal.  490.  Such  partner- 
ships, where  there  are  no  partnership 
articles,  are  subject  to  the  ordinary 
law  of  partnership,  except  for  differ- 
ences sanctioned  by  local  usage ;  the 
only  general  difference  being  that  in 
such  partnerships  there  is  no  delectus 
persnnw.  Jones  v.  Clark,  42  Cal.  180; 
Taylor  v.  Castle,  42  Cal.  367.  And 
see  Quinn  v.  Quinn,  81  Cal.  314;  Bis- 
sell  V.  Foss,  114  U.  S.  252;  Kahn  v. 
Smelting  Co.,  102  U.  S.  641;  Kim- 
berly  v.  Arms,  129  U.  S.  512;  Ash- 
ley V.  Bowling,  203  Mass.  311,  18? 
N.  E.  434  (cooperative  store)  ;  Nich- 
olls  V.  Buell,  157  Mich.  609,  122  N. 
W.  217;  Strang  v.  Osborne,  42  Colo. 
187,  94  Par.  320;  Andrew*?  v.  Brace. 
154  Mich.  126,  117  N.  W.  586;  Bishop 
V.  Bishop,  81  Conn.  509,  71  Atl.  583. 


309 


§  206  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

properly  notice  the  peculiar  manner  in  which  a  ship  or  vessel  is 
usually  owned.  A  chattel  so  costly,  exposed  to  so  many  risks, 
and  requiring  such  expensive  repairs,  necessarily  requires  two 
or  more  persons,  in  most  instances,  to  join  in  its  purchase;  and 
those  who  own  a  ship  together  hold  it  neither  as  joint  or  common 
owners,  nor  as  partners,  but  as  part-owners,  a  species  of  relation 
peculiar  to  the  property.  And  the  rights  and  duties  of  part- 
owners,  whether  among  themselves  or  as  to  third  persons,  are  to 
be  determined  by  the  law  of  shipping,  which  is  founded  on  com- 
mercial usage,  and  may  be  considered  older,  when  viewed  from 
our  standpoint,  than  the  law  of  partnership  itself.  Such  persons 
are,  in  general,  found  to  be  tenants  in  common  as  to  the  ship, 
but  co-partners  concerning  the  maritime  enterprise  in  which  the 
ship  engages.''  Let  us  consider,  then,  the  nature  of  this  interest 
of  part-owners,  first  with  relation  to  one  another,  and  second 
with  relation  to  third  persons. 

§  206.  Part-Owners,  with   Relation  to   One   Another;   General 
Principle  of  Ownership. 

First,  as  to  part-owners  of  ships  with  relation  to  one  another. 
We  have  seen  that  mere  tenants  in  common  of  chattels  exercise 
little  control  over  the  common  property,  and  fail  to  possess  'cer- 
tain powers  and  rights  essential  to  the  conduct  of  business  with 
it  as  capital;  that  owners  in  severalty  must  form  a  partnership, 
if  they  wish  to  go  into  active  business  effectively  with  their  re- 
spective means.  Now,  as  to  ships,  "  which  are  built  to  plough 
the  sea,  and  not  to  lie  by  the  walls,"  commercial  nations  find 
that  it  is  beneficial  to  government  no  less  than  the  individual  to 
keep  them  in  active  employment ;  and  hence  they  long  since  con- 
trived a  system  which  should  meet  the  case.  As  to  the  vessel, 
therefore,  the  owners  are  tenants  in  common,  each  having  a  dis- 
tinct though  an  undivided  interest;  and  thus  do  they  stand 
towards    one    another.      The    different    part-owners    may    have 

7.  See  supra,  c.  8;   Abb.  Shipping,  Perk.  ed.  98;  Pars.  Partn.,  3d  ed.,  e. 
19;  Bright.  Fed.  Dig.  782. 

310 


CHAP.  X.]  PAItT-OWXERSIlIP    IN     SHIPS.  §     206 

acquired  their  respective  interests  in  different  ways:  they  may 
have  built  it  together  at  their  common  expense,  or  they  may  have 
purchased  it  together;  or  one  or  more  of  the  part-owners  may 
have  purchased  his  share  from  -a  former  whole  or  part  owner. 
But  however  acquired,  the  parties,  in  the  absence  of  positive 
stipulations  to  the  contrary,  hold  the  property  as  "  part-owners ;  " 
in  the  present  aspect,  like  tenants  in  common,  and  not,  of  course, 
as  joint-tenants.^  And  if  property  is  given  to  two  or  more  as 
owners  of  a  ship,  it  belongs  to  them  as  tenants  in  common,  and 
not  as  partners;  nor  would  the  principle  of  survivorship  apply.^ 

But  while  part-owners  are  not  necessarily  partners,  it  is  well 
established  that  they  may  be  partners;  that  is  to  say,  that  per- 
sons united  in  a  general  partnership  may  own  a  ship,  or  some 
interest  in  a  ship,  as  part  of  the  partnership  property.^  And, 
more  than  this,  part-owners  of  a  ship,  who  own  nothing  else  in 
common,  may  agree  to  become  partners  of  that  ship.^  Whether 
a  person  is  to  be  considered  a  partner  or  a  part-owner  must  depend 
upon  the  special  circumstances  of  each  case ;  but  the  usual  rela- 
tion of  those  owning  ships  and  vessels  is  that  of  part-owners,  and 
not  partners;  and  such  is  the  strong  presumption  whenever  a 
controversy  arises,  since  the  partnership  relation  applied  to  such 
property  would  present  some  decided  disadvantages  with  scarcely 
a  mutual  advantage  to  balance  them.^ 

The  ownership  of  a  vessel  may  be  proved  in  the  same  manner 
as  that  of  any  other  chattel,  in  the  absence  of  controlling  statutes 
to  the  contrary.     But  registry  laws  are  an  important  feature  of 

8.  lb.;  Story  Partn.,  §  417;  3  Kent  Patterson  v.  Chalmers,  7  B.  Monr, 
Com.  151 ;  Mitchell  v.  Chambers,  43  407.  See  Merritt  v.  Walsh,  32  N.  Y. 
Mich.    150;     Mumford    v.    Nicoll,    20       685. 

Johns.    611;     Merrill    v.    Bartlett,    6  2.  lb.;     Harding     v.     Foxcroft,     6 

Pick.    46.      The   cases   are   quite   nu-  Grecnl.    77;    Thorndike   v.    De    Wolf, 

merous.  6  Pick.  120. 

9.  Thorndike  v.  De  Wolf,  6  Pick.  3.  Holdernesi?  v.  Shackels,  8  B.  & 
120;  Harding  v.  Foxcroft,  6  Greenl.  C.  612;  3  Kent  Com.  154.  Of  course 
78.  a  vessel   may   be  owned   by   an    indi- 

1.  Abb.  Shipping,  Perk.  od.  98;  vidual ;  and  as  to  ownership  by  a 
Mumford    v.    Nicoll,    20   Johns.    611;      corporation  see  next  chapter. 

311 


§  207  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  II. 

our  eommercial  system;  and  the  names  and  respective  shares  of 
part-owners  ought,  under  our  latest  statutes,  to  appear  inserted 
in  the  register.  Where  this  is  not  done,  and  no  distinct  shares 
are  otherwise  clearly  shown,  the  parties  would  be  presumed,  as 
in  the  case  of  a  partnership,  to  be  equal  owners  of  the  property.* 
When  those  interested  in  a  ship  or  vessel  are  part-owners, 
holding  the  property  after  the  manner  of  tenants  or  owners  in 
common,  their  rights  and  duties  correspond  to  the  nature  of  their 
interest.  Thus,  if  one  dies,  his  share  goes  to  his  representatives, 
and  not  to  the  surviving  part-owners,  as  would  have  been  the  case 
in  a  joint-tenancy.^ 

§  207.  The  Subject  Continued;  Right  to  Dispose  of  Vessel. 

N^o  part-owner  can  sell  more  than  his  own  interest  in  the  ship, 
unless  specially  authorized  to  act  as  agent  for  another  part- 
owner.^  Bnt,  if  the  owners  of  a  ship  or  vessel  choose  to  make 
themselves  partners  therein,  their  powers  and  duties  will  be  de- 
termined by  the  rules  of  partnership ;  in  which  case  one  partner 
may  sell  or  mortgage  the  entire  interest  of  the  firm  in  the  prop- 
erty, and  exercise  the  jus  disponendi  after  the  usual  manner  of 
partners.''  And  yet,  as  a  partner  cannot  introduce  a  new  person 
into  the  firm  without  the  assent  of  his  co-partners,  he  stands  at 
a  disadvantage  when  compared  with  the  part-owner;  for  the  lat- 

4.  Bright.     Fed.    Dig.    780:     Pars.  and  such  as  have  actual  notice  there- 

Partn.   552;   9  U.  S.  Stats,  at  Large,  of.     And  see  §§  300-334,  as  to  Ships 

441;   Alexander  v.  Dowie,  1  H.  &  N.  and  Vessels;  5  Sawyer  C.  C.  83. 

152;   Abb.   Shipping,  97,  98;    1   Pars.  5.  See     Abb.     Shipping,     97,     100, 

Shipping    (1869),   90.      See   Moore  v.  Perkins's  n. ;  Pars.  Shipping,  90;  Rex 

Simonds,    100    U.    S.    Supr.    145;     5  v.   Collector,  2  M.  &  S.  223;   Bulkley 

Sawyer  C.  C.   83;   Bowen  v.  Warren,  v.  Barber,  6  Ex.  164. 

71  Me.  470.  6.  lb.;   Henshaw  v.   Clark,  2   Root, 

See    U.     S.    Revised    Statutes,     §§  103;    3   Kent    Com.    140,    153;    Story 

4192,  4193,  invalidating  bills  of  sale,  Partn.,  §  417.     As  to  the  effect  of  a 

mortgages,  &c.,  of  United  States  ves-  sale  by  a  master  and  part-owner,  see 

sels,    unless    recorded,    construed    in  §  214,  post;  Williams  v.  Ireland,  11 

Moore   v.    Simonds,    100   U.    S.    Supr.  Phila.  273. 

145,  not  to  make  an  unrecorded  mort-  7.  Patch    v.    Wheatland,    8    Allen, 

gage   invalid   as   against  the   parties,  102 ;  Milton  v.  Moslier,  7  Met.  244. 

312 


CHAP.  X.]  PART-OWNERSHIP    IN    SHIPS.  §    208 

ter  may  transfer  his  own  undivided  interest  in  the  ship  so  as  to 
give  to  the  transferee  all  the  rights  and  powers  which  he  pos- 
sessed, together  with  his  share  in  the  property.^ 

While  a  part-owner,  on  the  principle  of  a  tenancy  or  ownership 
in  common  of  chattels,  can  sell  only  his  own  undivided  interest, 
those  of  his  co-owners  whose  shares  he  has  sold  may  subsequently 
ratify  the  sale,  in  which  ease  it  becomes  in  effect  their  own  sale, 
since  the  doctrines  of  agency  would  thus  apply.^  But  the  rule 
appears  to  be  (although  there  is  some  doubt  as  to  what  will  au- 
thorize one  owner  in  common  to  sue  his  co-owner)  that  if  a  part- 
owner  sells  the  whole  vessel  as  his  own,  the  sale,  when  carried 
into  effect,  is  such  a  constructive  destruction  of  the  property 
of  the  other  owners  as  to  amount  to  conversion,  and  so  enable 
them  to  maintain  tz'over  against  him,  or  against  the  purchaser 
who  sells  the  ship  again  as  his  own.^  This  action  of  trover  would 
not  lie  against  a  part-owner  for  merely  dispossessing  his  co- 
owner.^  Nor  can  one  part-owner  maintain  replevin  against 
another;  nor  perhaps  sue  in  trespass  for  the  sale  of  the  whole."' 
In  all  these  respects,  the  usual  rules  of  a  common  o^vne^ship  of 
chattels  apply. 

§  208.  The  Same  Subject;  Employment  of  the  Ship  or  Vessel. 
When  we  come  to  the  employment  of  the  ship  or  vessel  to  the 
enterprises  in  which  it  engages,  we  find  an  enlargement  of  the 
mutual  rights  and  duties  of  co-owners ;  for  those  who  o\\ti  the 
ship  as  part-owners,  and  load  and  send  it  out  on  an  adventure 
in  the  cost  and  profit  and  control  of  which  thcv  are  to  share, 
are  quasi  partners  as  to  this  particular  voyage  and  adventure."* 
The  common  law  of  England  provides  amply  for  an  emergency, 

8.  See  Oviatt  v.  Sage,  7  Conn.  95.  2.  Hyde    v.    Stone,    D    Cow.    230; 

9.  Putnam  v.  Wise,  1  Hill,  234.  Hurd  v.  Darlinnr,  14  Vt.  214. 

1.  Weld    v,    Oliver,    21    Pick.    559;  3.  Barnes  v.  Bartlett.  15  Pick.  71; 

Hyde  v.   Stone,  7  Wend.   354;   White       Furloup:    v.    Bartlett.    21    Pick.    401. 
V.    Osborn,   21    Wend.    72;    Farrar   v.       See  1  Pars.  Shipping.  93.  94. 
Beswick,  1  M.  &  W.  682.  4.  Doddington    v.    Hallett.    1    Ves. 

Sen.  497;  1  Pars.  Shipping,  91. 

313 


§  208  THE  I,AW  OF  PERSONAL  PROPERTY.       [PART  II. 

by  allowing  the  majority  in  value  of  the  ship  to  employ  it  at 
their  pleasure,  "  upon  any  probable  design,"  while  taking  care 
to  secure  the  interest  of  the  dissenting  minority  from  being  lost 
in  an  employment  of  which  they  disapprove.  Where  a  dispute 
arises,  the  court  of  admiralty  will,  on  application  of  the  dis- 
senting owners,  take  a  stipulation  from  the  majority  for  the  safe 
return  of  the  vessel;  and  the  dissenting  owners,  in  such  a  case, 
bear  no  part  of  the  expenses  of  the  outfit  and  take  no  share  in 
the  profits  of  the  enterprise,  but  the  ship  sails  wholly  at  the  risk 
and  for  the  profit  of  the  others.^  If  legal  proceedings  for  this 
purpose  have  not  been  seasonably  taken  before  the  voyage  has 
commenced,  the  dissenting  owners  should  expressly  notify  the 
others  interested  of  their  dissent,  and  carry  the  principle  of 
this  remedy  as  far  as  possible  and  with  all  expedition;  for  it 
has  been  decided  that  one  part-owner  cannot  sue  a  co-owner  at 
law  for  fraudulently  and  deceitfully  sending  the  vessel  to  foreign 
parts,  whereby  she  was  lost ;  nor  in  equity  for  the  loss  of  the 
ship  sent  without  his  consent.^  If  a  part-owner  expressly  notify 
his  dissent,  chancery  will  not  compel  him  to  contribute  to  a  loss.^ 
And  though  in  a  case  of  equal  ownership,  a  court  of  admiralty 
may  be  reluctant  to  interfere,  yet  where  the  equal  owners  differ 
in  the  ship's  management,  the  court  will  direct  what  shall  be 
done.^  But  a  part-owner  cannot  allow  repairs  of  permanent  value 
to  be  made  to  a  ship,  and  then,  arresting  the  ship,  avoid  payment 
of  his  proportion  of  the  expense  on  the  plea  that  he  dissents  from 
the  proposed  employment.^  On  the  other  hand,  while  it  is  said 
that  the  control  of  the  majority  of  a  ship  extends  to  putting  on 
board  or  removing  ofiicers  or  masters  at  pleasure,  it  is  by  no 
means  clear  that  this  majority  could  remove  a  master  who  was 
likewise  a  part-owner;  though,  if  dispossessed,  the  master  could 

5.  The  Apollo,  1  Hagg.   311;   Abb.      Strelly  v.  Winston,  Skinn.  230.     See 
Shipping,    100   et   seq.;   Bright.    Fed.      Horn  v.  Gilpin,  Ambl.  255. 

Dig.  783 ;  The  Orleans  v.  Phoebus,  11  7.  Horn  v.  Gilpin,  supra. 

Pet.  175.  8.  See  Bright.   Fed.  Dig.   783;   The 

6.  Carpenter    v.    Marshall,    1    Lev.      Ocean.  1  Spr.  535. 

29;   Strelly  v.  Winson,  1  Vern.  297;  9.  Davis  v.  Johnston,  4  Sim.  539. 

314 


CHAP.  X.J  PAET-OWNERSHIP    IN    SHIPS.  §    209 

only  sue  for  damages,  the  amount  of  which  might  greatly  depend 
upon  the  justification  for  his  removal.' 

Where  the  other  part-owners  are  absent,  and  no  prohibition 
on  their  part  has  been  interposed,  it  may  fairly  be  presumed 
that  the  part-owner  present  can  represent  them  in  the  supply 
or  management  of  the  vessel  and  bind  them  accordingly;  though 
this  privilege  would  not  be  carried,  probably,  to  the  extent  of 
binding  absent  owners  by  acts  unnecessary,  unreasonable,  and 
plainly  injurious  to  their  interests.^ 

§  209.  Adjustment  of  Controversies;  Lien  on  Each  Other's 
Shares,  etc. 
Whether  the  court  of  admiralty  has  power  to  compel  an  obsti- 
nate part-owner  to  sell  his  interest  is  not  settled  by  the  authori- 
ties. The  rule  of  the  maritime  law  in  Continental  Europe  is 
that  a  sale  may  be  judicially  ordered,  as  a  summary  method  of 
bringing  quarrels  to  an  end  over  the  ship's  emplo}Tnent ;  and 
Judge  Story  and  others  contend  for  the  lawful  exercise  by  our 
courts  of  the  same  power.*'  Yet  some  cases  deny  that  any  such 
authority  exists.'* 

1.  See  Pars.  Shipping,  95-97;  The  The  admiralty  jurisdiction  of  the 
New  Draper,  4  Rob.  Adm.  287 ;  Mont-  United  States  courts  has  been  re- 
gomery  v.  Wharton,  1  Dall.  49.  Rule  cently  enlarged.  Where  interests  are 
changed  by  Act  of  Congress,  April  9',  equal  and  the  conflict  decided,  it 
1872,  c.  90.  See  U.  S.  Corap.  St.  1916,  seems  that  a  sale  may  be  ordered. 
§§  8338-8342.  The   Annie   H.    Smith,    10    Ben.    110; 

2.  1  Pars.  Shipping,  D7,  criticising  Coyne  v.  Caples,  7  Sawyer,  360. 
Abb.  Shipping,  105;  Stedman  v.  Fcid-  4.  Ouston  v.  Hcbden,  1  Wils.  101; 
ler,  20  N.  Y.  437;  Brodie  v.  Howard,  Davis  v.  Brig  Seneca,  Gilp.  10.  S(^ 
17  C.  B.  109.  The  law  of  agency  has  Abb.  Shipping.  104;  Lewis  v.  Kinney, 
its  own  familiar  limitations  as  to  the  5  Dillon,  159.  It  is  preferable,  where 
scope  of  employment  in  which  one  justice  permits  of  the  arrangement, 
may  be  said  to  represent  another.  and  interests  are  unequal,  that  the 
See  Bowen  v.  Peters,  71  Me.  463.  For  majority  owners  who  de.«ire  to  use 
the  English  doctrine  see  Frazer  v.  the  vessel  ho  required  to  give  security 
Cuthbertson,  6  Q.  B.  D.  93.  to  the  dissenting  owners,  rather  than 

3.  3  Kent  Com.  153,  154:  Willings  that  a  sale  lie  ordered.  Lewis  v.  Kin- 
V.  Blight,  2  Pet.  Adm.  28S ;  Story  ney,  5  Dillon.  159;  Coyne  v.  Caples,  7 
Partn.,  §  438;  2  Pars.  Shipping.  343.  Sawyer.  360. 

315 


§  209  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  11,; 

Bj  the  technical  rule  of  the  common  law,  part-owners  are  not 
liable  to  each  other  for  negligence  whereby  the  common  prop- 
erty is  lost  or  injured;  for  the  reason  that  each  co-tenant  may 
and  ought  to  protect  himself.  But  admiralty  might  fairly  refuse 
to  accept  so  narrow  a  doctrine.^ 

Much  controversy  has  arisen  over  the  question  whether  part- 
owners  have,  under  some  circumstances,  a  lien  on  each  other's 
share  of  a  ship,  as  partners  in  trade  would  have  in  the  common 
merchandise.  The  result  of  the  decisions  would  seem  to  be  that 
no  such  lien  exists  where  the  ship  belongs  to  persons  as  part- 
owners  strictly,  and  not  as  partners.^  Yet  if  an  adventure  be 
undertaken  by  mutual  consent,  and  one  of  the  part-owners  become 
a  bankrupt  after  the  commencement  of  the  voyage,  not  having 
paid  his  full  share  of  the  outfit,  the  other  partners  have  a  right 
to  deduct  from  his  share  of  the  profit  whatever  remains  charged 
to  him  on  account  of  the  outfit,  and  pay  over  the  balance  only  to 
the  assignees.^  It  is  when  we  attempt  to  extend  this  right  of 
deduction  to  a  further  or  general  indebtedness,  that  we  are  beset 
with  doubts ;  for  not  only  may  persons  own  a  ship  as  partners 
rather  than  part-owners,  but  they  may  be  part-owners  of  the  ship 
and  partners  in  the  particular  adventure ;  or,  if  the  enterprise  be 
to  sell  vessel  and  cargo  abroad,  instead  of  freighting  and  charter- 
ing the  vessel  to  carry  a  cargo  and  return,  it  might  be  said  that 
the  part-owners  had  made  themselves  partners  in  both  ship  and 
cargo,  the  total  proceeds  comprising  the  fruits  of  the  voyage.^ 
It  must  be  admitted  that  the  cases  are  quite  conflicting  as  to  the 
general  liens  of  part-owners,  while  there  are  doubtless  instances 
in  which,   if  a  part-owner  obtained   the   proceeds  after  making 

5.  See  1  Pars.  Shipping.  107.  8.  See  Mumford  v.  Nicoll,  20  Johns, 

6.  1  Pars.  Shipping,  107,  108,  and  611;  Smith  v.  De  Silva,  Cowp.  469; 
n.;  The  Larch,  2  Curt.  C.  C.  427;  Ex  Hewitt  v.  Sturdevant,  4  B.  Monr.  458; 
parte  Young,  2  Ves.  &  B.  242;  Mer-  Doddington  v.  Hallett,  1  Ves.  Sen. 
rill  V.  Bartlett,  6  Pick.  46.  497;    Abb.    SMpping.   n.    by   Perkins. 

7.  Holderness  v.  Shackels,  8  B.  &  C.  111. 
612;    Abb.    SMpping,    108;    1    Pars. 
Shipping,  107. 

316 


CHAP.  X.]  PART-OWNERSHIP    IX    SHIPS.  §    210 

advances  for  the  voyage,  it  would  bo  unjust  to  make  him  pay 
over  without  allowing  him  to  keep  enough  in  his  hands  for  his 
proper  reimbursement.^ 

If  a  ship  be  owned  by  partners,  no  one,  on  the  principles  of 
partnership,  can  make  a  claim  upon  the  others  for  the  expenses 
he  has  properly  incurred,  except  by  having  the  partnership  ac- 
counts completely  made  up  and  adjusted.  But  where  all  are 
part-owners,  he  may  sue  each  of  the  others  for  his  share  of  the 
expense,  provided  only  the  repairs  were  made  or  the  outlay  in- 
curred with  the  express  or  implied  consent  of  his  co-owner.' 
For  a  full  adjustment  of  accounts  the  custom  has  been  for  part- 
owners  to  bring  a  bill  in  equity,  just  as  members  of  a  partner- 
ship would  do;  and  in  England  courts  of  admiralty  may  now  take 
jurisdiction  for  the  same  purpose;  yet  as  legislation  is  necessary 
to  give  admiralty  courts  power  over  matters  of  account  between 
part-owners,  those  of  the  United  States  need  such  jurisdiction.^ 

§  210.  Miscellaneous    Points    as    to    Rights    of    Part-Owners 
Inter   Se. 

Since,  as  we  have  seen,  one  part-owner,  as  such,  has  no  power 
over  the  shares  of  the  other  part-o■^^'ners,  it  follows  that  he  can 
no  more  mortgage  or  pledge  the  whole  ship  than  sell  it  outright.' 
He  cannot  even  insure  the  interests  of  his  co-owners  except  as 
their  authorized  agent."*  And,  in  fine,  part-owTiers  are  held  to 
honesty  and  fairness  in  their  mutual  dealings;  and  if  one  at- 
tempts to  obtain  advantages  to  himself  by  violating  the  rights 
of  the  others,  and  seeks  to  exercise  undue  control  over  the  com- 

9.  See  1  Pars.  Shipping,  115;  Story  Apollo.  1  Hag?.  Adni.   306;   24  Vict.. 

Partn.,  §§  441,  443;  Bright.  Fed.  Dig.  c.    10.    §    8:    Ward    v.    Thonipson,    22 

783.  How.      330.       State     jurisdiction      in 

1.  Pars.  Partn.  553-555,  and  cases  equity  of  such  matters  of  account 
cited;  Patterson  v.  Chalmers,  7  B.  has  been  asserted.  Eiidsor  v.  Sirap- 
Monr.    595;    Sawyer   v.    Freeman,    35  son,  12  Phila.  31)2. 

Me.  542:  Gowan  v.  Foster,  3  B.  &  Ad.  3.  Pars.  Partn.   556;   supra,  §  207. 

507.  4.  Abb.    Shipping.    107;    Hooper   v. 

2.  Moffat  V.  Farquharson.  2  Br.  C.  Lusby,  4  Cainpb.  CR ;  Peoria,  &c.,  Tns. 
C.   338;    1   Pars.   Shipping,   116;    The  Co.  v.  Hall.  12  Mich.  202. 

?A1 


§  211  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

mon  interests  he  will  find  that  justice  "  beareth  not  the  sword 
in  vain."  ^ 

§  211.  Ship-Owners  with  Relation  to  Third  Persons;  Form  of 
Actions,  etc. 

Secondly,  as  to  the  interest  of  part-owners  with  relation  to 
third  persons  or  the  public.  The  several  part-owners  of  a  ship 
make  in  law  but  one  owner ;  and  in  case  an  injury  is  done  to  the 
ship  by  a  stranger,  they  ought  to  join  in  an  action  for  damages ; 
though,  as  this  rule  is  for  the  convenience  of  the  wrong-doer,  he 
ought  to  plead  the  non-joinder  in  abatement,  in  order  to  take 
advantage  of  it.^  Where,  however,  the  action  is  for  the  freight 
of  goods  conveyed,  or  on  any  contract,  the  defendant  may  avail 
himself  of  the  non-joinder  by  evidence  at  the  trial.^ 

On  the  other  hand,  if  an  action  is  brought  against  the  part- 
owners  upon  any  contract  relating  to  the  ship,  although  the  ac- 
tion should  be  brought  against  all  jointly,  yet  the  non- joinder  of 
one  or  more  can  only  be  pleaded  by  the  defendants  in  abatement." 
But  in  respect  of  torts  committed  by  several,  it  is  now  settled 
that  all,  or  a  part  only,  of  the  wrong-doers  may  be  sued ;  and 
this  holds  good  as  to  the  wrongful  acts  of  part-owners.^  Where 
persons  are  joined  in  a  suit,  who  did  not  contract,  or  were  not 
contracted  with^  this  misjoinder  may  be  shown  on  the  general 
issue;  for  it  is  a  variance  in  substance.^  And,  again,  whenever 
an  action  which  should  have  been  brought  against  all  is  brought 
against  some  of  the  part-owners  only,  and  they  satisfy  the  judg- 
ment recovered,  they  can  sue  the  others   and  make   them  con- 

5.  See  Card  v.  Hope,  2  B.  &  C.  661;  8.  Abb.  116;  Robertson  v.  Smith,  18 
1  Pars.  Shipping,  124.                                    Johns.    459 ;    Bowen   v.    Stoddard,    10 

6.  See  Sedgworth  v.   Overend,  7  T.      Met.  375. 

R.  279 ;   Abb.  Shipping,  114 ;   1  Pars.  9.  Mitchell  v.  Tarbutt,  5  T.  R.  649 ; 

Shipping,    116 ;    Wheelwright    v.    De-  Low  v.  Mumford,  14  Johns.  426 ;  Pat- 

pey'ster,  1  Johns.  472;  Patten  v.  Gur-  ten  v.  Gurney,  17  Mass.  182. 
ney,  17  Mass.  182.  1.  Spalding  v.  Mure,  6  T.  R.   363; 

7.  Abb.  115;  1  Pars.  117;  Baker  x.  Tom  v.  Goodrich,  2  Johns.  213;  Liv- 
Jewell,  6  Mass.  460.  ingston  v.  Tremper,  11  Johns.  101. 

318 


CHAP.  X.]  PAET-OWNEKSHIP    IN    SHIPS.  §    212 

tribute.^  Some  of  the  United  States,  in  the  exercise  of  a  local 
jurisdiction,  allow  actions  to  be  brought  against  a  vessel  by  its 
name,  if  the  cause  of  action  did  not  arise  elsewhere.^ 

§  212.  Part-Owners  with  Relation  to  Third  Persons;  Liability 
for  Supplies,  etc. 
So  much  for  matters  of  form.  Concerning  the  liability  of  part- 
owners  for  necessary  repairs  or  supplies,  the  general  rule  is  that 
all  are  liable  in  solido,  provided  the  repairs  were  actually  made 
or  the  supplies  furnished ;  not  only  because  the  advantage  enures 
to  the  ship,  but  in  order  that,  wherever  the  ship  goes,  there  may 
be  a  credit  for  what  is  needful."*  In  this  respect  the  English 
law  goes  beyond  that  of  Holland  and  some  other  countries,  which 
only  charges  the  several  part-owners  according  to  their  respective 
interests.^  The  limitation  of  our  own  rule  is  obvious, —  namely, 
that  the  repairs  or  supplies  were  necessary  and  reasonable ; 
though  the  principle  of  necessity  is  not  grudgingly  applied  in  the 
courts.^  But  they  who  were  once  owners  are  not  liable  after 
they  have  sold  the  vessel,  although  neither  the  master  nor  the 
person  furnishing  supplies  knew  of  the  previous  sale ;  for  these 
are  owners  no  longer.^ 

A  distinction  is  sometimes  made  between  a  home  port  and 
a  foreign  port,  with  reference  to  the  exercise  by  one  of  the  power 
to  bind  all  by  contracts  for  repairs  or  supplies.  The  argument 
is,  that  a  ship  far  from  home  might  perish  for  want  of  aid  which 

2.  1  Pars.  Shipping,  119.  7.  Dame   v.   Hadlock,   4    Pick.    458. 

3.  See  1  Par-s.  Shipping,  119f-121,  Nor,  semble,  a  registori'd  owner  hold- 
and  n.  ing  as   security.     See   Brightly    Fed. 

4.  7  T.  R.  306;  Wright  v.  Hunter,  Dig.  Suppl.  168.  Part-o\vner.<;hip  is 
1  East,  20;  Chapman  v.  Durant,  10  prima  facie  evidence  of  liability  for 
Mass.  47;  1  Pars.  Shipping,  100  et  nwessary  repairs  or  supplies.  Bowen 
seg.  V.    Poter.s.    71     Me.    463.    469.      One 

5.  Abb.  Shipping,  117.  should    make    known    his    dissent    or 

6.  lb.;    Webster   v.    Seekamp.   4    B.  disapprol^ation      in     advance     if     he 
&  Aid.    352;    Merwin   v.    Shailer,    16  wishes      to      escape      responsibility. 
Conn.    489;    Meldon    v.    Campbell,    6  Brodie  v.  Howard,  17  C.  B.  109. 
Ex.  886. 

319 


§  212  THE  LAW  OF  PERSONAL  PROPEKTY.        [PART  II. 

was  delayed  until  the  master  or  co-owner  could  consult  the  others 
interested  in  the  vessel;  while  at  home,  all  who  will  have  to  pay 
might  and  ought  to  be  consulted.  But  the  question  is  still  open, 
whether  all  are  liable  when  the  expenses  are  incurred  at  the 
home  port ;  though  it  would  be  better  for  the  part-owner  giving 
the  order  to  obtain  specific  authority  from  the  other  part- 
owners.^  Certainly,  wherever  the  ship  may  be,  the  person  who 
repairs  or  supplies  a  ship  with  what  is  totally  and  plainly  unnec- 
essary has  no  claim  upon  those  part-owners  who  did  not  order 
them.^  jN^or,  we  may  add,  would  he  have  a  lien  on  the  ship 
under  those  circumstances ;  this  lien  being,  after  all,  the  favorite 
method  of  securing  a  claimant's  reimbursement  for  repairs  and 
supplies,  as  we  shall  see  hereafter.^  On  the  other  hand,  the 
part-owners  who  employ  a  vessel  are  presumed  to  do  so  for  the 
benefit  and  at  the  expense  of  all  part-owners  who  have  expressed 
no  dissent  and  do  not  seasonably  repudiate  the  idea  of  such 
agency  with  reference  to  the  creditor,  and  necessary  repairs  or 
supplies  may  be  recovered  accordingly;  even,  as  some  cases  hold, 
though  furnished  at  the  home  port.^ 

In  a  clear  case  where  especial  credit  is  given  to  one  only  of 
several  part-owners, —  meaning  by  this  not  only  that  the  other 
part-owners  were  unknown,  but  that  they  were  not  designed  to 
be  charged,  whether  afterwards  found  out  or  not, —  the  other 
part-owners  are  not  liable.^  But  where  the  creditor  charges  the 
only  owner  he  knows,  or  even  where  the  party  ordering  the 
repairs  or  supplies  gives  his  negotiable  paper  which  the  creditor 
accepts,  this  does  not  necessarily  relieve  the  other  part-owners 
from  liability.  A  creditor  who  accepts  a  note  from  one  indebted 
may  be  presumed,  it  is  true,  to  have  taken  it  in  satisfaction  of 

8.  Benson  v.  Thompson,  27  Me.  2.  Bowen  v.  Peters,  71  Me.  463,  and 
470;  Mitelieson  v.  Oliver,  5  E.  &  B.  cases  cited.  But  cf.  Frazer  v.  Cuth- 
419.  bertson,  6  Q.  B.  D.  9^3. 

9.  1  Pars.  Shipping,  101;  Stirling  3.  Thomson  v.  Davenport,  9  B.  & 
V.  Phosphate  Co.,  35  Md.  128.  C.  78;  Miln  v.  Spinola,  4  Hill,  177; 

1.  lb.  See  The  Lulu.  10  Wall.  Seottin  v.  Stanley,  1  Dall.  129;  1 
192.  Pars.  102-10^. 

320 


CHAP.  X.J  PART-OWNERSHIP    IN    SHIPS.  §    213 

the  debt;  yet  the  presumption  is  one  of  fact  only,  and  may  be 
rebutted."^  And  if  the  claimant  for  repairs  or  supplies  receives  a 
part  of  his  claim  from  one  or  more  of  those  liable  in  solido,  they 
who  thus  pay  part,  even  if  it  be  more  than  their  share,  are  still 
liable  for  the  balance,  unless  they  have  protected  themselves  by 
a  sufficient  discharge  of  the  claim.^  Credit  given  to  the  ship 
may  bind  the  ship,  though  a  part-owner  be  not  personally  bound. 

An  exception  to  this  rule  is  made  in  favor  of  insurers  who 
have  had  the  ownership  of  the  vessel  thrown  upon  them  b^^  an 
abandonment.  These,  out  of  regard  to  tbeir  misfortune,  are 
considered  liable  not  in  solido,  but  proportionally;  each  insurer, 
in  absence  of  a  special  promise,  being  liable  to  the  extent  of  his 
own  interest,  and  no  farther.^ 

In  case  a  ship  is  mortgaged,  the  party  who  has  actual  and  visible 
possession  and  control  of  the  vessel  is  commonly  treated  as  owner 
for  the  time  and  purpose,  so  as  to  become  liable  for  repairs  and 
supplies ;  and  a  like  principle  would  be  applied  to  charterers. 
The  question  who  has  the  benefit  of  the  repairs  and  supplies  is 
important  to  an  issue  of  this  sort ;  also  the  inquiry  to  whom  and 
on  whose  credit  they  were  given.'' 

§  213.     Liability  of  Part-Owners  to  Others  for  One  Another's 
Torts. 

The  liability  of  part-owners  for  the  torts  of  their  servants  or 
of  one  another  depends  upon  the  usual  principles  of  agency;  and 
while  for  a  wrongful  act  arising  in  the  scope  of  usual  employ- 
ment, and  extending  to  mere  negligence  in  the  performance,  all 
the  part-owners  could  be  made  to  suffer  as  principals,  it  is  not  to 

4.  See  Hudson  v.   Bradley,   2   Cliff  Rliippintr.    IIG;     Fitch    v.    Sutton,    5 

130;   The  Kimball,   3   Wall.   37.     The  Ea.st,  230. 

rule  in  Tvlaine  and  ]\Ia.«isachust^tts  may  6.  United  In.-^.  Co.  v.  Soott.  1  Johns, 

be  otherwise.     See   1   Pars.   Shipping,  lOfi. 

104.      See   also    Newell    v.    Nixon,    4  7.  Miln    v.    Spinola,    4    Hill.    177: 

Wall.    572;    First  Nat.   Bank  of  Ne-  Hodgson  v.   Butti*,   3  Cr.   140;    Pars, 

gauner  v.  Freeman,  47  Mich.  408.  Partn.  571.     But  see  Myers  v.  Willis, 

5.1     Pars.     Shipping.     102;     Abb.  18  C.  B.  886. 

21  321 


§214  THE    LAW    OF    PERSONAL    PROPERTY.  [PART  II. 

be  supposed  that  a  wanton  and  malicious  injury  deliberately  and 
intentionally  committed  in  or  about  the  ship,  outside  the  scope  of 
employment,  could  render  any  liable  for  the  consequences  except 
those  who  participated  personally  in  the  act,  or  gave  express  orders 
to  have  it  done,^  or,  under  the  usual  rules  of  agency,  contributed 
to  the  injury.^ 

§  214.     Managing  Owner,  or  Ship's  Husband. 

There  is  usually  some  person  selected  on  behalf  of  the  part- 
owners  to  act  as  their  general  managing  agent,  in  the  concerns  of 
the  ship  or  vessel.  He  is  known  as  the  "  ship's  husband  "  in  the 
older  books,  and  is  generally  one  of  the  owners,  for  which  reason 
our  registration  statutes  usually  speak  of  him  as  the  managing 
owner.  His  powers  and  duties  may  be  regulated  by  some  special 
agreement ;  but  the  appointment  is  frequently  to  be  inferred  from 
the  exercise  of  duties  appropriate  to  this  office  with  the  knowledge 
and  consent  of  the  owners;  and  usage  determines  his  conduct  in 
the  main.^  He  is  to  see  that  the  ship  is  seaworthy;  to  have  it 
properly  equipped  and  manned  for  its  voyages ;  to  take  care  of  it 
in  port ;  to  procure  freights  or  charter-parties ;  to  keep  the  ship's 
papers;  to  make  up  the  accounts,  disburse  and  receive  moneys; 
and  otherwise  to  assume  the  active  management  of  the  common 
concerns.  His  acts  for  these  purposes  are  to  be  deemed  the  acts 
of  all  the  part-owners,  who  are  liable  for  all  contracts  he  makes 
for  the  ship's  employment,  unless  the  creditor  dealt  with  him  on 

8.  The  Tribune,  3  Hagg.  114;  The  Woods,  C.  C.  377;  Hill  Man.  Co.  v. 
Dundee,  1  Hagg.  109;  Turnpike  Co.  Providence  Steamship  Co.,  113  Mass. 
V.    Vanderbilt,    2     Comst.    479;     Mc-       495. 

Mahon   v.    Davidson,    12    Minn.    357;  1.  1  Pars.  Shipping,  lOQ',  114;  Abb. 

1  Pars.  Shipping,  106,  107;   Somes  v.  Shipping,  106,  108;  3  Kent  Com.  157. 

White,  65  Me.  542.  The  owner  of  a  one-half  interest  who 

9.  So  as  to  damages  sustained  is  the  master  in  possession,  with  a 
■where  both  parties  concerned  in  the  right  of  possession  by  mutual  agree- 
injury  knew  that  the  vessel  was  being  ment  as  master,  is  not  liable  to  re- 
used outside  the  scope  of  permitted  moval.  Rea  v.  The  Eclipse,  135  U.  S. 
employment.      The    R.    F.    Cahill,    9  599. 

Ben.  352.     See  Taylor  v.  Brigham,  3 

322 


CHAP.  X.]  PART-OWNEESIIIP    IN    SHIPS.  §    214 

his  sole  credit.^  And  the  ship's  husband  ought  to  obtain  from 
each  part-o\vner  his  share  or  contribution  to  the  expense  of  outfit, 
repairs,  and  other  necessaries.  If  he  advances  the  proportional 
share  of  a  part-owner,  he  maj  sue  him  for  it ;  and  if  he  be  him- 
self a  part-owner,  he  has  a  lien  on  the  produce  of  the  voyage  for 
his  disbursements ;  though  whether,  as  ship's  husband,  the  law 
gives  him  a  lien,  is  quite  doubtful,  however  fairly  he  might  have 
earned  the  right.^  But  as  a  mere  stranger,  he  may  hold  the  pro- 
ceeds of  a  voyage,  or  of  the  ship  itself,  if  sold,  or  its  documents, 
by  way  of  securing  indemnity.  The  ship's  husband  cannot,  with- 
out special  authority  by  contract  or  clear  usage,  borrow  money; 
nor  give  up  the  lien  for  freight;  nor  insure;  nor  purchase  a 
cargo  for  the  owners ;  nor  bring  suits  concerning  the  ship,  though 
it  is  frequently  found  that  subsequent  ratification  is  as  good  as  a 
previous  authority ;  nor  delegate  his  ofiicc.'* 

Special  customs  regulate,  in  certain  localities,  the  proper  com- 
missions and  allowances  of  a  ship's  husband ;  and  commercial 
usage,  in  general,  will  be  found  to  depend  somewhat  upon  the 
character  of  the  adventure  in  which  the  ship  is  engaged,  not  only 
with  regard  to  the  powers  and  duties  of  the  managing  agent,  but 
as  concerns  the  part-owners  of  the  ship  and  those  employed  in  its 
navigation.^ 

2.  lb.;  Reed  v.  WTiite,  5  Esp.  122;  5.  As  to  whalinj!:  voyages,  for  in- 
Muldon  V.  Whitlock,  1  Cow.  290;  stance,  see  1  Pars.  Shipping,  30-34. 
Bowen  v.  Peters,  71  Me.  463;  Sted-  See  Rennell  v.  Kimball,  5  Allen,  356. 
man  v.  Feidler,  20  N.  Y.  437;  Mitch-  Custom,  general  and  notorious,  ia 
ell  V.  Chambers,  43  Mich.  150,  and  not  disregarded  with  reference  to  a 
cases  cited.  The  authority  of  a  ship's  husband;  it  may  even  author- 
managing  owner  extends  to  the  con-  izie  him  in  certain  classes  of  ca.ses  to 
duct  on  shore  of  all  that  concerns  the  insure  the  vessel  for  the  benefit  of 
emplojTnent  of  the  ship.  Huntsman,  the  owners  without  their  express  di- 
The   (1894),  P.  214.  rection.      Adams    v.    Pittsburgh    Ins. 

3.  Ex    parte    Young.    2    Ves.    &    B.  Co.,  95  Penn.  St.  348. 

242;    Smith   v.  De  Silva,   Cowp.   469;  The    ma'^tor    or    managing    owner 

3  Kent  Com.  155;  Story  Partn.,  §  443.  may  act  for  himself  in  obtaining  bail 

4.  1  Bell  Com.  (5th  ed.)  504;  1  for  the  release  of  the  vessel  from 
Pars.  Shipping,  110;  3  Kent  Com.  seizure  under  civil  process;  but  not 
157;  Hewett  v.  Buck,  17  Me.  147.  so  as  to  bind  the  other  owners  per- 

323 


CHAPTER  XI 


MEMBERS    OF    CORPORATIONS 


§  215.     Corporate  Organization;   Its  Advantages  and  Disadvan- 
tages. 

Personal  property  is  held  not  only  by  joint  and  common  own- 
ers, by  partners,  whether  engaged  in  a  general  or  a  limited  part- 
nership, by  shipowners,  and  by  members  of  joint-stock  companies, 


sonally.  Mitchell  v.  Chambers,  43 
Mich.  150,  criticising  Barker  v.  High- 
ley,  15  C.  B.  N.  S.  27 ;  Gager  v.  Bab- 
cock,  48  N.  Y.  154.  If  a  master  who 
is  part-owner  sells  his  interest,  he 
cannot  so  transfer  the  command  as 
necessarily  to  bind  the  other  part- 
owners.  Williams  v.  Ireland,  11 
Phila.  273.  Whether  one  part-owner, 
who  is  master,  can  be  held  liable  to 
the  other  for  neglecting  to  employ 
the  vessel,  see  Hyer  v.  Caro.  17  Fla. 
332.  And  see  Helium  v.  Kneehdt,  17 
Hun,  583. 

Master  and  owner  may  have  a 
special  contract  upon  various  points, 
such  as  supplies,  freight,  &c. ;  but 
this  does  not  bind  shippers  who  have 
no  notice  of  the  arrangement  and 
rely  upon  the  general  rules.  Oakland 
Cotton  Co.  V.  Jennings,  46  Cal.  175. 
But  cf.  Frazer  v.  Cuthbertson,  6  Q. 
B.  D.  93,  as  to  supplies.  "  Language 
occurs,  both  in  some  text-books  and 
in  some  decided  cases,  which  seems 
to  be  based  upon  the  assumption  that 
a  managing  owner  is  an  owner  em- 
ployed by  and  on  behalf  of  all  his 
brother  owners  without  exception. 
But  there  is  no  magic  in  the  term 
managing  owner  which  creates  him 
plenipotentiary     for     those     owners 


whose  agent  he  is  not  in  fact." 
Bowen,  J.,  in  Frazer  v.  Cuthbertson, 
6  Q.  B.  D.  9'3,  98.  See  also  remarks 
as  to  the  question  of  supplies  in 
Stedman  v.  Feidler,  20  N.  Y.  437. 
The  part-owner  and  manager  has 
no  authority  to  bind  the  estate  of  a 
deceased  part-owner  ior  supplies. 
Stedman  v.  Feidler,  ib.  As  to  his 
right  of  recompense,  see  Williamson 
V.  Hine  (1891),  1  Ch.  390.  As  to 
bail  or  security  taken  by  the  other 
part-o"\vner  from  the  manager,  see 
The  England,  12  P.  D.  32;  The  Vivi- 
enne,  12  P.  D.  185. 

See  The  Transfer  No.  12,  221  Fed. 
409,  137  C.  C.  A.  207  (master  named 
in  certificate)  ;  United  States  v.  Ham- 
burg-Amerikan  Gesellschaft,  212  Fed. 
40;  The  Florida,  212  Fed.  334  (both, 
statutes  limiting  liability  of  ship- 
owners) ;  Hinckley  v.  Wilson  Lumber 
Co.,  205  Fed.  974  (master  as  agent 
of  the  ship)  ;  The  Loyal,  204  Fed. 
930,  123  C.  C.  A.  252;  K  W.  Steam- 
ship Co.  V.  Cochran,  191  Fed.  146,  111 
C.  C.  A.  626;  The  Marie  Palmer,  191 
Fed.  79;  The  Sunbeam,  195  Fed.  468: 
The  H.  A.  Baxter,  179"  Fed.  1018,  102 
C.  C.  A.  663.  See  further  §§  300-334, 
post,  as  to  ships  and  vessels  gener- 
ally; also  §  471  as'  to  bills  of  lading. 


324 


CHAP.  »3C[.]  MEMBERS    OF    CORPOKATIONS.  §    215 

but  also  by  members  or  shareholders  in  a  private  corporation.  It 
is  this  last  species  of  combinatiou,  bringing  together,  as  it  does, 
the  largest  aggregate  wealth  with  the  smallest  possible  individual 
liability,  to  which  our  attention  will  now  be  directed.  In  the 
joint-stock  corporation  we  find  the  perfection  of  an  organized  self- 
aggrandizement,  with  the  most  splendid  opportunities  for  enter- 
prise and  princely  gains;  yet,  if  not  jealously  watched,  and 
checked  in  its  every  encroachment  upon  individual  rights,  the 
sure  foe,  besides,  of  honest  competition  in  business,  the  tyrant  of 
legislatures,  and  the  canker  of  a  sclf-governiug  people. 

Corporations  have  their  analogies  in  a  State,  and  a  corporate 
combination  is  usually  designated  as  a  sort  of  fictitious  person. 
A  corporation,  as  the  name  imports,  is  a  body;  it  is  a  body, 
created  by  law,  composed  of  individuals  united  under  a  common 
name,  the  members  of  which  succeed  each  other;  so  that  the 
body  continues  the  same,  notwithstanding  the  change  going  on  in 
the  individuals  who  compose  it.*  We  may  therefore  consider  that 
a  corporation  has  certain  advantages  over  the  individual  for  busi- 
ness. Instead  of  one  man's  brain,  wealth,  and  energy,  it  unites 
the  brains,  wealth,  and  energy  of  many.  Instead  of  being  con- 
fined to  operations  for  the  brief  and  uncertain  period  of  a  single 
human  life,  it  is  endowed  with  immortality;  still  ^vith  this  quali- 
fication, that  the  charter  may  have  limited  the  term  of  its  exist- 
ence to  a  certain  period.  Instead  of  being  a  moral  agent,  the  cor- 
poration, as  it  is  said,  has  no  soul  and  can  be  guilty  of  no  crime; 
though  here  it  should  be  added  that  proceedings  are  now  per- 
mitted in  some  States,  in  the  nature  of  an  indictment,  where  some 
gross  wrong  has  been  committed  through  the  nogligonfe  of  its 
managing  officers,  who,  nevertheless,  are  found  in  criminal  prac- 

1.  Sep  Dartmouth  College  v.  Wood-  distinct    from    the    corporators    who 

ward,    4    Wheat.    63G;    2    Kent    Com.  eompoao    it.      Morawetz   on    Corpora- 

215;  Anjr.  &  Ames  Corp.,  §  1.     While  tioiis,  §  1,  contrasting  4  Wheat.  .'51 S. 

a  corporation  is  frequently  defined  in  630,  and  numerous  other  cases,  with 

the  courts  as  an  "artificial  being,"  a  1  Kyd  on  Corporations.  13;   Railway 

"fictitious  person,"  &c.,  it  is  not  to  Co.  v.  Allerton,  18  Wall.  233. 
be   considered   as   a   person   or    thing 

325 


§  216  THE  LAW  OF  PERSONAL  PROPERTY.       [ PART  II. 

tice  very  hard  to  reach.  And  while  partnerships  and  joint-stock 
companies  are  ill-jointed  and  loose  in  their  management,  corpora- 
tions have  compactness  and  a  coercive  authority  over  their 
members.^ 

§  216.     Public  and  Private  Corporations;  Leading  Classes. 

The  leading  divisions  of  corporations  are  those  of  public  and 
private  corporations.  With  public  corporations,  such  as  cities 
and  towns,  we  have  no  present  concern;  but  private  corporations, 
and  those  especially  which  have  a  capital  stock  and  are  organized 
for  business  purposes,  may  properly  occupy  our  attention  in  the 
present  chapter.  The  line  which  divides  public  and  private  cor- 
porations is  not  always  readily  discernible ;  but  in  general,  while 
the  legislature  has  an  exclusive  control  over  the  former,  and  may 
modify  or  destroy  at  pleasure,  the  latter  are  created  by  a  legislative 
act  which,  in  connection  with  its  acceptance  by  the  parties  inter- 
ested, is  regarded  as  a  compact  that  cannot,  under  the  terms  of 
our  American  Constitution,  be  afterwards  modified  or  annulled. 
And,  besides,  a  private  corporation  is  distinguishable  from  munici- 
pal bodies  in  having  a  corporate  fund  from  which  to  satisfy  judg- 
ments, and  by  the  irresponsibility  of  individual  members  for 
corporate  debts  beyond  their  amount  of  interest  in  the  fund.'' 
There  are  ecclesiastical  (or  religious)  and  lay  named  among  pri- 
vate corporations ;  and,  again,  eleemosynary  or  charitable  (like 
hospitals)  and  civil;  which  last  term  applies  to  both  public  and 
private  corporations.'*  On  the  whole,  public  corporations  are  gen- 
erally considered  those  which  exist  for  public  and  political  pur- 
poses only,  although  they  Involve  in  a  measure  private  interests; 

2.  See  Ang.  &  Ames  Corp.,  §§  1-8,  tions,  see  Phillips  v.  Mayor,  &c.,  of 
passim;  1  Kyd,  71;  2  Bl.  Com.  470-  Baltimore,  110  Md.  431,  72  Atl.  902. 
472;  2  Kent  Com.  268;  Morawetz  See  also  Taylor  Corp.,  §  450,  which 
Corp.,  §  2.  questions     the      Dartmouth      College 

3.  Merchants'  Bank  v.  Cook,  4  case;  Munn  v.  Illinois,  94  U.  S.  113. 
Pick.  414;  Dartmouth  College  v.  4.  1  Ewell's  Bl.  Com.  470,  472;  2 
Woodward,  4  Wheat.  636;  Ang.  &  Kent  Com.  268,  269;  1  Kyd,  26;  Ang. 
Ames  Corp.,  §§  30-34,  and  notes.  As  &  Ames  Corp.,  §§  36-39;  Morawetz 
between   private   and  public   corpora-  Corp.,  §  2. 

326 


CHAP.  XI. J  MEMBERS    OF    COKPOIiATIONS.  §    217 

while  any  corporation  founded  by  private  beneficence,  though 
chartered  by  government  and  created  for  objects  of  general  wel- 
fare, is  a  private  and  not  a  public  corporation;  to  which  latter 
class  belong  of  course  corporate  associations  (those  demanding 
our  present  attention),  whose  main  object  is  business  and  pecuni- 
ary profit.^ 

§  217.     History  and  Modem  Growth  of  Corporations. 

In  England  the  law  of  corporations  has  been  confined  chiefly 
to  municipal  bodies  and  to  a  few  chartered  monopolies,  like  the 
East  India  Company;  though  more  lately  extended  to  joint-stock 
companies  under  the  Companies  Acts.  But  in  the  United  States 
we  have  a  large  number  of  aggregate  corporations,  chartered  not 
only  for  charitable  and  benevolent  objects,  but  for  manufacturing, 
mechanical,  mining,  and  various  other  business  and  industrial 
pursuits.  And  that  monopolies  may  not  too  greatly  rule  or  favor- 
itism direct  the  legislature,  the  tendency  in  the  various  States  is 
now  to  multiply  opportunities  for  persons  to  organize  for  business 
purposes  under  general  laws;  instead  of  requiring  them  to  pro- 
cure special  charters  of  incorporation  in  every  case,  as  formerly, 
a  course  which  invites  corruption  of  legislators  and  clogs  healthy 
competition  in  trade.^ 

5.  Dartmouth  College  v.  Wood-  Mass.  3D4,  101  X.  E.  1061;  In  re 
ward,  4  Wheat,  636;  Cowen,  J.,  in  Cordova  Shop,  216  Fed.  818  (N.  Y. 
Thomas  v.  Dakin,  22  Wend.  109.  1914)    (a  corporation  de  facto)  ;   Ri- 

6.  2  Kent  Com.  272,  and  n.;  Ang.  alto  Co.  v.  Miner,  183  Mo.  App.  119, 
&  AmeS,  §  64;  Brightlj^  Dig.,  "Cor-  166  S.  W.  629  (evidence  of  corpora- 
porations."  tion    where    created)  ;     International 

As  to  public  corporations,  see  Util-  &  G.  N.  R.  Co.  v.  Anderson  Co..  174 

itics  Com.  v.  Bethany  Tel.  Ass'n,  270  S.  W.  305   (Tex.  Civ.  App.)  ;  John  P. 

III.    183,    110    N.    E.    334.      And    see  Squire   &    Co.    v.    Portland,    106    Me. 

Barber  v.   Morgan,   89'  Conn.   583,  94  234,   76   Atl.   679,   30   L.  R.   A.   N.   s. 

Atl.  984;  The  State  v.  111.  Cent.  Ry.  576,  n.;   Groacen  v.  Buckley  Co.,  167 

Co.,  246  111.  188,  92  N.  E.  814;  In  re  Mich.  56^,  133  N".  W.  538.     Sw  Apsey 

Humphrey  Advertising  Co.,   177   Fed.  v.   Chattel   Loan   Co.,  216   Mass.   364, 

187,    101    C.    C.    A.    10    (two   lines   of  103  N.   E.  S99    (certain  directors  ap- 

business    permitted)  ;    Attorney    Gen-  pointed  as   pul>Iic  ofTicer.s)  ;   Smith  v. 

eral    v.    Haverhill    Gaslight   Co.,    215  Moore,    1D9    Fed.    689,   118   C.   C.    A. 

327 


§  217  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  n. 

Blackstone,  on  the  authority  of  Plutarch,  ascribes  the  invention 
of  private  corporations  to  Rome  and  Numa  Pompilius;  while 
others  have  thought,  with  more  reason,  that  it  was  brought  to 
Eome  from  the  Greeks ;  for  the  laws  of  Solon  permitted  private 
companies  to  institute  themselves  at  pleasure,  subject  only  to  the 
public  laws/  In  imperial  Eome,  the  corporation  became  regarded 
with  much  jealousy,  and  an  express  decree  of  the  Senate  or 
Emperor  was  essential  to  its  establishment  in  all  cases;  whereby 
the  number  was  doubtless  lessened,  while  the  odious  monopoly 
feature  became  all  the  more  apparent.  The  practice  of  incor- 
porating persons  composing  particular  trades  was  known  to  both 
Roman  and  Greek  law ;  and  in  England,  as  long  ago  as  the  reign 
of  Henry  II.,  or  even  earlier,  we  find  trade  charters,  older  than 
Magna  Charta  itself.  Privileges  were  thus  conferred  in  Great 
Britain  from  the  fourteenth  century  downward,  upon  the  weavers, 
the  mercers,  the  fishmongers,  the  vintners,  the  merchant-tailors, 
and  others.^  Commercial  corporations,  too,  were  known  to  the 
Roman  Law.^  And  with  the  revival  of  commerce  in  Europe,  cor- 
porations were  found  engaged  in  speculative  adventure  upon  the 
seas.  Banking  companies  have  also  claimed  and  obtained  many 
chartered  privileges ;  not  only  in  Genoa,  Venice,  and  the  other 
once  opulent  cities  of  Southern  Europe,  but  in  Amsterdam  and 
London;  and  the  example  of  the  Bank  of  England,  which  has 
proved  so  valuable  an  ally  to  the  public  credit  of  Great  Britain 
ever  since  its  incorporation  in  1694,  led  to  the  establishment  of  a 
similar  chartered  institution  in  this  country ;  but  for  a  time  only, 
since  so  gigantic  a  moneyed  monopoly  could  not  fail,  however 
useful,  to  be  unpopular  in  a  country  where  national  and  State 
interests  foster  jealousy.  Land  companies  were  organized  in  the 
seventeenth  century  to  enable  the  British  Government  to  develop 

127;  People  v.  Mackey,  255  111.  144,  7.  1  Errell's  Bl.  Com.  468;  2  Kent 

99  N.  E.  370 ;  Walker  v.  Taylor,  25&  Com.    268,    269 ;    Digest,    47,    22,    4 ; 

111.  424,  96  N.  E.  1055    (no  real  es-  Taylor  Corp.,  §§  1-9. 

tate  corporation  allowed)  ;  Drucklier  8.  lb.;  Ang.  &  Ames,  §§  52,  53. 

V.  Sam  H.  Harris,  155  App.  Div,  83,  9.  Ayliffe,  196. 

140  N.  Y.  S.  60. 

328 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    218 

the  vast  resources  of  a  newly  discovered  continent;  and  several 
of  the  early  governments  of  our  old  thirteen  American  colonies 
were  in  the  hands  of  proprietors  whose  charters  had  passed  the 
great  seal.^  In  these  and  other  instances  we  see  that  the  modem 
policy  of  government  has  been  to  encourage  certain  business  ven- 
tures of  public  importance  requiring  extraordinary  capital  or 
involving  daring  risks,  by  placing  in  the  hands  of  favored  indi- 
viduals a  charter  of  incorporation  which  confers  upon  them 
exclusive  privileges  and  correspondingly  shuts  out  all  competition. 

§  218.     The  Same  Subject. 

Corporations  have  been  multiplied  of  late  years  in  this  country 
to  a  remarkable  extent ;  and  that,  too,  notwithstanding  the  abuses 
which  are  admitted  to  attend  the  exercise  of  exclusive  privileges 
by  powerful  combinations.  The  absence  of  great  individual 
wealth  in  a  community  tends  to  draw  men  closely  together  for  the 
accomplishment  of  needful  measures  of  mutual  improvement; 
and,  in  order  that  trajfic  might  be  opened  as  civilization  went  for- 
ward, new  inducements  to  capitalists  have  been  offered  in  various 
States  or  by  our  American  Congress,  with  each  new  necessity,  in 
the  shape  of  liberal  charters  and  acts  of  incorporation.  The  net- 
work of  railways,  canals,  and  turnpikes  extending  across  this  con- 
tinent attests  lasting  advantages  which  result  from  this  policy; 
while  the  later  movements  of  railway  as  well  as  industrial  kings 
towards  the  practical  consolidation  of  their  companies,  with  a 
rivalry  far  more  crushing  than  that  formerly  of  small  and  single 
corporations,  may  well  awaken  alai-m  lest  this  private  monopoly 
system,  if  not  ovenuastered  and  kept  in  restraint,  prove,  notwith- 
standing, the  ruin  of  legitimate  toil  and  honest  enterprise  in  a 
popular  government  like  ours. 

And  yet,  as  experience  still  later  reminds  us,  corporations  may 
suffer  likewise  from  oppressive  and  confusing  legislation  where 
States  seek  local  advantage  unjustly  and  the  general  public  is 
heedless  of  the  rights  of  investors.^ 

1.  See  An?;.  &  Ames  Corp.,  §§   53,  2.  See  §  241a.  post. 

54;  2  Kent  Com.  268-271. 

829 


§  218  THE  LAW  OF  PERSONAL  PEOPERTY.       [ PART  II. 

Banking  and  insurance  business,  which  cannot  safely  be  trans- 
acted without  large  capital,  is  in  the  United  States  almost  entirely 
absorbed  by  corporations ;  and  at  present  we  have  a  national 
banking  system  in  full  operation,  not  confined  to  a  single  institu- 
tion, but  comprising  a  large  number  of  banks  chartered  formally 
under  the  local  laws.^  Under  any  American  system  the  banks 
are  likely  to  be  localized  to  a  great  extent  for  their  own  business 
convenience.  Corporations  for  manufacturing,  mining  and  vari- 
ous industrial  purposes  are  also  very  common  in  the  United  States. 
There  have  been  occasional  attempts  to  check  the  rapid  increase 
of  corporations;  as  in  the  New  York  Legislature  of  1821,  when 
a  two-thirds  vote  was  made  requisite  for  the  passage  of  each  act 
of  incorporation ;  '*  though  nothing  seems  to  be  more  effectual  for 
suppressing  the  worst  evils  of  a  monopoly  system  than  constitu- 
tional provisions,  such  as  many  States  have  already  adopted,  which 
interdict  or  restrain  special  grants  of  corporate  powers,  and  per- 
mit under  general  laws  all  persons  to  obtain  a  corporate  organiza- 
tion who  desire  the  facility.^  Legislation  sometimes  throws 
special  safeguards  about  its  chartered  banks ;  and  in  many  of  the 
Western  States  we  find  constitutional  restraints  imposed  upon  the 
State  ownership  of  stock  and  the  loan  of  State  credit  in  aid  of  a 
corporation ;  while  it  is  quite  common  and  highly  prudent  for  the 

3.  But  see  various  important  tions.  See  Hough's  Constitutions, 
ehanffes     towards     nationalizing     our      passim. 

banking  system  during  1914-16  under  5.  Morawetz  Corp.,  §§  6,  536;   San 

Acts  of  Congress.  Francisco   v.    Water   Works,    48    Cal. 

4.  Warner  v.  Beers,  23  Wend.  103.  493 ;  Wallace  v.  Loomis,  97  U.  S.  146, 
See  a  constitutional  provision  of  this  See  constitution  of  Maine  provid- 
character  in  the  fundamental  law  of  ing  that  when  a  bill  is  presented  for 
Michigan,  so  construed  as  to  prohibit  an  act  of  incorporation,  it  shall  be 
the  legislature  from  passing  a  general  continued  until  a  succeeding  legis- 
incorporation  law  without  the  assent  lature  assembles,  &c.  McClinch  v. 
of  two-thirds  of  each  house.  Green  Sturgis,  72  Me.  288.  The  charter  of 
V.  Graves,  1  Dougl.  351.  Constraints  a  private  corporation  organized  under 
of  one  kind  or  another  upon  corpo-  a  general  law  is  as  inviolable  as  that 
rate  legislation  (some  of  them  very  of  one  organized  under  a  special  act. 
curious)     prevail    quite    generally    at  People  v.  Keese,  27  Hun,  483. 

this  day  in  the  several  State  constitu- 

330 


CHAP.  XI.]  MEMBERS    OF    COKPOBATIONS.  §    219 

legislature  in  these  days,  when  granting  an  act  of  incorporation, 
to  limit  the  term  of  the  grant,  and  reserve,  moreover,  the  right  on 
the  part  of  the  State  to  alter  and  amend  whenever  it  shall  be 
thought  needful  and  proper.  And,  finally,  there  has  been  a  dis- 
position in  some  parts  of  the  United  States  to  change  essentially 
the  privileges  of  private  corporations,  in  various  instances,  by 
enlarging  the  personal  liabilities  of  the  members  or  directors.^ 

§  219.     Hovy  Private  Corporations  Are  Created;    Charter,  Leg- 
islative Act,  etc. 

How,  then,  is  a  private  corporation  to  be  created?  We  have 
borrowed  from  the  Roman  law,  and  from  that  policy  of  municipal 
corporations  which  the  Roman  conquerors  long  ago  extended  to 
Great  Britain  as  well  as  to  the  continent  of  Europe,  most  of  the 
legal  principles  relative  to  the  powers  and  capacities  of  corpora- 
tions. No  corporation  could  exist,  at  the  civil  law,  unless  con- 
firmed by  sovereign  power.  The  king  of  England,  soon  after  the 
Norman  Conquest,  assumed  the  exclusive  prerogative  of  granting 
exclusive  privileges  of  this  sort;  and  since  the  time  of  Bracton 
the  rule  has  been  settled  that  the  king's  assent  should  be  given, 
either  by  act  of  Parliament  (where  the  royal  assent  is  a  necessary 
ingredient)  or  by  charter;  and,  as  the  prescriptive  royal  preroga- 
tives suffer  with  every  new  encroachment  of  Parliament,  recourse 
in  that  country  must  now  be  usually  had  to  special  legislation. 
And  special  legislation  being  procured  with  difficulty  and  expense, 
joint-stock  companies  are  favored/     Tn  this  conntry  tlio  subject 

6.  See  Abbott's  Dijrest,  Corp.  "  Con-  upon  the  will  of  the  penernl  stoekhold- 

stitutions;"   2    Kent   Com.    272.   and  era.  if  not  of  the  public,  than  hitherto, 

notes;  Ang.  &  Ames,  §  64.     It  is  sub-  The   supervision    of   public    service 

mitted  by  the  writer  that  chan,c;os  in  eorpor.itions    by    State    or    national 

private    corporate    orgnnizations    are  commissions,   even    to   the    extent    of 

desirable  in  the  direction  of  enlarpinfj  fixincr    rates,    is   a    recent    innovation 

the  personal  liability  of  the  directors.  of   lep^islative   policy   to   bo   noted   in 

simplifyinpr  and  defininji  their  powers,  this  connection    (19'17). 

and   rendering  them   better  subjected  7.  Dig.  47,  lib.  22,  23;   1  Kyd.  Gl  ; 

to  scrutiny  and  more  closely  dependent  Ang.  A  Ames,  §§  67,  68;  supra,  §  201. 

331 


§  219 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  II. 


is  commonlj  controlled  by  the  State  legislatures ;  and  the  author- 
ity of  this  branch  of  each  local  government  to  create  corporations 
with  powers  which  are  not  repugnant  to  the  constitution  of  the 
State,  nor  to  the  constitution  and  laws  of  the  United  States,  is 
unquestionable.^  The  federal  government,  too,  though  limited  in 
its  powers,  is  sovereign  within  its  sphere  of  action;  and,  as  an 
appropriate  means  of  exercising  any  of  the  powers  given  by  the 
Constitution  to  the  government  of  the  Union,  it  may  lawfully 
create  a  corporation.^  It  is  sometimes  said  that  corporations 
exist  by  prescription ;  but  this  is  nothing  more  than  a  presumption 
that  any  existing  corporation  was  duly  incorporated ;  and  the  case 
must  be  rare  in  this  country  where  a  legislative  act  or  charter 
could  not  be  shown  in  positive  proof.  ^ 


8.  M'Culloeh  v.  State  of  Maryland, 
4  Wheat.  421 ;  Vineennes  University 
V.  Indiana,  14  How.  268 ;  Stowe  v. 
Flagge,  72  III.  401. 

The  power  to  charter  corporations 
belongs  to  each  legislature,  unless  ex- 
pressly taken  away  by  the  constitu- 
tion ;  and  is  incidental  to  the  general 
power  of  making  laws  for  the  welfare 
of  the  State.  Bank  of  Chenango  v. 
Brown,  26  N.  Y.  467 ;  Morawetz  Corp., 
§  4.  A  State  legislature  cannot  in- 
corporate an  association  for  purposes 
prohibited  by  the  Constitution  of  the 
United  States;  as,  e.  p.,  to  promote 
rebellion.  Ponton  v.  McAdoo,  71  N. 
C.  Ill;  6  Rich.  243.  The  old  com- 
mon-law doctrine  of  the  power  of  dele- 
gating the  right  to  grant  a  private 
charter  has  little  or  no  practical  ap- 
plication to  the  constituted  govern- 
ments. State  and  national,  in  this 
country.  See  Morawetz,  §§  7,  8, 
where  the  doctrine  is  stated  with  its 
limitations. 

9.  M'Cullough  V.  Maryland,  4 
Wheat.  316.  This  is  a  leading  case 
in  point,  affirming  the  right  of  Con- 


gress to  charter  a  national  bank; 
contrary  to  the  constitutional  inter- 
pretation which  a  political  school  in 
this  nation  had  previously  insisted 
upon.  This  doctrine  has  been  reas- 
serted and  extended  in  later  years; 
as,  for  example,  in  sustaining  our 
present  national  banking  acts,  and 
the  acts  incorporating  the  Pacific 
railroad  companies.  See  also  Federal 
Reserve  Bank  legislation  (1914-15), 
§  241a,  post.  The  power  of  granting 
corporate  franchises  is  not  given  ex- 
pressly to  Congress  by  our  federal 
constitution ;  but  is  incident  to 
powers  expressly  granted.  See  Mora- 
wetz, §  5;  Thompson  v.  Pacific  R.,  7 
Wall.  566;  Farmers^  &c..  Bank  v. 
Bearing,  91  U.  S.  27;  Luxton  v.  No. 
River  Bridge  Co.,  153  U.  S.  525. 

1.  2  Kent  Com.  277;  Dillingham  v. 
Snow,  3  Mass.  276;  Pawlet  v.  Clark, 
9  Craneh,  292. 

Under  the  "  interstate  commerce  " 
clause  of  our  federal  constitution  the 
policy  pursued  towards  private  cor- 
porations takes  largely  a  national 
direction  of  late  years  (1917). 


332 


CHAP.  XI.]  MEMBEKS    OF    CORPORATIONS.  §    220 

A  corporation  is  the  body  or  institution  itself;  while  incor- 
poration is  the  act  by  which  that  institution  is  created.  A  charter 
is  properly  a  sovereign  grant;  but  in  this  country  the  word  is 
used  ^s  synonymous  rather  with  the  legislative  act  of  incorpora- 
tion.^ And  a  State  legislature  may  pass  a  general  law  which 
authorizes  any  persons  to  meet  together  and  form  corporations  of 
a  certain  kind ;  or  it  may  grant  a  special  act  of  incorporation  to 
certain  individuals  and  their  successors  only.  It  is  the  policy  of 
some  States,  indeed,  to  discourage  special  acts  of  incorporation 
altogether;  and  constitutional  prohibitions  may  be  found  to  that 
effect,  which  nevertheless  permit  the  passage  of  general  laws 
authorizing  the  formation  of  an  indefinite  number  of  corpora- 
tions, in  order  that  corporate  privileges  may  be  as  free  to  the 
public  as  the  right  to  trade  singly  or  in  partnerships.''  Our  State 
legislatures,  in  the  absence  of  express  constitutional  restrictions, 
exercise  large  powers  in  the  premises ;  for  they  may  prescribe  the 
functions  and  duties  of  private  corporations,  control  their  action, 
and  impose  restraints  upon  them ;  subject  to  the  qualifications  that 
the  obligations  of  the  contract  implied  in  the  charter  cannot  after- 
wards be  impaired,  nor  the  essential  franchise  taken  without  due 
compensation.* 

§  220.  The  Same  Subject;  Acceptance  of  a  Charter  by  the 
Incorporators;  Conditions  Precedent,  etc. 
A  charter  is  inoperative  until  it  is  accepted  by  the  persons 
intended  to  be  incorporated ;  and  the  grant  may  be  withdrawn 
meantime;  but  after  it  has  once  been  sufficiently  accepted,  the 
legal  duties  and  liabilities  attach,  according  to  the  terms  of  the 
charter,  and  cannot  be  disavowed  at  the  pleasure  either  of  the 
State  or  the  individuals  concerned.     No  precise  form  of  accept- 

2.  Aug.  &  Ames.  §  5;  Bouvier  Diet.  4.  Thorpe   v.    Rutland,    &c.,    R.    R. 
"Corporations,"  &c.  Co.,  27  Vt.  140;  Madison,  &c..  R.  R. 

3.  Brightly  Fed.  Dig.  182;  Falconer  Co.  v.  Whiteneck,  S  Ind.  217;  Gorman 
▼.    Campbell,    2    McLean,    195.      See  v.  Pacific  R.  R.  Co.,  26  Mo.  441. 
supra,  §  218,  n. 

333 


§  220a         THE  LAW  OF  PERSONAL  PKOPEKTY.        [PART  II. 

ance  is  necessary ;  for  while  any  man  may  refuse  a  grant,  yet  he 
may  bo  bound  by  collateral  acts  which  imply  an  acceptance  on 
his  part;  and  hence  we  find  that  where  the  persons  named  in  a 
charter  have  acted  under  it,  held  meetings,  adopted  by-laws,  and 
elecited  officers  in  conformity  with  its  terms,  they  are  considered 
to  have  accepted  it,  although  acceptance  should  usually  be  by  a 
majority  vote  of  the  persons  incorporated.^  A  charter  must  be 
accepted  on  the  terms  offered ;  not  conditionally,  nor  partially, 
nor  for  another  time  than  stated  therein.  A  substantial  compliance 
with  all  the  forms  prescribed  by  a  general  statute  authorizing 
incorporation  is  a  prerequisite,  and  a  sufficient  one,  to  corporate 
existence.^  The  same  principles  of  law  will  apply  to  the  accept- 
ance by  an  existing  corporation  of  a  new  or  amended  charter.^ 

Private  corporations  are  almost  always  organized  in  these  days, 
under  general  acts ;  and  for  such  organization  a  substantial  com- 
pliance with  all  the  terms  imposed  by  the  act  as  conditions 
precedent  is  the  essential  prerequisite.^ 

§  220a.     De  Facto  Corporations. 

AYhere  some  defect  appears  in  the  corporate  papers,  but  the 
corporation  does  business  as  such,  there  may  result  what  is  known 
as  a  de  facto  corporation  having  corporate  rights  and  privileges 
for  most  purposes  and  subject  only  to  attack  by  the  State  itself. 
The  following  are  requisites  of  a  de  facto  corporation:  First,  a 
statute  authorizing  the  organization  of  such  a  corporation ;  ^   sec- 

5.  1  T.  R.  575;  1  Kyd,  63;  Ang.  &  8.  Morawetz,  §  17,  and  cases  cited; 
Ames,  §§  81-83;  Bangor  R.  R.  Co.  v.  Utley  v.  Union  Tool  Co.,  11  Gray, 
Smith,  47  Me.  34;  Abb.  Dig.  Corp.  139;  People  v.  Selfridge,  52  Cal.  331; 
"Acceptance;"  Russell  v.  McLellan,  55  Barb.  45;  Doyle  v.  Mizner,  42 
14  Pick.  63;  Zabriskie  v.  Cleveland  Mich.  332;  Hurt  v.  Salisbury,  55  Mo. 
R.  R.  Co.,  23  How.  39'1 ;  Morawetz,  310.  So,  too,  there  may  be  conditions 
§§  12-16,  and  cases  cited.  precedent    under    a    special     charter, 

6.  Green  v.  Seymour,  3  Sandf.  Ch.  whose  obser\'ance  is  essential  in  the 
285;  Harris  V.  McGregor,  29  Cnl.  124.  same  sense.     Morawetz,  §  18. 

See     Eastern     Plank     Road     Co.     v.  9.  Imperial   Bldg.   Co.   v.   Board   of 

Vaughan,  14  N".  Y.  546.  Trade,  238  111.  100,  87  N.  E.  167. 

7.  Commonwealth     v,     Cullen,     13 
Penn.  St.  133. 

334 


CHAP.  XI.]  MEMBERS    OF    COEPOKATIONS.  §    222 

ond,  an  apparent  organization ;  ^  third,  action  as  a  corporation ;  - 
fourth,  good  faith  in  the  incorporators.^ 

Where  one  sells  goods  to  a  de  facto  corporation  believing  it  to 
be  a  corporation  he  cannot  hold  the  incorporators  personally ;  ^ 
while  if  the  seller  has  been  dealing  on  a  partnership  basis  there 
is  a  personal  liability.^  So,  where  one  deals  with  a  de  facto 
corporation,  not  knowing  whether  it  is  a  corporation  or  a  partner- 
ship, he  cannot  recover  against  the  directors  as  partners.^ 

Where  the  incorporators  make  some  error  in  the  execution  of 
the  corporate  papers  equity  has  no  jurisdiction  to  reform  them, 
as  the  incorporation  is  by  grant  of  the  sovereign  power  and  equity 
cannot  interfere.^ 

§  221.     Language  of  Legislative  Acts  of  Incorporation. 

To  create  a  corporation,  such  words  as  "  found,"  "  erect," 
"  establish,"  or  "  incorporate  "  are  commonly  used ;  but  they  are 
not  essential ;  the  intention  of  the  legislature  in  enacting  a  law  of 
this  kind  being  the  main  thing  which  the  courts  will  regard.^ 

§  222.     Constituent  Elements  of  a  Private  Corporation. 

There  are  certain  constituent  elements  in  every  private  cor- 
poration. A  bod}^  corporate  is  usually  made  up  of  natural  per- 
sons in  their  n'atural  capacity.  Every  corporation  should  have  a 
name, —  or,  as  Coke  called  it,  a  name  of  baptism, —  by  which  it 

1.  Tulare  Irr.  District  v.  Shepard,  6.  Newcomb-Endicott  Co.  v.  Fee, 
185  U.  S.   13,  22   Sup.  Ct.   531,  46  L.        (Mich.)    133  N,  W.  540. 

Ed.  773.  7.  Casper    v.     Kalt-Zimmers     Mfg. 

2.  Tulare  Irr.   District  v.   Shepard,  Co.,  159  Wis.  517,  149'  N.  W.  754. 
s^u^ra.  8.  Phillips  v.  Pearce,  5  B.  &  C.  423; 

3.  Gilkey  v.  How,  105  Wis.  41,  81  Lawrence  v.  Fletcher,  8  Met.  153;  1 
N.  W.  673,  50  L.  R.  A.  324.  Kyd.   63 ;    Ang.   &   Ames,    §§   76,   77 ; 

See    article    on    de   facto    corpora-  Morawetz,  §  9;  Liverpool  Ins.  Co.  v. 

tions  in  25  Harvard  Law  Review,  623.  Massachusetts,  10  Wall.  566. 

4.  Snider's  Sons  Co.  v.  Troy,  91  A  corporation  cannot  enter  into  a 
Ala.  224,  8  So.  658.  partnership    without    legislative    per- 

5.  Guckert  v.  Hacke,  159  Pa.  St.  mission.  Post  &  M'Cord  v.  City  of 
303,  28  Atl.  249.  New   York.    86    Misc.    Rep.    300,    148 

N.  Y.  S.  568. 

335 


§  222  THE  LAW  OF  PERSONAL  PROPERTY.       [PABT  II. 

may  be  known  as  grantor  and  grantee,  perform  all  legal  acts,  hold 
and  transmit  property,  and  sue  and  be  sued;  and  here  we  notice 
that  the  name  of  this  legally  created  being  expresses  usually  the 
objects  for  which  it  was  founded,  and  that  it  is  sufficiently  named 
whenever  the  identifying  words  are  used ;  but  a  natural  person's 
name  is  short,  and  cannot  suffer  verbal  changes  without  losing 
the  means  of  identification  altogether.^  And,  since  corporate 
powers  are  only  locally  exercised,  every  corporation  should  be 
constituted  as  of  some  particular  place ;  and  the  principal  office 
for  the  transaction  of  business  usually  determines  the  local  resi- 
dence of  this  ideal  inhabitant.^ 

The  powers  and  capacities  which  are  essential  to  all  corpora- 
tions, and  implied  in  every  act  of  incorporation,  are  often 
enumerated  as  follows:  (1)  to  have  perpetual  succession,  admit- 
ting new  members  to  fill  old  vacancies;  (2)  to  sue  and  be  sued, 
implead  and  be  impleaded;  grant  and  receive  by  its  corporate 
name,  and  do  all  other  acts  as  natural  persons  may;  (3)  to  pur- 
chase and  hold  property,  whether  real  or  personal,  for  the  benefit 
of  its  members  and  their  successors;  (4)  to  have  a  common  seal; 
(5)  to  remove  members.  But,  as  Mr.  Kyd  says,  some  of  these 
powers  are  to  be  taken  in  many  instances  with  much  modification 
and  restriction;  for  the  essence  of  a  corporation  consists  only  of 
a  capacity  to  have  perpetual  succession,  under  a  special  denomina- 
tion and  an  artificial  form,  and  to  take  and  grant  property,  con- 
tract obligations,  and  sue  and  be  sued  by  its  corporate  name,  and 
to  receive  and  enjoy,  in  common,  grants  of  privileges  and  immuni- 
ties.^ The  incidental  powers  and  capacities  of  every  corporation 
are  subject  moreover  to  such  limitations  as  may  be  prescribed  by 
the  sovereignty  which  creates  it ;  nor  has  any  corporation  other 
powers  than  such  as  are  specifically  granted,  or  are  within  the 
letter  and  spirit  of  the  act  of  incorporation.^ 

9.  Ang.  &  Ames,  §§  95-102;  2  Kent  Co.  v.  Wheeler,  1  Black,  286;  Potter 

Com.  292;  Forbes'  v.  Marshall,  11  Ex.  v.  Bank  of  Ithaca,  7  Hill.  530. 

166;  Sutton  v.  Cole,  3  Pick.  232.  2.  1  Kyd.  13,  69.  70:   2  Kent  Com. 

1.  Bank  of  U.  S.  v.  Devaux,  5  Or.  278. 

84 ;  Ang.  &  Ames,  §  107 ;  Ohio  R.  R.  3.  Ang.  &  Ames.  §  111 :  Dublin  v. 

336 


CHAP.  XI.]  MEMBEKS    OF    COKPORATIONS.  §    223 

§  223.  Internal  Organization  and  Management;  Directors, 
Membership,  etc. 

The  internal  management  of  a  private  corporation  is  primarily 
vested  in  the  members ;  but  it  is  more  immediately  in  the  hands  of 
the  president  and  directors,  or  a  sort  of  managing  board  with  a 
chief  executive  at  the  head. 

In  joint-stock  corporations, —  those  which  consist  in  combina- 
tions of  capital,  usually  for  some  business  purposes, —  the  rights 
of  membership  are  incident  to  the  ownership  of  stock.  As  Shaw, 
C  J.,  has  observed,  in  all  bridge,  railroad,  and  turnpike  corpora- 
tions, in  all  banks,  insurance  corporations,  manufacturing  cor- 
porations, and,  generally,  in  corporations  having  a  capital  stock 
and  looking  to  profits,  membership  is  constituted  by  a  transfer  of 
shares,  according  to  the  by-laws,  without  any  election  on  the  part 
of  the  corporation  itself."*  This  right  to  elect  officers  and  other- 
wise control  the  corporate  interests  may,  however,  be  modified  by 
the  express  terms  of  the  charter  or  a  general  statute  applicable  to 
the  company.^  And  members  of  private  corporations  sometimes 
make  a  by-law,  creating  a  select  body  to  whom  they  delegate  the 
power  of  electing  officers  and  members.^     The  charter  or  statute 

Attorney-General,  3  Bligh,  N.  s.  395;  718;  Jackson  v.  Hooper,  76  N.  J.  E. 

Beaty  v.  Knowler,  4  Pet.  152;  Bright-  532,   75   Atl.   568,  27   L.   R.   A.   n.   s. 

ly  Fed.  Dig.  182,  183.  658,    n.;    Torrey   v.   Toledo   Portland 

See  Water  Commissioners  v.   Man-  Cement  Co.,  158  Mich.  345,  122  N.  W. 

Chester,    89    Conn.    671,    96    Atl.    182  614     (promoters)  ;    William    Gilligan 

(acceptance  of  charter)  ;  Jvj  Press  v.  Co.  v.  Casey,  205  Mass.  26,  91  N.  E. 

McKechnie,   88    Wash.    643,   153   Pac.  124    (corporation  known   by  different 

1067    (estoppel  to  deny  corporate  ex-  names). 

istence)  ;  Gregg  v.  Little  Rock  Cham-  4.  Poor  v.  Sears,  22  Pick.  122.   And 

ber  of  Commerce,   120  Ark.   656,   179  see  Ang.   &  Ames,   §   113;   Gilbert  v. 

S.   W.   658    (implied   power);    Ameri-  Manchester  Iron  Co.,  11  Wend.   627; 

can  Ball  Bearing  Co.  v.  Adams,   222  Downing   v.    Potts,    23   N.   J.    L.    66. 

Fed.   967    (N.   D.   1915  D.   C.)     (valid  See  chapter  IX..  infra,  on  Stocks  and 

organization)  ;  Wilder  Co.  v.  Refining  Shares. 

Co.,    236   U.    S.    165,    35   S.    Ct.    398;  5.  Ang.  &  Ames.  §§  115-118;   Com- 

Woodlawn  Ass'n  v.  Anderson,  187  Til.  monwealth  v.  Gill,  4  Whart.  228. 

App.    507;    Webster   v.    Susquehanna  6.  12    Mod.    225;    Ex    parte    Wil- 

Co.,  112  Md.  416.  76  Atl.  254 ;  Green-  cocks,  7  Cow.  407. 
ville  V.  Green,  9^  S.  C.  573,  77  S.  E. 

22  337 


§  224  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

is  usually  explicit  as  to  the  times  and  manner  of  election  and  the 
qualification  of  voters;  otherwise  the  corporation  may  regulate 
such  matters  for  itself.  At  the  proper  time  and  place  of  meeting, 
every  candidate  is  proposed  (though  nominating  committees  fre- 
quently regulate  the  presentation  of  lists  to  the  members  at  large), 
and  those  having  a  majority  of  the  votes  cast,  the  assembly  being 
sufficiently  large,  are  the  officers  elected;  no  more  officers  being 
chosen  than  such  as  suffice  to  complete  the  proper  number ;  and  a 
plurality  or  any  other  system  being  optional  in  preference  to  a 
majority  vote,  if  regularly  and  properly  adopted  by  the  members 
at  large. ^  For  we  are  to  remember  that  members  of  a  private 
corporation  are  not  unlike  citizens  and  voters  under  a  constitu- 
tional form  of  government.  Where  the  election  was  conducted  in 
good  faith,  the  officers  appointed  are  usually  considered  to  have 
been  properly  appointed,  in  the  absence  of  positive  formalities 
which  were  neglected ;  and  persons  acting  publicly  as  officers  of  a 
corporation  are  always  presimied  to  be  rightfully  in  office.  When 
questions  of  this  sort  are  raised,  the  language  of  the  charter  or  stat- 
ute will  usually  be  resorted  to  as  determining  whether  the  irreg- 
ular election  was  void  or  only  voidable;  and  where  a  person  ha^ 
been  de  facto  elected  to  a  corporate  office,  and  has  accepted  and 
acted  in  the  office,  the  validity  of  his  election  and  his  title  to  the 
office  in  the  latter  instance  can  only  be  tried  in  proceedings  on  a 
quo  warranto  information.^ 

§  224.     The    Same    Subject;    Powers    of    Directors,    Corporate 

Officers,  etc. 

The  management  of  private  corporations  is  usually  vested  in 

certain  officers  and  boards;  the  body  of  the  members  having  no 

voice  except  in  their  election.^     The  board  of  directors,  as  it  is 

7.  2  Kent  Com.  294;  Ang.  &  Ames,  ridge,  12  Wheat.  79;  Ang.  &  Ames, 
passim,  §§  118-123 ;  Morawetz,  §§  236,  §§  137-141 ;  Regina,  v.  Mayor  of 
382.  Chester,  34  E.  L.  A  Eq.  59. 

8.  Waite  v.  Windham,  &c..  Mining  9.  Bank  v.  Dandridge,  12  Wheat. 
Co.,  36  Vt.  18;  Frost  v.  Frosthurg  113:  Ridgway  v.  Farmers'  Bank,  12 
Coal  Co.,  24  How.  278 ;  Bank  V.  Dand-  S.   &   R.    256;    Morawetz,   §   382.     A 

338 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    224 

called,  constituting  a  sort  of  executive  committee,  though  with 
more  than  purely  executive  functions,  represents  the  corporation, 
and  in  general  may  act  as  such,  and,  unless  specially  restricted, 
exercise  all  the  corporate  powers.^  It  would  be  manifestly  incon- 
venient for  a  large  body  of  members  to  meet  and  transact  the 
multifarious  details  of  corporate  business;  hence,  the  custom,  in 
the  present  day  universal,  of  choosing  a  special  board  or  body  of 
directors,  as  the  representatives,  agents,  or  managers  of  the  cor- 
poration at  large.  There  was  formerly  great  stress  laid  upon  the 
use  of  the  corporate  seal,  as  indispensable  to  the  validity  of  the 
business  contracts  of  a  corporation ;  but  the  modern  rule  is,  that 
the  acts  of  the  board  of  directors  are  as  binding  upon  the  corpo- 
ration when  evidenced  by  a  legal  vote;  and,  in  the  absence  of  a 
charter,  statute,  or  by-laws  expressly  providing  otherwise,  a  ma- 
jority of  the  directors  of  a  joint-stock  corporation,  organized  for 
transacting  some  kind  of  business,  constitute  a  quorum ;  and  a 
majority  of  the  (piorum  have  authority  to  decide  any  question 
within  the  scope  of  the  coi-porate  powers.^ 

The  board  of  directors  being,  in  effect,  but  agents  of  the  mem- 
bers at  large;  and  every  corporation  having  the  implied  right  to 
choose  its  own  general  and  special  agents;  the  directors  can  only 

majority   of   stockholdors   are   incom-  respondingly      revoke      it.        Taylor, 

petent  to  divest  the  directors  of  the  §  219. 

fundamental      management     of     con-  1.  Burrill  v.  Nahant  Bank,  2  Met. 

cems;     and   manifestly    the   body   of  163;     Whitwell    v.    Warner,    20    Vt. 

shareholders    is   incapable    of    manag-  425;   Ang.  &  Ames,  §§   22'8-231,  276- 

ing  the  corporate  business  cfTiciently.  283. 

Taylor,  §  180.  Tlie  "  constitution  "  2.  Cowp.  248 ;  Sargent  v.  Webster, 
or  fundamental  charter  is  not  to  be  13  Met.  497;  Fleckner  v.  U.  S.  Bank, 
altered  except  as  that  instrument  8  Wheat.  357;  Co.  Lit.  66  b;  Rajidall 
provides.  v.  Van  Vechten,  13  Johns.  65 ;  Mora- 
Some  corporations  are  so  organized  wetz,  §§  167,  247.  The  directors  act 
that  the  fundamental  law  leaves  cor-  as  a  board  and  not  singly;  nor  should 
porate  power  discretionary  with  the  formalities  prescribed  by  the  charter 
shareholders  themselves  to  a  great  or  constitution  be  disregarded, 
extent.  In  such  case  the  shareholders  whether  as  to  calling  meetings  or  in 
may  by  resolution  or  by-law  delegate  other  respects.  Morawetz,  §  247,  and 
authority  to  their  directors  and  cor-  cases  cited. 

339 


§  224         THE  LAW  OF  PERSONAL  PEOPEKTY.       [pART  II. 

act  for  it  and  bipd  it  within  such  limits  and  in  such  modes  as  the 
charter,  statute,  by-laws,  or  some  acts  of  the  members  authorize.^ 
jN^o  general  rule  can  be  laid  down  in  this  respect,  for  their  powers 
will  ditfer  with  the  rules  and  usage  of  the  business ;  and  we  must 
refer  to  the  laws  of  agency  to  determine  the  principles  on  which 
the  corporation  will  be  bound  by  their  acts.'*  In  chartered  bank- 
ing and  insurance  companies,  and  joint-stock  business  corporations 
generally,  the  exclusive  agency  is  generally  put  into  the  hands  of 
the  directors  by  the  incorporating  act;  so  that  while  the  stock- 
holders elect  their  board  of  managers,  the  managers  themselves 
derive  their  authority  from  the  charter,  and  are  agents,  not  of  the 
stockholders,  but  of  the  corporation;  in  which  case  they  exercise 
large  discretionary  powers,  and  the  body  at  large  cannot  control 
their  movements,  except  in  the  matter  of  election,  nor  compel 
them  to  do  contrary  to  their  own  judgment.^  And  the  usages  of 
well-established  corporations  may  guide  where  the  fundamental  law 
fails  of  guidance.^  The  directors  may  commit  authority  to  others 
among  themselves;  and  here,  as  in  the  State,  some  executive 
officer  is  requisite  for  ordinary  routine  business, —  such  as  a  presi- 
dent; while  other  officers  are  employed,  such  as  secretaries,  treas- 
urers, and  cashiers  of  banks ;  all  of  whom  are  usually  designated 
as  officers  with  powers  defined  in  the  act  of  incorporation  or  the 
by-laws;  while  their  selection  and  the  general  employment  of 
clerks,  messengers,  operatives,  attorneys,  and  others,  with  the 
length  of  service  and  rates  of  compensation,  are  all  matters  left 
to  a  great  extent  under  the  control  of  the  directors  themselves.'' 
A  board  of  directors,  authorized  to  conduct  the  aifairs  of  a  bank, 
may  empower  the  president,  or  the  president  and  cashier,  to  bor- 

3.  Salem  Bank  v.  Gloucester  Bank,  G.  See  Taylor,  §  195. 

17  Mass.   29;   Ang.  &  Ames,   §   231;  7.  Union  Bank  v.  Ridgely,  1  Har. 

Bargate  v.  Shortridge,  5  H.  L.  Cas.  &  G.  324;   Dedliam  Bank  v.  Chicker- 

297;  Morawetz,  §§  238,  242,  248.  ing,  3  Pick.  335;  Ang.  &  Ames,  §285; 

4.  P>.  Waite  v.  Windham,  &.C.,  Mining  Co., 

5.  Bank   v.   Dandridge,    12   Wheat.  37  Vt.  608;  Morawetz,  §  248;  Taylor, 
113;   Royalton  v.  Koyalton,  Ac,  Co.,  §§  233-246. 

14    Vt.    311:    CommonAvealth    v.    St. 
Mary's  Church,  6  S.  &  R.  508. 

340 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    225 

row  monej,  indorse  its  notes,  or  obtain  a  discount  for  the  use  of 
the  bank.^ 

§  225.     The  Same  Subject. 

But  the  authority  to  borrow  money  requires  to  be  carefully 
guarded ;  and  where  a  corporation  is  organized  for  manufacturing 
and  other  more  general  purposes,  the  directors  are  not  presumed 
to  have  financial  powers  to  del^ate  or  exercise  so  extensive.^  And 
under  all  circumstances  the  purposes  of  the  incorporation  must  be 
regarded;  nor  are  boards  of  directors  empowered  to  go  beyond 
their  charter.^  They  cannot  alienate,  pledge,  or  mortgage  as  indi- 
viduals property  essential  for  the  corporate  purposes,  misappro- 
priate moneys,  assign  over  the  corporation  effects,  speculate,  make 
donations  to  themselves  or  their  friends,  or  in  any  way  deal  with 
the  funds  entrusted  to  their  keeping  other  than  as  honest  and  pru- 
dent men  who  feel  bound  to  follow  the  terms  of  their  authority 
and  have  no  adverse  or  sinister  ends  to  subserve.^  In  England 
the  rule  in  this  and  other  respects  is  a  strict  one;  and  even  com- 
pensation for  their  services  has  been  refused,  unless  rendered  un- 
der some  express  contract  or  a  vote  of  the  company;  though  the 
American  rule  in  this  respect  is  more  liberal.  The  officers  and 
directors  of  a  corporation  are  often  regarded  as  trustees  for  the 
stockholders,  rather  than  agents ;  and  in  securing  to  themselves 
an  advantage  not  common  to  all,  they  certainly  commit  a  plain 
breach  of  official  duty.''     Directors  cannot  as  a  rule  wind  up  the 

8.  Fleclcner  v.  U.  S.  Bank,  8  Wheat.  Beav.  495;  Butts  v.  Wood,  37  N.  Y. 
338;  Merrick  v.  Bank  of  Metropolis,  317;  Abb.  Dig.  Corp.  280.  284;  But- 
8  Gill,  59;  Olcott  v.  Tioga  R.,  27  lor  v.  Cornwall  Tron  Co.,  22  Conn. 
X.  Y.  546.  335;  Koehler  v.  Black  River,  &c.,  Co., 

9.  See  Burmester  v.  Norris,  6  Ex.  2  Black,  715;  Iloyle  v.  Plattsbnrgh 
'796.  R.,  54  K  Y.  314;    Morawetz,   §§   243- 

1.  Rollins  V.  Clay,  33   Maine,   132;       245. 

Gibson  v.  Goldthwaite,  7  Ala.  281;  3.  lb.  Directors  ought  not  to  rep- 
Redmond  V.  Dickerson,  1  Stockt.  507;  resent  the  company  where  they  have 
Morawetz,  §  242;  Pickering  v.  Rte-  conflicting  private  interests  to  siib- 
phenson,  L.  R.  14  Eq.  322;  Taylor,  serve.  Morawetz,  §  245;  Hoyle  v.  P. 
§  19^.  &  M.  R.  R.  Co.,  54  N.  Y.  314:  Penn- 

2.  York  Railway  Co.  v.  Hudson,  16  sylvania    R.'s    Appeal,    80    Pcnn.    St. 

341 


§  226 


TUB    LAW    OF    PERSONAL    riiOPERTY. 


[PAKT  II. 


concern,  nor  dispose  of  the  assets  as  tantamount  to  such  procedure.'* 
Nor  does  their  authority  to  manage  the  stock,  property,  and  affairs 
of  the  corporation,  give  them  authority  to  make  important  changes 
in  the  scheme  and  nature  of  the  corporate  enterprise,  or  to  apply 
to  the  legislature  for  enlarging  the  corporate  powers.^  Nor  to 
exclude  members  from  a  reasonable  right  to  inspect  their  books ; 
since  they  would  thus  be  unduly  shielded  from  responsibility  for 
their  official  conduct.^  And  yet  some  of  these  powers  might  have 
been  conferred  expressly  upon  the  board  of  directors,  by  charter 
or  otherwise,  and  in  consequence  would  be  rightfully  exercised. 
By  inference  from  a  charter  for  business  purposes,  directors  have 
the  honest  discretion  of  declaring  dividends  or  not.^ 

§  226.     The  Same  Subject. 

Persons  dealing  with  a  corporation  must  take  notice  of  what- 
ever is  contained  in  the  law  under  which  it  was  organized ;  for  a 


265;  Warden  v.  Railroad,  103  U.  S. 
651.  A  director  ought  not  to  pur- 
chase assets  of  the  corporation.  Mc- 
Cowell  V.  Arkansas  Co.,  38  Ark.  17. 
As  to  a  director's  personal  liability 
for  wrongfully  appropriating  the  cor- 
porate funds,  see  In  re  Oak  Pits  Ck)l- 
liery  Co.,  21  Oh.  D.  322.  It  is  a 
breach  of  trust  for  directors  to  sell 
their  own  shares  to  the  corporation. 
Shattuck  V.  Oakland  Co.,  58  Cal.  550. 
4.  Ang.  &  Ames,  §  280;  Morawetz, 
§  240;  Rollins  v.  Clay,  33  Me.  132; 
Bank  Com'rs  v.  Bank  of  Brest,  1 
Harring.  Oh.  106.  But  directors,  by 
virtue  of  an  authority  to  pay  debts, 
may  convey  assets  in  trust  for  the 
benefit  of  creditors,  as  some  cases 
hold.  52  Ind.  473;  13  Met.  497; 
Morawetz,  §  240.  And  where  the 
chiarter  or  good  usage  justifies  such 
action,  directors  may  borrow  money 
for  the  corporation,  and  even  secure 
the  indebtedness  by  a  pledge  of  the 
corporate    personal    property.      Salt- 


marsh  v.  Spaulding,  147  Mass.  224, 
17  N.  E.  316;  Taylor,  §  225.  But 
directors  have  no  inherent  power  to 
increase  or  decrease  the  capital  stock. 
Railway  Co.  v.  AUerton,  18  Wall.  233. 
Nor  to  transfer  property  essential  to 
continuing  the  corporate  business'. 
Burke  v.  Smith,  16  Wall.  390.  See 
Taylor,  §§  227-230. 

5.  Marlborough  Co.  v.  Smith,  2 
Conn.  579;  Morawetz,  §  239;  Taylor, 
§  221;  Railway  Co.  v.  Allerton,  18 
Wall.  233. 

6.  People  V.  Throop,  12  Wend.  183. 
Right  of  stockholder  to  examine  cor- 
porate books.  Vol.  32,  N.  Y.  Rpte., 
Bender  ed.,  note,  p.  898;  Vol.  34,  N. 
Y.  Rpts.,  Bender  ed.,  note,  p.  949. 

7.  Morawetz,  §  348 ;  Mills  v.  Buenos 
Ayres  Ry.,  L.  R.  5  Oh.  App.  621; 
Smith  v.  Prattville  Man.  Co.,  20  Ala. 
503;  Pratt  v.  Pratt,  33  Conn.  446. 
See  post.  §  510.  What  is  surplus  and 
reserve  fund.  Vol.  32,  N.  Y.  Rpts., 
Bender  ed..  note.  p.  1028. 


342 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    227 

corporation  cannot  vary  from  the  law  of  its  creation.  Hence,  if 
the  charter  or  act  of  incorporation  prescribes  the  mode  in  which 
the  officers  must  act,  that  mode  must  be  followed  in  order  to  ren- 
der their  acts  obligatory  on  the  corporation.^  But  where  formali- 
ties have  long  been  disregarded  by  the  directors,  and  yet  they 
have  acted  within  the  scope  of  their  general  authority,  the  corpo- 
ration will  not  be  permitted  in  law  or  equity  to  set  up  the  negli- 
gence of  its  own  agents  to  the  prejudice  of  third  parties.^  And 
while  directors  act  as  the  majority  of  a  quorum,  or  by  such  other 
requisite  number  as  the  charter  may  prescribe,  the  record  of  their 
acts  is  not  in  general  necessary  to  the  validity  of  the  acts,  since 
requirements  concerning  the  corporation  records  are  usually  di- 
rectory and  nothing  more.^ 

§  227.     The  Same  Subject. 

As  to  the  liability  of  a  corporation  officer  to  the  corporation  for 
all  damages  occasioned  by  a  violation  of  his  duties  and  obligations, 
the  principle  is  much  the  same  as  in  an  ordinary  agency.  For  all 
damages  occasioned  by  the  violation  of  his  official  duties,  the  offi- 
cer of  a  corporation  is  responsible  to  his  principal ;  and  this  prin- 
cipal is  the  corporation,  and  not  individual  stockliolders.  Hence, 
proceedings  brought  to  enforce  the  responsibilities  of  directors 
must  usually  be  conducted  in  the  name  of  the  corporation.^  But 
equity,  in  furtherance  of  natural  justice,  and  for  the  reason  that 
there  can  be  no  wrong  without  a  remedy,  has  permitted  stock- 
holders, as  the  real  parties  in  interest,  to  file  a  bill  in  their  own 
names  where  there  is  such  collusion  and  fraud  in  the  control  of 

8    Ang.    &    Ames,    §    291 ;    Taylor,  The  formalities  of  a  meeting  of  the 

§  201;  Williains  v.  Chester  R.  R.  Co.,  directors  s>eem,  however,  to  be  rather 

5    E.    L.    &    Eq.    503.      See    Head    v.  strictly    insisted    upon     in     England. 

Providence  Ins.  Co.,  2  Cr.  16G.  See  D'Arcy  v.  Tamar  R.  R.  Co.,  L.  R. 

9.  Bargate   v.   Shortridge,    5   H.    L.  2   Ex.   158;    Waite  v.   Windham,   &c., 

Cas.  297 ;  Zabrislcie  v.  Cleveland  R.  R.  Mining  Co.,  37  Vt.  608. 
Co.,  23  How.  381,  398;  Ang.  &  Ames,  2.  Ang.  &  Ames,  §   312;   Brown  v. 

§  291 ;  Morawetz,  §  246 ;  Pennsylvania  Vandyke,    4    Halst.    795;    Abbott    v. 

R.'s  Appeal,  80  Penn.  St.  265.  Merriam,  8  Cush.  588. 

1.  Hutchins  v.  Byrnes,  9^  Gray,  370. 

343 


§  227         THE  LAW  OF  PERSONAL  PEOPERTY.       [PART  II. 

the  corporation  that  prosecution  is  obstructed.'^  Of  course,  the 
directors  of  a  corporation  are  not  to  be  presumed  infallible;  and 
for  losses  suffered  through  mere  error  of  judgment  on  their  part, — 
there  being  neither  culpable  negligence  nor  fraud  apparent, — 
they  are  not  made  liable,  more  than  the  agents  of  natural  persons 
would  bo  under  similar  circumstances ;  and  this  principle  is  fre- 
quently applied  where  subordinates  are  prudently  selected  by 
them  who  prove  unworthy  of  trust  and  bring  mischief  to  the 
corporation.'*  Directors,  on  the  other  hand,  who  sanction  a  breach 
of  tinist  and  aid  in  embezzlement  are  certainly  responsible  for 
their  own  misconduct.^  And  a  director  renders  himself  liable,  as 
it  is  held,  who  has  knowingly  assented  to  a  dividend  amounting 
to  more  than  the  profits,  or  to  making  false  reports  to  the  share- 
holders; for  this  is  a  violation  of  duty  both  towards  the  stock- 
holders and  the  public.^  In  fine,  the  powers,  rights,  duties,  and 
obligations  of  directors  are,  when  uncontrolled  by  the  act  of  incor- 
poration or  the  by-laws  of  the  corporation,  to  be  determined  on 
the  principles  of  the  law  of  agency;  and  in  adjusting  controver- 
sies of  this  sort,  as  between  themselves  and  the  coi-poration  at 
large,  we  must  examine  in  every  case  the  act  of  incorporation  and 
the  by-laws;  since  the  general  power  of  making  by-laws  may  re- 
main in  the  stockholders  at  large,  who  are  then  at  liberty  to  cir- 
cumscribe the  power  of  the  directors  as  they  may  deem  fit.'' 

3.  KoeMer  v.  Black  River  Co.,  2  The  implied  powers  of  the  president 
Black.  715;  Turquand  v.  IVIarshall,  of  a  corporation  depend  upon  the 
L.  R.  6  Eq.  112.  nature  of  the  company's  business  and 

4.  See  Scott  v.  Depeyster,  1  Edw.  the  measure  of  authority  delegated 
Ch.  513 ;  Williams  v.  Gregg,  2  Strobh.  to  him  by  the  board  of  directors. 
Eq.  316;  Spering's  Appeal,  71  Penn.  There  are  some  recent  cases  which, 
St.  11;  Dunn  v.  Keyle,  14  Bush,  134.  admitting    the    difficulty    of    defining 

5.  Attorney-General  v.  Leicester,  7  precisely  the  nature  and  extent  of 
Beav.  176.  these  powers,  deny  to  the   president 

6.  Hill  V.  Frazier,  22  Penn.  St.  320 ;  the  general  right  to  dispose  of  cor- 
Flitcroft's  Case,  21  Ch.  D.  322.  porate  property  at  his   personal   dis- 

7.  See  Ang.  &  Ames,  §§  299,  315 ;  cretion,  or  to  be  othenvise  regarded, 
Pratt  V.  Hudson  River  R.  R.  Co.,  21  save  for  a  delegated  authority  as  ex- 
N.  Y.  305;  Hotehin  v.  Kent,  8  Mich.  ecutive,  as  more  than  the  presiding 
526.  director  at  the  board.     See  Titus'  v. 

344 


CHAP.  XI.] 


MEMBERS    OF    COEPORATIONS. 


§  228 


§  228.     By-laws  of  a  Private  Corporation. 

From  what  has  already  been  said,  the  reader  will  gather  that 
the  by-laws  of  a  corporation  are  of  considerable  influence  in  shap- 
ing the  distribution  of  corporate  powers  and  determining  the 
methods  of  its  organization  and  management.  The  power  of  mak- 
ing by-laws,  or,  as  they  are  called,  private  statutes,  for  its  gov- 
ernment and  support,  is  an  incident  to  every  corporation,  included 
in  the  very  act  of  incorporation.  "  For,"  says  Blackstone,  "  as 
natural  reason  is  given  to  the  natural  body  for  the  governing  it, 
so  by-laws  or  statutes  are  a  sort  of  political  reason  to  govern  the 
body  politic."  ^  Yet  this  power  is  not  generally  left  to  implica- 
tion, but  will  be  almost  always  found  expressly  conferred  by  the 
act  of  incorporation ;  that  being  a  sort  of  ''  private  constitution," 
to  which  the  by-laws  of  the  corporation,  like  the  legislative  acts  of 


Cairo  R.  R.,  37  K  J.  L.  98,  102; 
Chicago  R.  v.  James,  22  Wis.  198; 
Walworth  Bank  v.  Farmers'  Trust 
Co.,  14  Wis.  325.  Yet  the  peculiar 
business,  charter,  usage,  &c.,  may  re- 
lax such  a  rule.  See  Smith  v.  Smith, 
62  111.  493;  Morawetz,  §§  251,  252. 

The  peculiar  functions  and  exten- 
sive authority  of  the  cashier  or  ex- 
ecutive officer  of  a  bank  are  discussed 
at  length  in  Wild  v.  Passamaquoddy 
Bank,  3  Mason,  506,  per  Mr.  Justice 
Story ;  Merchants'  Bank  v.  State 
Bank,  10  Wall.  604,  and  other  cases 
cited;  Morawetz,  §§  253,  254. 

See  further  In  re  Wm.  S.  Butler, 
207  Fed.  705,  125  C.  C.  A.  223; 
Drneklieb  v.  Harris,  209^  N.  Y.  211, 
102  K  E.  579;  Penn.  Ry.  Co.  v. 
Minis,  120  Md.  461,  496,  87  Atl.  1062; 
Townsley  v.  Niagara  Ins.  Co.,  160 
App.  Div.  177,  145  N.  Y.  S.  20T)  (em- 
ployment of  manager)  ;  Metropolitan 
Ry.  Co.  V.  Chicago,  261  III.  624.  104 
N.  E.  165;  Gk'orgia  Granite  R.  R.  Co. 
V.  Miller,  144  Ga.  665,  87  S.  E.  897 
(scope  of  corporate  powers)  ;   Mutter 


of  Ringler  &  Co.,  204  N.  Y.  30,  97 
N.  E.  593  (trustees  improperly 
elected)  ;  Jacobus  v.  Mantello,  211 
N.  Y.  154,  105  N.  E.  210. 

Corporate  officers  are  personally  lia- 
ble for  their  torts  or  frauds  regard- 
less of  corporate  liability.  Jacobs  v. 
Williams,  85  Conn.  215,  82  Atl.  202; 
Kosher  v.  Stuart,  64  Ore.  123,  121 
Pac.  901.  And  see  Moore  v.  Atcliison, 
&c.,  Ry.  Co.,  26  Okla.  682,  110  Pac. 
1059";  Washington  Bank  v.  Central 
Bank,  168  S.  W.  456  (Tex.  Civ.  App. 
1914): 

A  corporate  officer  usually  holds 
over  until  his  successor  is  duly 
elected.  Quitman  Oil  Co.  v.  Peacock, 
14  Ga.  App.  550,  81  S.  E.  90S. 

8.  1  Ewell's  Bl.  Com.  476;  Abb. 
Dig.  Corp.  "  By-Laws ;  "  Ang.  & 
Ames,  §§  110,  325;  1  Kyd,  69;  Hob. 
211;  Taylor,  §  582.  Judicial  knowl- 
edge of  acts  of  corporations.  Cham- 
berlayne  Evid..  §  625.  Judicial  knowl- 
edge as  to  by-laws.  Chamberlayne 
Evid.,  §§  611.  613,  625. 


345 


§  228         THE  LAW  OF  PERSONAL  PEOPERTY.       [pART  II. 

a  State,  must  always  conform.  Of  course,  the  by-law  of  a  corpo- 
ration in  this  country  must  not  contravene  the  State  or  United 
States  constitution,  nor,  indeed,  should  the  charter;  and,  besides 
being  subject  to  these  and  to  the  charter  creating  it,  the  by-law  of  a 
corporation  must  be  in  itself  reasonable;  whence,  by-laws  in  re- 
straint of  trade  or  repugnant  to  sound  morals  have  been  pro- 
nounced void ;  while  a  by-law  which  might  under  one  construction 
be  unreasonable  has  received  another  construction  which  would 
make  it  reasonable.^  A  by-law  may  be  good  in  part  and  bad  in 
part;  or  the  whole  may  be  vitiated  by  the  bad  part,  according  to 
circumstances.^  The  power  of  making  by-laws  is  to  be  exercised 
by  the  members  at  large  according  to  common-law  methods,  or 
rather  after  the  same  manner  in  which  the  charter  directs  them 
to  transact  their  general  business ;  and  here  again  the  act  of  incor- 
poration, whether  special  or  general,  may  throw  light  on  the  sub- 
ject. The  will  of  the  majority  determines  presumably  in  such 
cases.^ 

The  power  to  make  by-laws  presupposes  the  power  to  enforce 
them  by  appropriate  penalties,  or  to  repeal  them  altogether;  ^  but 
their  repeal  cannot  affect  vested  rights  under  a  fundamental  law, 
any  more  than  their  passage.'*  And  by-laws,  when  made,  are 
binding  upon  all  the  members  of  the  corporation,  and  upon  others 
acquainted  with  their  mode  of  business  conformably  to  the  by-laws. 
By-laws  regulating  the  directors  and  other  agents  of  the  company 
as  to   the   business   management  should   be  observed   by   them.^ 

9.  lb.;     Hob.     210;     Brightly    Fed.  municipal     corporations.       Morawetz, 

Dig.  188,  189;  Kennebec  R.  R.  Co.  v.  §  366. 

Kendall,      31      Me.      470;      Common-  3.  Rex  v.   Westwood,   2   Dow.   &  C. 

wealtli    V.    Worcester,    3    Pick.    462;  21 ;  Ang.  &  Ames,  §§  327-329 ;  Taylor, 

Queen  v.  Saddlers'  Company,  10  H.  L.  §   584 ;   Abb.  Dig.  Corp.  "  By-Laws ;  " 

Cas.  404 ;  Vedder  v.  Fellows,  20  N.  Y.  Union  Bank  v.  Ridgely,  1  Harr.  &  G. 

126.  324. 

1.  See  Abb.  Dig.,  supra;  Rogers  v.  4.  See  Kent  v.  Quicksilver  Co.,  78 
Jones,  1  Wend.  237.  N.  Y.  159. 

2.  Morawetz,  §  366.  The  term  by-  5.  Stevens  v.  Davi^n.  18  Gratt. 
law  was  orisrinally  applied  to  the  laws  819.     See  Morawetz,  §§  366-370. 

and  ordinances  enacted  by  public  or 

346 


CHAP.  tXI.]  MEMBERS    OF    COEPORA.TIONS.  §    229 

But  those  who  deal  with  a  corporation  in  ignorance  of  a  certain 
by-law  cannot  be  affected  in  their  rights  merely  because  the  by-law 
exists;  for  members  and  officers  are  presumed  to  know  all  the 
by-laws,  while  third  persons  must  have  had  the  knowledge  of 
any  by-law  brought  home  to  them  in  such  a  manner  that  it  entered 
into  the  mutual  agreement.^ 

§  229.     The  Corporate  Seal. 

Much  signficance  was  formerly  attached  to  the  corporate  seal ; 
probably  because  such  of  our  ancestors  as  could  not  write  or  read 
writing  found  the  use  of  a  seal  almost  indispensable  to  authenti- 
cate their  solemn  acts.  But  it  must  be  admitted  that  there  is  a 
peculiar  propriety  in  giving  to  every  corporation,  as  well  as  to 
every  government,  an  official  seal,  to  be  used  in  formal  instruments 
as  a  means  of  confirming  the  authority  and  assuring  the  deliberate 
purpose  of  the  officers  who  execute  on  behalf  of  the  corporation 
at  large.  Blackstone  carries  this  reason  very  far  when  he  asserts 
that  a  corporation  acts  and  speaks  only  by  its  common  seal,  be- 
cause, being  an  invisible  body,  its  intentions  cannot  be  manifested 
by  any  personal  act  or  oral  discourse;  for,  in  truth,  government 
speaks  by  its  legislative  acts,  and  every  corporation  public  or  pri- 
vate manifests  its  intention  clearly  enough  by  its  ordinances  or 
by-laws.^ 

At  the  present  day  private  corporations  make  contracts  and 
manifest  their  assent  either  by  the  common  seal,  or  in  other  words 
by  deed ;  or  by  the  vote  of  the  corporation ;  or  by  the  contracts  or 
agreements  of  their  authorized  agents ;  and  so,  too,  the  inference 
of  a  promise  by  implication  may  be  drawn  from  certain  corporate 

8.  lb.;  Palmyra  v.  Morton,  25  Mo.  upon     general      contract     principles. 

593;    2    Kyd,    156;    Royal    Bank    of  Flint  v.  Pierce.  93  Mass.  68. 

India's  Case,  L.  R.  4  Ch.  252;  Mora-  As  to  the  bindinjr  cfTect  of  corporate 

wotz,    §§    332,    370.      Records   of   cor-  by-laws,   see  McCall later  v.   Rhannon- 

poration    as    evidence,    see    Chamber-  dale  Co.,  47  Ind.  App.  517,  D4  N.  E. 

layne  Evid.,  §§  2760,  3491.    The  rights  910;     Commonwealth    v.    Vandosrrift, 

of  a  third  person  under  a  by-law  to  232  Pa.  53,  81  Atl.  153. 

establish  a  legal  claim  must  depend  7.  1  Ewell's  Bl.  C/om.  475;  Ang.  4 

Ames,  §  216 ;  Taylor,  §§  12,  248. 

347 


§  230         THE  LAW  OF  PEESONAL  PROPERTY.       [pART  II. 

acts.^  With  the  progres  of  invention,  and  the  enormoiis  growth 
of  business  details,  we  find  ourselves,  in  this  day,  gladly  escaping 
many  of  the  clumsy  formalities  which  were  in  favor  at  a  time 
when  men  found  ample  leisure  for  solemnizing  every  important 
legal  transaction ;  and  the  impression  of  a  corporate  seal  upon  the 
substance  of  the  paper  is  now  regarded  commonly  as  quite  effectual 
without  the  use  of  the  once  significant  wax ;  though,  as  the  courts 
of  some  States  rule,  the  seal  is  not  sufficiently  affixed  if  printed 
on  a  blank  certificate  at  the  time  when  the  rest  of  the  paper  was 
printed,  and  afterwards  signed  by  the  corporate  officer.^  The 
effect  of  sealing  is  the  same  as  when  an  individual  signs  and  seals ; 
it  makes  the  contract  a  specialty  or  sealed  instrument.^  We 
should  be  careful  to  distinguish  the  individual  from  the  corporate 
signature  and  execution ;  and  it  must  always  be  borne  in  mind  that 
the  corporate  seal  affixed  to  a  contract  or  conveyance  does  not  ren- 
der the  instrument  valid  unless  affixed  by  an  officer  or  agent  duly 
authorized  either  generally  or  specially  for  that  purpose.^ 

§  230,     Power  of  Private  Corporations  to  Hold  and  Dispose  of 
Personal  Property. 

To  investigate  the  powers  and  capacities  of  corporations  at 
length  would  be  foreign  to  the  purpose  of  the  present  treatise ; 
and  the  reader  should  refer  to  more  exhaustive  works  for  informa- 
tion on  this  important  topic  of  law.  Of  corporation  stock  and 
the  rights  of  stockholders,  we  shall  speak  in  a  future  chapter. 

8.  Ang.  &  Ames,  §  112 ;  Morawetz,  signing  with  the  addition  of  his  offi- 
§  167.  cial   name;    but   less  formal   methods 

9.  See  Hendee  v.  Pinkerton,  14  of  execution  are  sometimes  sustained. 
Allen,  381;  Haven  v.  Grand  Junction  Ang.  &  Ames,  §  227;  Hutchins  v. 
R.  R.  Co.,  12  Allen,  337;  Ang.  &  Byrnes,  9  Gray,  367.  See  Eureka 
Ames,  §  218  et  seq.;  Abb.  Dig.  Corp.  Company  v.  Bailey  Company,  11  Wall. 
"  Seals."  488. 

1.  lb.;   Clark  v.   Woollen,   &c.,   Co.,  2.  Damon  v.   Granby,   2  Pick.   345; 

15  Wend.  256.     The  usual  style  is  to  Bank   of   Ireland   v.    Evans,    5    H.   L. 

afiSx,  "  In  witness  whereof,  the  A.  B.  Cas.  389 ;  Koehler  v.  Black  River  Co., 

corporation,    by   J.    S.,    their    [treas-  2  Black,  715;  D'Arcy  v.  Tamar  R.  R. 

urer],  duly  authorized  for  this  pur-  Co.,    L.    R.    2    Ex.    161;    Morawetz. 

pose,    have    hereunto,"     &c.;     J.     S.  §  168. 

348 


CHAP.  XI.]  MEMBEKS    OF    CORPORATIONS.  §    231 

But  having  sufficiently  set  forth  those  legal  principles  which  de- 
termine the  organization  of  private  corporations,  we  now  come 
to  a  most  pertinent  branch  of  the  present  subject:  namely,  the 
power  of  such  corporations  to  take,  hold,  transmit  in  succession, 
and  alienate  personal  property. 

§  231.  The  Same  Subject;  Right  to  Purchase  and  Hold  Personal 
Property. 

The  rule  is  generally  stated  quite  broadly,  and  to  this  effect, 
that  every  corporation  has  at  common  law  a  right,  incidental  to  its 
creation,  to  take,  hold,  and  in  succession  transmit  property,  both 
real  and  personal,  to  an  unlimited  extent  or  amount.^  As  to  per- 
sonal property  in  particular,  this  unlimited  right  is  asserted  in 
the  absence  of  charter  restrictions.'*  But  while  a  business  corpo- 
ration ought  to  be  able  to  hold  and  dispose  of  property  to  an  extent 
sufficient  to  inspire  confidence  in  its  resources  and  enable  it  to 
pursue  legitimate  ends,  a  limit  may  not  unreasonably  be  imposed ; 
and  in  some  cases  it  is  maintained  that  even  the  common  law  gave 
corporations  the  right  to  purchase  and  hold  property  only  so 
far  as  might  enable  them  to  fulfil  the  objects  of  their  creation.^ 
Be  this  as  it  may,  we  find  that  is  is  quite  common  for  an  act  of 
incorporation  or  general  statute  not  only  to  require  that  the  whole 
capital  stock,  or  a  certain  amount  of  it,  shall  be  paid  in  or  sub- 
scribed before  the  corporation  can  commence  operations,  but  also 
to  limit  the  right  of  holding  property  to  whatever  amount  may  he 
needful  or  necessary  to  the  object  of  its  creation.  And  in  such 
cases  the  decision  of  the  court  will  usually  turn  upon  mere 
construction. 

To  prevent  monopolies,  to  place  a  check  upon  arbitrary  power, 

3.  Abb.    Dig.    Corp.    584 ;    2    Kent  shares.     Book  12,  N.  Y.  Rpts.,  Bender 

Com.   281;    1   Bl.   Com.   475;    Ang.   &  ed.,  note,  p.  233. 

Ame«,  §  145,  and  cases  cited;  Taylor,  4.  See  §  233. 

§§    128,    129 ;     McCartee    v.    Orplian  5.  Soo  Page  v.  Heineberg,  40  Vt.  81 ; 

Asylum   Society,   9  Cow.    437;    Over-  Blanchard's  Factory  v.  Warner,  1  Bl. 

seers  of  Poor  v.  Sears,  22  Pick.  122.  C.  C.  258;  State  v.  Commissioners,  3 

Right  to  pay  for  goods  and  labor  with  Zabr.  510. 

349 


§    231  THE    LAW    OF    PERSONAL    PROPERTY.  [PART  II. 

and  to  guard  the  public  against  those  evils  which  attend  the  wield- 
ing of  immense  wealth  in  the  hands  of  a  few,  our  State  legislatures 
often  indicate  plainly,  in  the  charters  they  grant,  how  much  prop- 
erty the  corporation  may  hold  at  the  outside  limit,  in  what  it  shall 
consist,  the  purposes  for  which  it  shall  be  purchased  and  held,  and 
the  mode  in  which  it  shall  be  applied.^  But  the  amount  of  capital 
stock  to  which  a  corporation  is  by  its  charter  limited  is  not  per  se 
a  limitation  upon  the  amount  of  property  which  it  may  own,  or 
upon  its  outstanding  liabilities;  for  the  capital  stock  is  rather  to 
be  regarded  as  that  sum,  divided  into  shares,  which  represents 
the  aggregate  interests  of  the  various  stockholders,  and  upon  which 
assessments  are  to  be  computed  and  dividends  paid.^  Nor  are 
the  individual  members  of  a  corporation  legal  owners  of  the  cor- 
porate property,  either  jointly  or  as  partners;  though  in  some 
joint-stock  companies  of  a  peculiar  character  a  sort  of  partnership 
is  found  to  exist  among  the  associated  members.^  In  what  are, 
strictly  speaking,  corporations,  the  corporation,  as  such,  is  the  sole 
owner,  notwithstanding  the  individual  stockholders  are  indirectly 
to  profit  by  the  increase  or  lose  by  the  destruction  of  the  property, 
or  that  one  person  holds  most  or  all  of  the  stock.^ 

6.  Callaway  Co.  v.  Clark,  32  Mo.  sey.  In  each  case  a  corporation  was 
305;  Ang.  &  Ames,  §  146;  Minor  v.  authorized  in  effect  by  its  charter 
Mechanics'  Bank,   1  Pet.  46.  to   hold    such    property   as   might   be 

7.  Ang.  &  Ames,  §  151  et  seq.;  needful  or  necessary  to  the  object 
Harpending  v.  Dutch  Church,  16  Pet.  of  its  creation.  The  Missouri  cor- 
492;  Barry  v.  Merchants'  Exchange  poration  was  created  for  the  purpose 
Co.,  1  Sandf.  Ch.  280.  of  mining  and  transporting  coal;  and 

8.  See  §  201.  tlie  court  decided  that  it  might  prop- 

9.  Regina  v.  Amaud,  9  Q.  B.  806;  erly  purchase  and  own  a  Steam-boat 
Abb.  Dig.  584;  Brock  v.  Poor,  216  for  transporting  and  delivering  the 
N.  Y.  387,  111  N.  E.  229.  To  show  coal.  Callaway  Co.  v.  Clark.  32  Mo. 
that  the  limitations  imposed  upon  305.  But  see  Pearce  v.  Madison,  &c., 
corporations,  in  respect  of  the  power  R.  R.  Co.,  21  How.  441.  The  New 
to  hold  property,  give  rise  to  nice  dis-  Jersey  corporation  was  a  railroad 
tinctions,  even  where  the  construction  and  transportation  company;  and  in 
of  words  used  in  the  charter  deter-  this  case  it  was  held  that  among  the 
mines  the  controversy,  let  us  take  two  necessary  appendages  were  suitable 
American  cases,  decided  the  one  in  depots,  car-houses,  water-tanks,  shops 
Missouri  and  the  other  in  New  Jer-  for     repairing     engines,     houses     for 

350 


CHAP.  XI.]  MEMBERS    OF    COEPOKATIONS.  §    232 

§  232.     The  Same  Subject. 

The  rights  of  corporations  are  not  equally  favored  in  all  parts 
of  this  country.  Sometimes  jealousy  of  their  encroaching  force 
seems  to  influence  the  decision  of  the  court  or  legislature.  On  the 
other  hand,  it  is  often,  especially  where  railways  are  concerned, 
confidence  that  a  new  and  undeveloped  region  will  *be  laid  open 
to  prosperous  trade,  or  deference  to  capital  allied  with  power. 
Prohibitions  in  an  act  of  incorporation  receive  frequent  consider- 
ation; and  it  is  said  that  there  is  a  broad  distinction  between  a 
prohibition  in  a  corporation  charter  to  purchase  or  take,  and  a 
prohibition  to  hold.'  Corporations  are  usually  allowed  to  pur- 
chase and  hold  bills  of  exchange  and  promissory  notes  within  the 
limits  already  indicated.^  As  to  the  power  of  a  corporation  to 
hold  its  own  stock  or  to  subscribe  for  stock  in  another  corporation 
independently  of  charter  provisions,  there  is  some  uncertainty. 
A  corporation's  right  to  purchase  its  own  stock  appears  to  be  in 
disfavor  in  England ;  ^  while  in  this  country  the  rule  is  rather 
that  there  is  no  illegality  in  doing  so,  though  the  exercise  of  such 
a  right  admits  of  some  salutary  qualifications.'*  For  one  corpora- 
switch  and  bridge  tenders,  and  coal  4.  Taylor,  §§  134,  135;  Dupee  v. 
or  wood  yards  for  the  use  of  the  Boston  Water  Power  Co.,  114  Mass. 
locomotives;  all  of  which,  then,  it  37;  Fremont  Carriage  Mfg.  Co.  v. 
might  erect,  maintain  and  own;  but  Thomsen,  65  Neb.  370,  91  N.  W.  376; 
as  what  was  necessary  did  not  ex-  Porter  v.  Plymouth  Gold  Mining  Co., 
tend  to  things  merely  convenient  or  29  Mont.  347,  74  Pac.  O'SS.  See  con- 
advantageous,  it  could  not  set  up  tra,  Maryland  Trust  Co.  v.  Nat.  Me- 
factories  for  making  its  own  rails,  chanics  Bank,  102  Md.  608,  63  Atl. 
engines,  and  cars,  nor  purchase  coal  70;  Coppin  v.  Greenlees,  etc.,  Co.,  38 
mines  to  supply  its  fuel.  State  v.  Ohio  St.  275;  Vail  v.  Hamilton,  85 
Commissioners,  3  Zabr.  510.  And  see  N.  Y.  453.  An  insolvent  corporation 
Railroad  v.  Berks  County,  6  Penn.  cannot  thus  purchase,  nor  is  the  prior 
St.  70;  Worcester  v.  Western  R.  R.  holder  to  1k»  thus  relieved  of  his 
Co.,  4  Met.  564.                                               statutory    liability    to   creditors.     Tb. 

1.  Leazure  v.  Hillegas,  7  S.  &  R.  Even  tiiose  jurisdictions  which  hold 
313;  Runyan  v.  Coster,  14  Pet.  122;  that  a  corporation  cannot  buy  its 
Blunt  V.  Walker,  11  Wis.  334.  own  stock  uphold  the  taking  of  stock 

2.  See  Abb.  Dig.   Corp.   586,  587.  in  payment  or  as  security  for  a  debt. 

3.  Trevor  v.  Whitworth,  L.  R.  12  Taylor  v.  Miami  Exporting  Co.,  6 
A.  C.  409.  Ohio,  176;   German  Savings  Bank  v. 

351 


§  233         THE  LAW  OF  PERSONAL  PKOPERTY.       [PART  U. 

tion  to  subscribe  in  the  stock  of  another  would  be  objectionable, 
and  —  unless  in  some  way  authorized  by  the  charter  —  would 
probably  be  treated  in  most  cases  as  void.^  And  yet  it  is  held  not 
objectionable  for  directors  to  take  stock  in  another  company  in 
payment  of  property  sold  and  as  the  means  of  selling  it,  if  taken 
with  a  view  to  selling  it  again.^  Savings  banks  are  often  author- 
ized by  statute  to  invest  in  the  stock  of  other  banks,  as  a  species 
of  prudent  investment.  The  great  danger  to  be  avoided  is  that 
of  permitting  a  corporation  to  push  wild  schemes  for  the  absorp- 
tion of  power, —  a  permission  which  is  constantly  craved  on  the 
part  of  an  enterprising  directory,  and  secured  whenever  one  com- 
pany may  purchase  a  wntrolling  influence  in  the  affairs  of  another. 

§  233.    Power  to  Hold  Real  Estate;  Statutes  of  Mortmain. 

As  to  the  right  of  a  corporation  to  hold  real  estate,  we  may 
observe  that,  in  order  to  restrain  it,  a  variety  of  statutes,  from 
the  days  of  Magna  Charta  and  King  Henry  III.  down  to  the 
reign  of  George  II.,  have  been  passed,  known  as  the  statutes  of 
mortmain,  and  originally  designed  to  loosen  the  "  dead  clutch  " 
of  the  ecclesiastical  corporations  upon  lands  and  tenements, 
though  afterwards  extended  in  principle  to  lay  corporations.  It 
is  noticeable  that  these  statutes  make  no  mention  of  personal  prop- 
erty.^ And,  although  originating  in  the  feudal  system,  the  policy 
of  this  mortmain  legislation  was  known  to  the  civil  law.^     A  cor- 

Wulfekuhler,    19    Kan.    60;    State    v.  6.  Hodges  v.    N.    E.    Screw   Co.,   3 

Oberlin  Building  &  Loan  Association,  R.    I.    9.      And   see   Howe   v.    Boston 

35  Ohio  St.  358.    See  27  Harvard  Law  Carpet  Co.,  16  Gray,  493. 

Eeview,  747.  7.  1  Swell's  Bl.  Com.  479;   Ang.  & 

5.  Mechanics'      Savings      Bank      v.  Ames,  §  148 ;  Baird  v.  Bank  of  Wash- 

Meriden   Agency   Co.,   24   Conn.    159:  ington,   11   S.   &  R.   411;   Vanseat  t. 

Morawetz,  §  197;  Clearwater  v.  Mere-  Roberts,  3  Md.  Ch.  119';  2  Kent  Cora, 

dith,    1    Wall.     40.       In    Branch    v.  283;     2    Redf.    Wills,    1st    ed.    783; 

Jesup,  106  U.  S.  468,  it  was  held  that  Morawetz,  §§  156-161;  Taylor,  §  128. 

the    purchase    by    one    railway    com-  8.  Browne's  Civil  Law,   145; 

pany   of   a   road    constructed    by   an-  &  Ames,  §  150. 
other  was  not  ultra  vires.    See  §  245, 
post. 

352 


CHAP.  XI.]  MEMBERS    OF    COKPORATIOXS.  §    233 

poration  cannot  take  an  estate  in  joint  tenancy,  either  jointly  with 
another  corporation  or  with  a  natural  person.^  And  while  the 
common-law  principle  may  be  considered  as  applicable  alike  to 
real  and  personal  property,  so  far  as  concerns  the  right  of  a  corpo- 
ration to  purchase  and  hold  it,  the  statutes  of  mortmain  long  since 
established,  where  such  statutes  prevailed,  an  essential  practical 
difference  on  behalf  of  things  personal.^  Devises  of  lands  to  cor- 
porations are  not  favored  by  our  law.^  And  yet,  there  are  many 
of  our  modem  corporations  whose  business  essentially  requires 
the  holding  of  real  estate,  and  public  policy  moulds  the  legislative 
grant  accordingly.^  So  are  some  modern  corporations  created 
expressly  for  the  purpose  of  dealing  in  lands.'' 

It  is  one  thing,  however,  to  purchase  directly,  and  another  to 
hold  property  by  reason  of  the  foreclosure  of  some  mortgage  or 
the  forfeiture  of  some  pledge  given  to  secure  a  bond  fide  debt. 
Corporations,  like  individuals,  necessarily  become  creditors  in 
the  course  of  business ;  and  common  prudence  dictates  that  a  debt 
due  be  sometimes  secured  by  mortgage  or  otherwise.  The  power 
to  take  mortgages  is  often  given  to  a  corporation  by  its  charter; 
and,  even  if  not,  it  is  usually  an  implied  power,  provided  the  debt 

9.  Telfair    v.    Howe,    3    Rich.    Eq.  Where    a    corporation    is    incompe- 

235.  tent   under   its   charter   to   take   real 

1.  The  statutes  of  mortmain,  though  estate,  a  conveyance  to  it  is  voidable 
in  force  in  Great  Britain,  appear  in  and  not  void,  and  only  direct  pro- 
many  of  the  United  States  to  have  ceedings  at  the  instiince  of  the  State 
no  force,  or  else  to  apply  merely  to  can  invalidate  it.  Fritts  v.  Palmer, 
ecclesiastical  corporations.     However,  132  U.  S.  282. 

legislative  provisions  are  to  be  found  2.  See    Morawetz,    §§    160.    161 ;    2 

in  various  States,  expressed  either  in  Bl.    Com.   372.     A.s   to   the   American 

special   cliarters  or  general   laws,   in-  doctrine  in  this  respect,  see  Downing 

spired    by    the    English    policy.      See  v.    Marshall,    23    N.    Y.    366;    Taylor. 

Morawetz,  §  157;   Page  v.  Heineberg,  §  3f)l.     The  English  statutes  of  wills, 

40  Vt.   81;   Odell   v.   Odell,   10   Allen,  enacted   under   Henry  VITT.,  have  an 

1;    Downing   v.    Marshall,    23    N.    Y.  important    bearing   on    this   question. 

392;    Perin   v.   Carey,   24   How.   465;  3.  As,    e.    (j.,    railways,    and    their 

Miller   v.    Porter,    53    Penn.    St.    292.  right  to  acquire  land  for  their  routes 

The  right  to  hold  land  may  be  found  by  eminent  domain.     See  §  240. 

granted,   restricted,   or    forbidden,  un-  4.  See    Fort    Worth    Co.    v.    Smith 

der  any  particular  charter  in  question.  Bridge  Co.,  151  U.  S.  294. 

23  353 


§  234         THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

were  bond  fide  created  in  the  regular  course  of  business.^  In  some 
States  a  bank  may  receive  real  estate  as  security  for  a  loan  or  in 
payment  of  debts.^  Even  a  prohibition  on  purchasing  or  dealing 
in  land  does  not  necessarily  forbid  taking  a  mortgage  as  security.'' 
Corporations  often  lease  buildings,  too,  and  are  held  liable  on 
their  covenants.^  And,  whether  it  be  in  regard  to  real  estate  or 
some  species  of  personal  property,  that  a  corporation  is  forbidden 
to  purchase  and  hold  such  property,  under  ordinary  circumstances, 
the  rule  appears  to  be  quite  favorable  in  permitting  corporations 
to  secure  debts  due  them,  as  best  they  may,  even  though  the  col- 
lateral security  taken  should  be  of  the  prohibited  class. 

§  234.     Power  to  Take  by  Bequest. 

Corporations  have  the  common-law  right  of  taking  personal 
property  by  bequest,  equally  with  natural  persons;  and  even  a 
bequest  to  a  corporation  of  its  own  stock  is  valid.^  But  the  law 
in  this  respect  is  affected  by  Statute  43  Eliz,,  c.  4,  relating  to 
charitable  uses.^  Religious  corporations,  and  even  unincorporated 
religious  societies,  frequently  receive  gifts  and  bequests  under  a 
will  for  objects  within  the  scope  of  their  usual  duties;  and  in  this 
country  the  statute  of  charitable  uses  receives  a  favorable  construc- 
tion from  the  courts.  Even  a  misnomer  of  the  corporation  does 
not  vitiate  the  bequest,  provided  its  identity  be  otherwise 
apparent.^ 

5.  2  Kent  Com.  283 ;  Ang.  &  Ames,  Cartee  v.  Orphan  Asylum  Society,  9 
§    156;    Susquehannah   Bridge   Co.   v.      Cow.  437. 

General  Ins.  Co.,  2  Md.  Ch.  418;  Sil-  1.  2  Kent  Com.  285;  Ang.  &  Ames, 

ver    Lake   Bank   v.    North,    4    Johns.  §§  179-185.     And  see,  as  to  Legacies, 

Ch.  370.  2  Schoul.  Wills  &  Ex'rs,  §§  1458-1475. 

6.  Thomaston  Bank  v.  Stimpson,  21  2.  lb.  An  executory  bequest  lim- 
Me.  195;  2  Kent  Com.  283;  Abb.  Dig.  ited  to  the  use  of  a  corporation  to  be 
Corp.  41.  created  within  the  period  allowed  for 

7.  Blunt  V.   Walker,    11   Wis.    334.  the  vesting  of  future  estates  and   in- 

8.  Abby   v.   Billups,    35   Miss.    618.  terests   is   valid.       Burrill   v.    Board- 

9.  Ang.    &   Ames,    §    177;    Rivanna  man,   43   N.   Y.   254. 
Nav.  Co.  v.  Dawson,  3  Gratt.  19;  Mc- 

354 


CHAP.  XI.]  MEMBERS    OF    CORPORATIOXS.  §    235 

§  235,     Power  to  Hold  Property  upon  Trusts. 

As  to  the  capacity  of  corporations  to  hold  property  upon  trusts, 
there  are  English  authorities  which  treat  them  as  incapable, 
though  for  reasons  somewhat  artificial;  but  in  this  country  their 
capacity  to  perform  the  duties  of  trustees  is  generally  admitted, 
and  the  present  American  rule  is  that  any  corporation  may  hold 
property  in  trust  for  purposes  not  foreign  to  its  own  institution.'' 
Some  of  our  courts  seem  disposed  to  regard  this  capacity  of  a 
corporation  even  more  favorably;  yet  in  matters  entirely  outside 
of  the  proper  purposes  of  the  corporation,  and  more  especially  if 
the  trust  be  repugnant  to  or  inconsistent  with  the  duties  imposed 
by  its  creation,  it  should  be  conceded  that  a  corporation  has  no 
right  to  take  trust  property  nor  to  act  as  trustee.'*  The  right  of  a 
corporation  to  take  a  trust  which  is  valid  in  point  of  law  must  be 
contested  by  the  State,  and  not  by  heirs  and  parties ;  and  while 
the  corporation  may  not  be  permitted  to  execute  a  trust,  upon  the 
grounds  already  indicated,  yet  this  is  no  reason  why  a  trust  unex- 
ceptionable in  itself  should  not  be  permitted  to  stand  with  a  new 
trustee  substituted  for  the  corporation.^  A  notable  development 
of  recent  years  is  the  growth  of  trust  companies  and  other  cor- 
porations under  laws  expressly  authorizing  them  to  be  appointed 
and  act  as  trustees  of  various  sorts. 

3.  1  Kyd,  27 ;  Ang.  &  Ames,  §§  166-  incorporated  literary  institutions  are 
168;  2  Kent  Com.  285;  Phillips  Acad-  authorized  to  take  real  and  personal 
emy  v.  King,  12  Mass.  546;  Mora-  estate  in  trust  for  a  variety  of  pur- 
wetz,  §  163;  Vidal  v.  Girard,  2  How.  poses.  N.  Y.  Stat.  May  14,  1840,  ch. 
187.  318;  Ang.  &  Ames,  §  168,  Lathrop's  n. 

4.  See  Jackson  v.  Hartwell,  8  The  charter  of  a  corporation  some- 
Johns.  422 ;  Vidal  v.  Mayor,  &c.,  of  times  provides  in  effect  that  the  whole 
Philadelphia,  2  How.  128;  Trustees  property  of  the  company  shall  be  held 
V.  Peaslee,  15  N.  H.  317.  as    real    estate    and    so    descend,    or, 

5.  Bliss'  V.  American  Bible  Society,  on  the  other  hand,  that  it  shall  be  held 
2  Allen,  334.  See  American  Academy  as  personal  estate  and  be  transferred 
V.  Harvard  College,  12  Gray,  582.  and  distributed  accordingly.  Al- 
This  whole  subject  will  be  found  to  though  such  clauses  are  usually  de- 
have  been  modified  considerably  by  signed  to  operate  as  among  the  stock- 
local  statutes;  as,  for  instance,  in  holders,  and  not  as  to  strangers,  the 
New  York,  where  colleges  and  other  legislature   may  give  a   provision   of 

355 


§  236  THE  LAW  OF  PERSONAL  PROPEETY.       [PAET  II. 

§  236.  Right  to  Transfer  and  Dispose  of  Corporate  Property. 
Incidental  to  the  right  of  holding  property  is  the  right  to  dis- 
pose of  it  at  pleasure.  Independently,  therefore,  of  positive  law 
to  the  contrary,  all  corporations  have  the  absolute  jus  disponendi 
of  all  property,  whether  real  or  personal,  which  they  may  have 
lawfully  acquired.  Nor  does  the  circumstance  that  the  State 
holds  some  of  the  stock  of  the  corporation  affect  this  common-law 
right  of  alienating  the  corporation  property.^  And  if  a  corpora- 
tion has  power  to  dispose  of  its  property  in  general,  it  certainly 
can,  like  an  individual,  dispose  of  any  portion  it  may  see  fit.  It 
may  lease,  grant,  or  mortgage  what  are  rightly  its  lands,  or  assign 
such  a  mortgage,  and  may  be  held  liable  upon  its  covenants  cor- 
respondingly like  an  individual.^  It  may  sell  its  property  in 
order  to  raise  money  for  the  legitimate  objects  of  its  creation ;  ^ 
and  if  it  can  borrow,  it  can  borrow  upon  security  of  what  it  owns. 
If  a  suitable  building  for  its  business  be  lawfully  purchased,  its 
mortgage  given  to  secure  part  of  the  purchase-money  is  equally 
lawful.^  And  where  a  corporation  has  the  right  to  purchase  ma- 
terials to  be  worked  up  in  its  factories,  it  may  by  inference  borrow 
m.oney  for  that  purpose,  and  may  pledge  the  corporate  property 
as  security.^ 

But  all  this  might  be  a  matter  of  special  regulation  in  the 
charter;  and  we  frequently  find,  in  England  and  some  portions 
of  the  United  States,  restraints  placed  by  statute  upon  the  aliena- 

this  kind  a  more  sweeping  effect,  by  Ch.  App.  83;  Aurora  Soc.  v.  Paddock, 

using  suitable  language  for  that  pur-  80  111.  263. 

pose.       Cape    Sable    Company's    Case,  7.  lb..  Hart  v.  Eastern  Union  R.  R. 

3  Bland  Ch.  670.  Co.,  8  Ex.   116;   Abb.  Dig.  Corp.  41: 

6.  Abb.  Dig.  Corp.  587-588;   1  Kyd,  Morawetz,  §§  174,  175;  Taylor,  §130. 

108:    Ang.    &    Ames,    §§    187-191;    2  8.  See  §  239. 

Bland  Ch.  142;  Reynolds  v.  Commis-  9.  Shaver  v.  Bear  River  M.  Co.,  10 

sioners,    5    Ohio,    204;    White    Water  Cai.    396. 

Canal  Co.  v.  Vallette,  21   How,   424:  1.  Fay    v.     Noble.     12     Cush.     18; 

Dupee   V.    Boston    Water   Power    Co.,  Uncas  Nat.  Bank  v.  Rich,  23  Wis.  339. 

114    Mass.    37;    Burton's    Appeal,    57  See  Phillips  v.  Winslow.   18  B.  Men. 

Penn.  St.  213 ;  In  re  Patent  File  Co.  431 ;   Willink  v.  Morris  Canal  Co.,  3 

&    Birmingham    Bank    Co.,    L.    R.    6  Green  Ch.  377. 

356 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    237 

tiou  of  corporate  property,  especially  in  the  case  of  religious  cor- 
porations.^ A  restraint  upon  the  power  of  alienation  may  be 
derived  from  the  form  of  the  instrument  prescribed  by  its  charter 
or  by-law.^  Sometimes  the  charter  provides  as  to  the  place  where 
it  shall  dispose  of  certain  kinds  of  property ;  as  in  the  case  of  the 
charter  of  a  fire  insurance  and  loan  company,  which  especially 
empowered  the  company  to  take  mortgages,  but  provided  that  all 
mortgage  sales  should  be  made  in  the  county  where  the  property 
was  situated.'*  Sometimes  the  instrument  must  be  executed  in  a 
praticular  manner ;  as  where  an  act  of  incorporation  required  the 
assent  of  three-fourths  of  the  stockliolders  to  make  a  mortgage.^ 
All  such  requirements,  if  expressed,  must  be  strictly  complied 
w4th,  or  the  transaction  is  likely  to  fail  altogether;  although  we 
find  the  courts  disposed  to  protect  third  parties  in  their  rights, 
when  construing  restraining  clauses  of  this  character,  and  to  pre- 
vent the  transaction  from  being  collaterally  impeached.^  The 
circumstances  under  which  equity  would  interfere  to  restrain  a 
corporation  from  improperly  alienating  its  property  must  depend 
on  general  principles;  but  the  court  would  doubtless  interpose 
wherever  the  alienation  was  for  other  than  permissible  corporate 
purposes.^  The  power  to  purchase  usually  implies  the  power  to 
sell ;  and  the  implied  power  to  sell  includes  the  power  to  bind  by 
a  reasonable  condition  to  refund  on  certain  contingencies.^ 

§  237.     The  Same  Subject. 

A  provision  in  the  charter  making  the  stockholders  individually 
liable  for  the  corporate  debts  does  not  affect  the  right  of  a  corpo- 
ration to  dispose  of  its  property;  ^  nor  does  the  fact  that  proceed- 

2.  Anfj.    &    Ames.    §§    187.    188;    2  6.  See  Fuller  v.  Van  0«eson,  s!/;»ra  ; 
Kent  Com.  281;    1  Kyd,  116-162.  Ang.    &    Ames,    §    189;    Duncomb    v. 

3.  Myatt  v.   St.  Helen's  R.  R.  Co..  N.  Y..  &c.,  Ry.  Co..  84  N.  Y.   190. 
2  Q.  R.  364.  7.  Ang.  &  Amos,  §  190. 

4.  Fuller    v.    Van    Geest-n,    4    Hill,  8.  Do   Groff   v.    Linen    Thread    Co.. 
171.  21   N".   Y.   124. 

5.  Cape  Sable  Company's  Case,  3  9.  As  to  the  riglit  to  assign  if  in- 
Bland  Ch.  166.  solvent,    see   Abb.    Dig.    Corp.    43-47; 

357 


§  237 


THE    T>A\V    OF    PEKSONAL    PROPERTY. 


[part  II. 


ings  for  forfeiting  the  charter  were  pending,  under  a  writ  of 
quo  warranto,  or  that  the  charter  was  just  about  to  expire.'  But 
an  assignment  and  transfer  of  the  corporate  franchise  outright 
is  beyond  the  power  of  any  corporation  under  its  charter  apart 
from  the  consent  of  the  State;  and  a  corporation  cannot  even 
mortgage  its  franchise  in  such  a  sense  as  to  give  the  mortgagees 
a  right  to  foreclose.^  The  practical  mode  of  selling  out  the  fran- 
chise is  for  individuals  to  dispose  of  their  stock  to  others  and 
thus  give  to  transferees  a  controlling  interest.  And  fraudulent 
transfers,  whether  made  to  defeat  the  insolvent  laws,  or  for  the 
aggrandizement  of  unprincipled  achemers,  are  not  and  should  not 
be  tolerated  under  any  circumstances.^ 


Ang.  &  Ames,   §   IW;   State  v.  Bank 
of  Maryland,  9  Gill  &  J.  205. 

1.  Cooper  V.  Curtis,  30  Me.  488; 
State  V.  Commercial  Bank,  13  Sm.  & 
M.  569.  As  to  liability  under  by- 
laws, see  Flint  v.  Pierce,  99  Mass.  68. 

2.  See  Ang.  &  Ames,  §  191,  and  La- 
throp's  n.,  with  eases  cited;  Common- 
wealth V.  Smith,  10  Allen,  448 ;  Coe  v. 
Columbus  R.,  10  Ohio  St.  372;  Mora- 
wetz,  §§  535-542,  and  cases  cited; 
Carpenter  v.  Black  Hawk  Mining  Co., 
65  N.  Y.  43;  Thomas  v.  West  Jersey 
R.,  101  U.  S.  73.  Where  a  railroad 
corporation  assigns  the  right  to  use 
and  control  its  road,  it  yet  remains 
liable  for  the  infringement  by  its  as- 
signees of  a  patent  right.  York  R.  v. 
Winans,  17  How.  30.  But  a  distinc- 
tion is  drawn,  conformably  to  the 
legislative  intent,  as  deduced  from 
the  particular  charter  or  the  particu- 
lar class  of  business  in  which  the  cor- 
poration is  to  engage.  A  legislature 
may  have  conferred  the  right  to  trans- 
fer or  mortgage  the  franchise;  and 
franchises  merely  appertaining  to  the 
use  of  particular  property  (such  as 
to    build    and    maintain    a    turnpike 


road)  may  sometimes  be  presumed  to 
enable  a  mortgage  of  such  franchise 
to  be  made.  Morawetz,  §  540 ;  Pierce 
V.  Milwaukee  R.,  24  Wis.  551.  But 
the  mortgage  of  a  franchise,  so  as  to 
carry  a  special  immunity  from  tax- 
ation, should  be  understood  differ- 
ently. Morgan  v.  Louisiana,  93  U.  S. 
217.  And  as  to  transferring  to  a 
lessee  the  power  of  eminent  domain, 
a  similar  objection  applies.  Mayor 
of  Worcester  v.  Norwich,  &c.,  Ry. 
Co.,  109  Mass.  103.  This  whole  sub- 
ject, comparatively  novel  in  develop- 
ment, is  full  of  doubt  and  difficulty, 
and  the  only  safety  appears  to  be 
in  procuring  express  legislative  sanc- 
tion. See  Morawetz,  §§  535-542; 
Taylor,  §§  131,  132.  The  legislature 
which  creates  the  corporation  and 
grants  the  franchises,  has  power  to 
authorize  it  to  sell  them.  W^ilamette 
Co.  V.  Bank,  119  U.  S.  191. 

3.  Bodley  v.  Goodrich,  7  How.  277; 
Kean  v.  Johnson,  1  Stockt.  401 ;  Ang. 
&  Ames,  §  191 ;  Morawetz.  §  176,  and 
cases  cited;  Moss  v.  Averill.  10  N.  Y. 
449,  457.  A  lease  by  one  common 
carrier  to  another  of  all  its  property 


358 


CHAP.  XI.]  MEMBERS    OF    COKPORATIOXS.  §    238 

Furthermore,  in  the  absence  of  statutes  of  especial  application 
to  corporations,  the  usual  laws  relating  to  the  transfer  of  property 
and  prescribing  formalities  of  execution  must  be  observed ;  and, 
in  general,  the  word  "  persons,"  'in  laws  relating  to  the  transfer 
of  property,  includes  corporations.'* 

§  238.     Right  to  Issue  Negotiable  Obligations. 

A  corporation  often  becomes  a  party  to  negotiable  paper,  by 
the  signature  of  its  president  or  other  duly  empowered  agent.  If 
this  be  done  in  the  transaction  of  its  legitimate  business,  and  as 
a  convenient  mode  of  conducting  its  affairs,  the  corporation  will 
be  bound,^  And  the  note  of  a  manufacturing  corporation  may 
be  enforced,  even  though  given  as  a  mere  accommodation,  pro- 
vided the  holder  took  it  in  good  faith  and  before  maturity  with- 
out knowledge  of  this  fact.*^  The  same  general  doctrine  extends 
to  executing  other  classes  of  commercial  securities  such  as  coupon 
bonds;  and  the  payment  of  all  such  obligations  may  be  secured 
by  a  pledge  or  mortgage  of  the  corporate  property.^ 

But  in  respect  of  the  right  to  issue  negotiable  obligations,  the 
English  rule  appears  to  be  more  strict  than  the  American;  for 
while,  under  late  English  decisions,  it  is  established  that  a  corpo- 
ration, whose  business  is  of  such  a  character  that  the  issuing  of 

has   been    held    ultra  vires   and   void,  signs    negotiable    paper   on   behalf   of 

as  an  abandonment  of  its  own  public  the  corporation  binds  only  himself  in- 

duty.     Central  Trans.  Co.  v.  Pullman  dividually,    unless    ho    signs    in    due 

Co.,  139  U.  S.  24.     See  §  245.  form.    Caphart  v.  Dodd,  3  Bush,  584; 

4.  See  State  v.  Nashville  Univer-  Button  v.  Marsh,  L.  R.  6  Q.  B.  361. 
sity,  4  Humph.  157 ;  Ang.  &  Ames,  And  inasmuch  as  a  corporation  can- 
§  193.  not  go  beyond  the  powers  specifically 

5.  Ex  parte  Overend,  L.  R.  4  Ch.  granted  to  it  or  necessary  for  car- 
460;  Perrine  V.  Chesapeake,  &c.,  Canal  rying  those  powers  into  effect,  the 
Co.,  9  How.  172 ;  Cooper  v.  Curtis,  notes  of  a  railroad  company  given 
30  Me.  488;  Abb.  Dig.  Corp.  119-121.  for    the    purchase    of   steamboats   are 

6.  Monument  National  Bank  v.  held  not  enforct^able  again.st  it. 
Globe  Works,   101   Mass.   57.  Pearoe   v.    Madison,    &c.,    R.    R.    Co., 

7.  Olcott  V.  Tioga  R.,  27  N.  Y.  546;  21  How.  441;  West  River  Bridge  Co. 
Morawetz,  §  176;  Taylor,  §  125.     See  v.  Dix,  6  How,  507. 

Part  III   post.      But  the  agent  who 

359 


§  239 


THE    LAW    OF    PERSONAL    PROPERTY. 


[part  II. 


negotiable  instruments  would  be  an  ordinary  incident,  as  in  the 
case  of  a  bank  with  implied  authority  to  issue  negotiable  instru- 
ments, it  is  held,  nevertheless,  that  corporations  whose  business 
does  not  ordinarily  require  such  an  issue  cannot  issue  such  instru- 
ments.^ In  most  parts  of  the  United  States,  however,  the  doc- 
trine is  more  lax;  and  various  classes  of  corporations,  railways 
and  manufacturing  companies,  for  instance,  are  treated  accord- 
ingly as  having  by  implication  the  right  to  issue  negotiable  instru- 
ments for  any  legitimate  purpose.^ 

§  239.     Right  to  Borrow  or  Raise  Money. 

Of  the  right  to  borrow,  it  may  be  more  generally  added  that 
private  corporations  have  an  implied  authority  to  borrow  money 
and  incur  debts  in  the- due  fulfilment  of  their  legitimate  purposes ;  ^ 


8.  See  Bateman.  v.  Mid-Wales  R., 
L.  R.  1  C.  P.  499-;  Morawetz,  §  178; 
L.  R.  2  Ch.  617.  The  implied  prohi- 
bition thus  extends  to  railways;  as 
also  to  mining,  gas,  water,  cemetery, 
and  various  manufacturing  associa- 
tions. See  Morawetz,  §  178,  and 
cases  cited. 

9.  Morawetz,  §§  176-178;  Taylor, 
§§  125-127.  Railway  companies  can 
issue  negotiable  instruments  in  the 
United  States.  Olcott  v.  Tioga  R., 
27  N.  Y.  546;  Railroad  Co.  v.  How- 
ard, 7  Wall.  412;  Richmond  R.  v. 
Sneed,  ID  Gratt,  354;  Hamilton  v. 
Newcastle  R.  R.  Co.,  9  Ind.  359; 
Lucas  V.  Pitney,  27  N.  J.  L.  221.  So 
may  manufacturing  companies  gen- 
erally. Morawetz,  §  178;  35  N.  Y. 
505 ;  National  Bank  v.  Globe  Works, 
101  Mass.  57;  Orford  Iron  Co.  v. 
Spradley,  46  Ala.  98. 

Railroad  and  other  corporations  in 
this  country  have  shown  great  in- 
genuity of  late  years  in  tempting  in- 
vestments of  new  and  peculiar  kinds. 
It  is  held  that  a   railroad   company 


may  lawfully  issue  such  securities  aa 
"  deferred  income  bonds,"  which  can 
only  receive  interest  after  net  earn- 
ings reach  a  prescribed  point.  Phila. 
R.  V.  Stichter,  cited  Taylor,  §  126. 
But  see  contra,  Taylor  v.  Phila.  R., 
7  Fed.  386,  where  such  obligations 
are  made  '^  irredeemable." 

A  railroad  corporation  having  legis- 
lative power  to  issue  bonds  or  lease  a 
road,  is  allowed  by  some  decisions  to 
guaranty  other  bonds  as  incidental  to 
such  power.  Taylor,  §  127 :  Railroad 
Co.  V.  Howard.  7  Wall.   592. 

1.  Bank  v.  Breillat,  6  Moore  P.  C. 
152;  Imperial  Land  Co.  v.  Nat. 
Bank,  L.  R.  10  Eq.  311;  Morawetz. 
§  171,  and  cases  cited ;  Commercial 
Bank  v.  N.  0.  Man.  Co.,  1  B.  Monr. 
14;  Orford  Iron  Co.  v.  Spradley,  46 
Ala.  9'8 ;  A.  W.  Moss  v.  Harpeth  Acad- 
emy, 7  Heisk.  285;  Nelson  v.  Eaton. 
26  N.  Y.  410.  The  right  to  borrow 
includes  the  right  to  give  a  written 
acknowledgment  of  indebtedness  after 
the  usual  form.  Morawetz.  §  171; 
Com'rs  of  Craven  v.  Atlantic   R.   R. 


360 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    240 

though  only  for  such  purposes  in  a  just  and  rational  sense,  and 
where,  moreover,  the  charter  contains  no  express  prohibition  of 
such  acts.^  An  express  limitation  upon  the  right  of  borrowing 
is  held  to  be  not  necessarily  a  limitation  upon  the  right  of  incur- 
ring debts  in  managing  the  ordinary  business  of  the  corporation."' 
But  a  corporate  borrowing,  to  be  legitimate,  ought  to  include  some 
sort  of  promise  to  return  the  principal  of  the  loan  sooner  or  later.'^ 

§  240.     Rule  of  Eminent  Domain  Applied. 

Corporation  property  is  subject  to  the  right  of  eminent  domain 
on  the  part  of  government,  and  may  be  applied  even  to  the  extent 
of  extinguishing  its  franchise  to  public  uses,  like  that  of  a  citizen, 
upon  the  payment  of  just  compensation.  No  exemption  indeed 
can  be  claimed  from  this  rule ;  unless,  perhaps,  it  could  be  shown 
that  the  property  had  already  been  applied  to  a  greater  or  equally 
beneficial  public  use.^  This  public  right  of  eminent  domain  is 
sometimes  delegated  in  a  measure  by  government,  on  behalf  espe- 
cially of  railroad  companies ;  but  the  legislature  cannot  relinquish 
the  right.  The  statute  mode  of  grant  must  be  strictly  followed. 
]!io  corporation  may  take  private  property  without  the  owner's 
assent,  unless  the  power  to  do  so  is  given  expressly  or  by  necces- 
sary  implication ;  the  power  itself  extends  only  to  necessary  prop- 
erty for  the  corporate  purposes,  and  just  compensation  must  be 
made  to  the  owner  at  all  events.^ 


Co.,  77  N.  C.  28'9.     Cf.  preceding  sec-  States    does    not    jjroliiliit    tliis    to    a 

tion.    See  Reid  on  Corpoiate  Finance.  State   as   "  impairing   the   obligations 

2.  lb.     See  Duncomb  v.  N.  Y.,  &c.,  of  contracts."     Cooley  Const.  Limita- 
R.  R.  Co.,  84  N.  Y.  190.  tions,     342-344 ;     Black     v.     Delaware 

3.  Morawetz,  §  172,  and  cases  cited;  Canal   Co.,  24  N.  J.  Eq.   468;   Phila- 
Re  German  Mining  Co.,  4  De  G.  M.  delphia  R.  v.  Catawissa  R.,  53  Penn. 

6  G.  19.    Cf.  Ex  parte  Chippendale,  4  St.  20. 

De  G.  M.  &  G.  43.  6.  Canal    Co.    v.    Railroad    Co.,    4 

4.  See  Taylor  V.  Philadelphia  R.  R.,  Gill   &   J.   1;    Thacher   v.   Dartmouth 

7  Fed.  386 ;  Kent  V.  Quicksilver  Min-  Bridge    Co..    18    Pick.    501;    Eastern 
ing  Co.,  78  N.  Y.  159.  R.  R.  Co.  v.   Boston  &.  Maine   R.   R., 

5.  The  Constitution    of  the  United  111  Mass.  125.  1:^9:   Abb.  Dig.  Corp. 

361 


§  241  THE  LAW  OF  TERSONAL  PROPERTY.       [pART  II. 

§  241.     Visitation     of     Corporations;       Mandamus     and     Quo 
Warranto. 

Corporations  are  subject  at  the  old  law  to  what  is  called  visita- 
tion. The  origin  of  the  visitatorial  power  is  in  the  property  of 
a  donor,  and  the  power  which  everyone  has  to  dispose,  direct,  and 
regulate  his  own  property.  The  internal  affairs  of  ecclesiastical 
and  eleemosynary  corporations  (the  latter  term  including  only 
schools,  colleges,  and  hospitals)  are  usually  inspected  and  con- 
trolled by  a  private  visitor.^  But  it  is  otherwise  with  civil  cor- 
porations, whether  public  or  private ;  for  these  are  subject  to  the 
law  of  the  land,  and  are  visited  by  the  government  itself  through 
the  medium  of  the  courts.^ 

And  the  method  of  proceeding  where  the  common-law  jurisdic- 
tion is  to  be  exercised  over  civil  corporations  is  by  writ  of  man- 
damus or  by  information  in  the  nature  of  quo  warranto.  The 
writ  of  mandamus  is  (as  the  word  imports)  substantially  a  com- 
mand in  the  name  of  government,  directed  to  persons,  corpora- 
tions, or  inferior  courts  within  the  jurisdiction,  requiring  them 
to  do  a  certain  act  as  the  legal  duty  of  their  office,  character,  or 
situation;  and,  though  issuing  from  the  common-law  courts,  it 
affords  a  sort  of  equitable  relief.  This  writ  issues  only  at  the  dis- 
cretion of  the  court  to  whom  the  application  is  made ;  it  is  not 
allowed  unless  the  applicant  has  a  clear  legal  right,  and  is  without 
any  other  adequate  or  specific  remedy  for  its  enforcement ;  nor  will 
it  control  discretionary  power,  but  applies  to  plain  dereliction  of 
duty.^  The  object  of  mandamus  is  to  compel  corporate  officers 
or  the  corporation  itself  to  the  performance  of  duties  which  are 
owed  to  the  public  and  third  parties  in  interest.^ 

"  Eminent  Domain ;  "   Ang.    &    Ames,  8.  lb. ;    King   v.    Excise    Com'rs.,    2 

§  192 ;  Morawetz,  §§  459'-462  ;  Taylor,  T.  R.  385. 

§§  163-166.  9.  Rex  v.  Dublin,  1  Stra.  538.     See 

7.  1   Ewell's  Bl.  Com.   480;   2  Kent  more  fully  Abb.   Dig.   Corp.   450-453; 

Com.  300-305;  Ang.  &  Ames,  §§   684-  Ang.    &■    Ames,    §§    700-715;    Taylor. 

696;     Dartmouth     College    v.     Wood-  §§    454,    455;    and   general   works   on 

ward,  4  Wheat.  518 ;  Abb.  Dig.  Corp.  Practice,  as  to  remedy  by  mandamus. 

873 ;  Green  v.  Rutherford,  1  Ves.  462.  1.  As,  for  instance,  to  compel  out- 

362 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    241 

Writs  or  information  in  the  nature  of  quo  warranto  are  usually 
filed,  at  the  present  day,  by  the  attorney-general,  or  in  his  name 
pro  forma  by  the  prosecutor;  and  proceedings  are  conducted  be- 
fore the  highest  court  of  ordinary  jurisdiction.  The  local  prac- 
tice depends,  however,  to  some  extent,  upon  local  statutes.  These 
informations  are  in  form  criminal,  but  in  their  nature  they  are 
civil  proceedings.^  Quo  warranto  applies  to  all  sufficient  causes 
for  the  dissolution  of  a  corporation ;  though  in  general  an  informa- 
tion to  dissolve  must  be  prosecuted  by  the  sovereign  authority; 
and  among  other  causes  may  be  enumerated  those  of  impeaching 
the  title  to  office  of  some  corporate  officer  or  member,  and  of  pro- 
ceeding against  persons  who  presumed  to  act  as  a  corporation 
when  in  fact  no  such  corporation  was  ever  created.  Fines  are 
merely  nominal  for  the  most  part ;  and  the  remedy  aims  to  cor- 
rect the  mischief  in  each  case,  according  to  the  circumstances ; 
extending  even  to  a  seizure  of  the  franchises,  when  necessary,  and 
their  forfeiture, —  no  dissolution  taking  place,  however,  until 
execution  has  followed  a  judgment  of  seizure.^ 

As  mandamus  and  quo  warranto  are  common-law  proceedings, 
it  is  often  said  that  corporations  are  amenable  only  to  the  common- 
going   officers   to  surrender   corporate      era  without  any  autiiority  at  all.     See 
books;    to   obtain    inspection   of    such       §  243,  post,  as  to  dissolution, 
books;   to   compel   a   regular   transfer  3.  Commonwealth    v.    Union    Fire, 

of  shares;  to  compel  officers  to  pub-  &c.,  Co.,  5  Mass.  2.'?0;  Rex  v.  Ogden, 
lish  periodical  reports,  or  to  hold  10  B.  &  C.  230;  State  Bank  v.  State, 
elections,  or  to  call  meetings.  1   Blackf.  278.     See  United  States  v. 

2.  Abb.  Dig.  Corp.  595-600;  2  Kyd  Addison,  6  Wall.  291;  People  v. 
Corp.  395,  403;  Ang.  &  Ames,  §  730  Kankakee  Co.,  103  111.  4ffl ;  State 
et  seq.;  3  T.  R.  484;  Bac.  Abr.  In-  v.  Bick,  81  Ind.  78.  Jurisdiction  in 
formations,  D. ;  Taylor,  §§  457-460.  equity  has  been  refused,  in  a  Massa- 
See  Donnelly  v.  People,  11  Til.  552.  chusettS  case,  where  the  party  com- 
In  this  country  the  ancient  writ  of  plained  of  was  a  private  corporation, 
quo  -ivarranto  has  become  practically  whose  procetMlings  had  not  endan- 
obsolete;  but  information  in  the  nat-  gcred  any  public  or  private  rights, 
ure  of  a  quo  warranto  will  lie  both  and  were  objected  to  merely  as  un- 
against  corporations  having  a  legal  authorized  by  the  act  of  incorpora- 
existence  for  the  forfeiture  of  their  tion  and  contrary  to  public  policy, 
franchises,  and  against  such  bodies  Attorney-General  v.  Tudor  Ice  Co., 
as  assume  to  exercise  corporate  pow-      104    Mass.    243. 

363 


§  242  THK  LAW  OF  PEESONAL  PROPEETY.       [PART  II. 

law  courts.  Yet,  where  a  charitable  or  other  corporation  is 
chargeable  with  a  trust,  chancery  may  exercise  some  sort  of  juris- 
diction bj  virtue  of  its  well-known  authority  in  such  matters; 
and  a  corporation  may  be  restrained  upon  equitable  grounds  on 
behalf  of  one  or  more  stockholders  or  the  State  in  various  modem 
instances,'*  so  as  to  prevent  ultjn  vires  acts  which  arc  in  contempla- 
tion from  being  performed. 

§  241a.     Legislative   Regulation;    Foreign   Corporations. 

Of  late  years  Congress  and  our  State  legislatures  incline  much 
to  regulating  by  statute  corporations,  and  especially  railway  and 
other  companies  of  the  public  service  kind.''^  Furthermore,  ''  for- 
eign corporations,"  so  called, —  a  term  applied  chiefly  to  those 
created  in  some  other  State, —  are  subjected  to  local  statute  con- 
ditions for  obtaining  permission  to  conduct  a  local  business."^^ 

§  242,     Dissolution   of   Private   Corporations;   how   Effected. 

Now,  as  to  the  dissolution  of  corporations,  and  its  effect  upon 

4.  See  2  Kent  Com.  305 ;  Morawetz,  conceded    by    the    lex    loci.       Dalton 

§§   657-659.      Thus,  misapplication  of  Adding  Mach.  Co.  v.  Va.  Corporation 

funds  or  a  violation  of  charter  or  il-  Com'n,    213    Fed.    889;    M.   V.    Moore 

legal  voting  upon  shares  is  restrained,  &    Co.    v.    Gilmore,    216    Fied.     199'; 

though  a  court  of  equity  will  not  un-  Alpena  Portland  Cement  Co.  v.  Jenk- 

necessarily    interfere    with    the    man-  ins,  244  III.  352,  91  N".  E.  480;   State 

agement  of  the  corporation.      lb.,   §§  v.   N.   Y.   Ins.   Co.,   173    S.   W.    1099; 

381-412;   Taylor,   555,   556,   587.      See  Hannis    Distilling    Co.    v.    Baltimore, 

Arbour  v.   Pittsburg  Ass'n,  44  Penn.  114    Md.    678,    80    Atl.    319;     State 

Super.    240;    People    v.    Dunbar    Co.,  ex    rel.    Martin   v.    Howard,    96    Neb. 

215  N.  Y.   416,   109  K   E.   554    (con-  278,  147,  N.  W.  689.     But  as  to  any 

spiracy)  ;    Meek   v.    Smith,    59    Colo.  State   attempt   to   restrain   a   foreign 

621,  149  Pac.  627.  corporation      from      seeking      federal 

4a.  See  Paul  V.  Virginia,  8  Wall.  168  ;  courts,   see  Herndon  v.   Chicago,   218 

Interstate     Commerce     Act     (1887);  U.    S.    135,   30   S.   Ct.    633.      And   as 

Wabash,  &e.,  Ry.  v.  Illinois,  118  U.  S.  to   other   unjust   attempts,   see   West- 

557;    In    re    Debs,    158    U.    S.    564;  ern  U.  T.  Co.  v.  Frear,  216  Fed.  199. 

Schoul.   Bailments,   §§    509-516.  A   fair    license   fee   may   be   imposed. 

4b.  Corporations    are    the    creation  Moore    &    Co.    v.    Gilmore,    216    Fed. 

of     local     law,    and     they    have    no  199;  State  v.  Creamery  Co.  110  Minn, 

powers  out  of  the   State  where  they  415,  126  N.  W.  623. 
were    created,    except    such    as'    are 

364 


CHAP.  XI.]  MEMBERS    OF    COEPOKATIOXS.  §    242 

the  corporate  property.  A  corporation  may  be  dissolved,  as 
Chancellor  Kent  tells  us,  (1st)  by  statute;  (2d)  by  the  natural 
death  or  loss  of  all  or  an  integral  part  of  the  members;  (3d)  by 
surrender  of  its  franchises;  (4th)  by  forfeiture  of  its  franchises. 
And  to  these  an  eminent  text-writer  has  added  a  mode  grown  to 
be  quite  common  in  this  country:  (5th)  by  expiration  of  its  term 
of  duration  as  limited  by  charter  or  general  law.^ 

The  first  mode  of  dissolution  applies  rather  to  England,  where 
an  act  of  Parliament  is  supreme  law,  than  to  this  country,  where, 
in  conformity  to  the  Constitution  of  the  United  States,  it  has 
become  a  settled  principle  that  the  charter  of  a  private  corporation 
is  an  executed  contract  between  the  State  and  the  individuals  in- 
corporated, which  the  legislature  cannot  afterwards  repeal,  impair, 
or  alter,  against  the  consent  or  without  the  default  of  the  corpora- 
tion judicially  ascertained  and  declared.^  Since  the  decision  of 
the  Supreme  Court  of  the  United  States  in  the  great  case  of 
Dartmouth  College  v.  Woodivard,  it  has  become  a  common  and 
prudent  legislative  practice  in  this  country  to  reserve  expressly 
in  every  important  act  of  incorporation  for  private  purposes  the 
power  on  behalf  of  the  State  to  alter,  modify,  or  repeal  at  pleas- 
ure.'' And  a  reservation  of  this  sort  is  frequently  to  be  found  in 
the  general  statutes ;  ^  inasmuch  as  the  granting  of  any  corporate 
right  or  privilege  rests  entirely  in  the  discretion  of  the  State  as 
to  terms  and  conditions.^ 

5.  2  Kent  Com.  305;  Ang.  &  Ames,  prived  of  property  nor  the  equal  pro- 
§  765;  1  Ewell's  Bl.  Com.  485;  Abb.  tection  of  the  laws,  as  State  and 
Dig.  Corp.  289-290;   Morawetz,  §  629.  national   constitutions  provide.     Min- 

6.  Dartmouth  College  v.  Wood-  neapoli.s  R.  Co.  v.  Beclcwitli,  129 
ward,   4    Wheat.    518;    2    Kent   Com.  U.  S.  26. 

306;    2    Kyd,    446;    Ang.   &   Amos,    §  8.  Sec  Commonwealth  v.  Essex  Co., 

7G7;    1    Ewell's    Bl.    Com.    160,    485.  13  Gray,  239;  People  v.  Oakland  Co. 

But    as    to    public    corporations,    see  Bank.  1  Doug.    (Mich.)    286;   Suydam 

Curran  v.  State  of  Arkansas,  15  How.  v.  Moore,  8  Barl).  358;   Pennsylvania 

304.  R.   R.  Co.   V.   Miller.   132   U.   S.   75. 

7.  lb.  And  see,  as  to  a  private  9.  See  People  v.  Raymond.  104 
business  corporation.  New  Orleans  v.  N.  Y.  189,  87  N.  E.  90  (reservation 
Houston,  119  U.  S.  265.     Such  corpo-  to  the  legislature). 

rations  are  "  persons "  not  to  be  de- 

365 


§  242  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

As  to  the  second  mode  of  dissolution,  the  rule  is  self-evident 
where  all  of  the  members  are  dead,  leaving  no  successors  to  sup- 
ply their  places;  but  not  so  clearly  in  case  an  integral  part  is 
gone;  for  here  a  corporation  is  like  a  natural  person,  who  dies  if 
his  head  be  gone,  but  might  survive  the  loss  of  an  arm;  In  other 
words,  the  dissolution  of  a  corporation  from  the  loss  of  an  integral 
part  results  from  the  incapacity  of  the  corporation  in  its 
imperfect  state  to  act  or  to  restore  itself;  and  the  legitimate 
existence  of  a  part  is  not  always  indispensable  to  a  valid  elec- 
tion.^ Furthermore,  it  has  been  observed  that  private  corpora- 
tions aggregate  in  this  country  for  business  purposes  are  not 
usually  composed  of  integral  parts;  for  stockholders  compose  the 
company,  and  the  directors  or  managers  are  only  their  agents,  so 
that  the  non-existence  of  the  managers  does  not  suppose  the  non- 
existence of  the  corporation;  for  which  reason  a  mere  failure  to 
elect  managers  on  the  regular  day  would  not  prevent  an  election 
on  the  next  charter  day.^  So,  too,  as  to  companies  represented 
by  shares  of  stock,  the  death  of  a  member  passes  the  title  in  the 
shares  to  some  one  else ;  unlike  the  case  of  a  corporation  of  purely 
personal  membership.^ 

The  third  mode  of  dissolution  is  by  surrender  of  its  franchises ; 

1.  2  Kent  Com.  309;  Ang.  &  Ames,  Should  all  the  shares  be  held  by  one 
§§  768-770;  2  Kyd,  448;  Morawetz,  person,  the  corporation  might  still 
§§  632-635.  exist;    for  if   certain   acts   under   the 

2.  Ang.  &  Ames,  §  771 ;  Morawetz,  charter  required  more  stockholders, 
§  633;  Rose  v.  Turnpike  Co.,  3  Watts,  this  owner  could  transfer  some  of  his 
48.  See  Phillips  v.  Wickham.  1  Paige,  ebares  to  another,  and  so  conform  to 
597;  Pondville  Co.  v.  Clark,  25  Conn.  the  letter  of  the  rule.  lb.,  §  634. 
97;  Lehigh  Bridge  Co.  v.  Lehigh  Coal  Corporate  powers  remain  for  collect- 
Co.,  4  Rawle,  9.  ing    debts,    enforcing    liabilities,    and 

3.  Morawetz,  §  634 ;  Russell  v.  Mc-  paying  creditors,  notwithstanding  a 
Lellan,  14  Pick.  69.  Discontinuance  non-user.  Brown  v.  Lake  Superior 
of  business  by  a  business  corporation  Iron  Co.,  134  U.  S.  533. 

does  not  dissolve  it.  And  though  the  Insolvency  alone  does  not  dissolve 
organization  be  discontinued,  a  new  a  corporation,  possession  of  property 
organization  may  be  brought  about,  not  being  essential  to  the  corporate 
and  new  officers  chosen  at  some  later  existence.  Morawetz,  §  636 ;  Wether- 
regular   meeting.      Morawetz,    §    635.  bee  v.  Martin,  10  Gray.  245. 

366 


CHAP.  XI.]  MEMBERS    OF    CORPORATIONS.  §    242 

and  in  this  country  it  is  generally  admitted  that  whenever  a  corpo- 
ration voluntarily  gives  up  its  charter  with  the  assent  of  the  State, 
and  perhaps  where  it  dissolves  by  assent  of  its  members  alone 
(that  of  the  State  being  sometimes  presumed  without  a  formal 
acceptance),  the  corporation  is  at  an  end;  though  it  is  clear  that 
the  officers  cannot  dissolve  a  corporation  without  the  assent  of 
the  members,  nor  the  majority  in  general  against  the  will  of  the 
minority  where  an  improper  object  was  in  view."*  But  trading 
and  manufacturing  corporations  and  those  of  other  classes  are 
expressly  authorized  in  some  States  to  have  their  affairs  wound 
up  on  petition  to  the  court  of  a  majority  in  number  or  interest; 
the  court,  nevertheless,  exercising  discretion  in  granting  the  peti- 
tion; and  this  is  a  most  desirable  mode  of  procedure.^  No  uni- 
versal form  of  surrender  is  provided  by  law ;  and  whether  a  corpo- 
ration has  been  sufficiently  dissolved  in  this  manner  will  depend 
in  each  case  upon  circumstances.  A  statute  of  the  legislature 
repealing  the  act  of  incorporation  would,  if  passed  with  the  assent 
of  the  corporation,  suffice  for  dissolution;  but  a  temporary  sus- 
pension of  the  corporate  business  would  not,  nor  a  neglect  to  choose 
officers,  although  a  legal  surrender  may  be  presumed  where  the 
non-user  of  the  corporate  franchises  iias  long  continued ;  nor 
would  the  mere  sale  of  the  corporate  property  have  such  an  effect.* 

4.  Mumma  v.  Potomac  Co.,  8  Pet.  23  Vt.  228;  Brufett  v.  Great  Western 
281;  Ang.  &  Ames,  §  772;  Norris  v.  R.,  25  111.  353;  2  Kent  Com.  311; 
Smithville,  1  Swan,  164;  2  Kent  Com.  Evarts  v.  Killingsworth  Man.  Co.,  20 
310;  Abb.  Dig.  Corp.  289;  Smith  v.  Conn.  448;  Rooke  v.  Thomas,  56 
Smith,  3   Des.  Ch.   557.  N.   Y.   559.      Under   pcneral   enabling 

5.  See  Pratt  V.  Jewett,  9  Gray,  34;  .'statutes  for  organizing  business  cor- 
N.  Y.  Rev.  Stats.  466-472;  Herring  porations,  a  nio<lo  of  fonnal  dis.solu- 
V.  N.  Y.  R.,  105  N.  Y.  340 ;  Morawetz  tion  is  generally  provided.  Such  for- 
§  637;  Taylor,  §§  433,  434.  mal  modes  under  pro|>er  judicial  sub- 

6.  See  2  Kyd,  471 ;  Ang.  &  Ames,  mission  are  desirable ;  and  yet,  as 
§  773,  and  cases  cited;  Abb.  Dig.  such  companies  usually  sustain  no 
Corp.  295;  Morawetz,  §§  637,  638;  real  public  duty,  and,  like  individu- 
Bradt  v.  Benedict,  17  N.  Y.  93  ;  Uni-  als,  fail  often  of  success  without  in- 
v«rsity  of  Maryland  v.  Williams.  9  solvency,  dissolution  should  be  simple 
Gill  &  J.  365;  State  v.  Adams,  44  Mo.  and  easy. 

570 ;    Brandon    Iron    Co.    v.    Gleason, 

367 


§  243  THE  I.AW  OF  PERSONAL  PROPEKTY.       [pART  II. 

§  243.     The  Same  Subject. 

The  fourth  mode  of  dissolution  —  by  forfeiture  of  the  fran- 
chises —  requires  a  judicial  investigation  and  decree,  bj  a  court 
of  competent  jurisdiction,  and  may  originate  in  a  variety  of 
causes;  but  the  decisions  in  which  a  forfeiture  has  been  declared 
are  either  for  mis-user  or  non-user  of  the  corporate  franchises, 
and  all  turn  upon  the  principle  that  a  charter  is  liable  to  forfeit- 
ure whenever  the  grantees  fail  to  act  up  to  the  end  or  purpose  for 
which  they  were  incorporated.''  Fraud,  collusion,  and  misman- 
agement on  the  part  of  the  stockholders  or  directors,  gross  trans- 
gressions of  the  charter  in  borrowing  money  or  speculating  with 
the  corporate  funds,  fraudulent  oiScial  statements  as  to  the  affairs 
of  the  company  for  imposing  upon  and  deceiving  the  public,  all 
these  may  be  enumerated  as  among  the  instances  of  mis-user, 
which  justify  a  judicial  forfeiture.  As  to  non-user  of  the  fran- 
chises, the  rule  is  of  course  less  strict ;  and  rarely  would  the  charter 
be  forfeited  on  this  account  unless  some  element  of  mis-user  were 
also  present;  for  in  general  to  work  a  forfeiture  something  more 
than  mere  casual  negligence  or  honest  error  must  be  shovvTi ;  some- 
thing more,  even,  than  a  slight  abuse  of  the  charter  privileges 
which  has  neither  produced  nor  tends  to  produce  mischief  to  any 
one.  But  the  discontinuance  of  business  for  an  unreasonable 
length  of  time  would  be  an  instance  of  non-user  calling  properly 
for  a  decree  of  forfeiture ;  if,  inded,  a  dissolution  might  not,  upon 
the  principle  of  surrender,  be  well  enough  presumed  without  it.^ 
There  are  a  number  of  cases  where  high-handed  and  arbitrary  acts 
on  the  part  of  influential  officers  or  members  of  a  corporation 
have  been  deemed  insufficient  for  a  sweeping  forfeiture  of  the 
franchises;  and  certainly  the  milder  methods  of  judicial  correc- 

7.  See  Bright.  Fed.  Dig.  Corp.  mercial  Bank  v.  State  of  Mississippi, 
VIII.;  Lum  V.  Robertson,  6  Wall.  6  Sm.  &  M.  613;  Abb.  Dig.  Corp.  296. 
277;  2  Kyd,  474;   2  Kent  Com.  312:  8.  lb.      And   see   Commonwealth   v. 

Ang.   &   Ames,   §   774    et  seq.;   State      Commercial  Bank,  28  Penn.  St.  383; 
Bank  v.  State,  1  Blaekf.  270;   Com-      State  v.  Commercial  Bank,  10  Ohio, 

535. 

368 


CHAP.  XI.]  MEilBERS    OF    CORPORATIONS.  §    243 

tion,  as  by  compelling  refractory  individuals  in  power,  are  pre- 
ferred wherever  available. 

The  government  which  created  the  corporation,  and  which  of 
course  can  waive  the  conditions  of  a  violated  charter,  must  insti- 
tute proceedings  for  forfeiture ;  and  the  remedy  is  either  by  scire 
facias^ —  the  usual  process  where  there  is  a  legally  existing  corpo- 
ration,—  or  by  quo  warranto.  Our  local  statutes,  however,  affect 
somewhat  the  mode  of  procedure;  the  tendency  in  many  States 
being  to  commit  jurisdiction  over  the  forfeiture  of  corporate  fran- 
chises to  chancery  instead  of  the  common-law  courts, —  that  is,  to 
the  highest  tribunal  of  the  State  in  the  exercise  of  its  equity,  not 
its  common-law  functions ;  ^  since  equity  has  a  more  flexible  dis- 
cretion for  meeting  the  various  controversies  which  may  arise. 

The  fifth  and  last  mode  by  which  a  corporation  may  be  dissolved 
is  by  expiration  of  its  term  of  duration.  This  term  being  defi- 
nitely fixed  by  its  charter  or  by  general  law,  a  complete  dissolu- 
tion takes  places  when  the  prescribed  limit  is  reached ;  and  all  the 
usual  consequences  follow,  unless  specially  provided  against.  It 
is  beyond  the  power  of  the  legislature  by  renewing  the  charter, 
afterwards,  to  revive  the  corporate  debts  and  liabilities,  any  more 

9.  Cooper    v.    Curtis.    30    Me.    488 ;  a     judicial     forfeiture     of     corporate 

Ang.   &  Ames,   §§   777,   778;    2   T.   R.  franchises  are  these:     Failure  to  ful- 

515:     Morawetz,    §    640;    Terrett    v.  fil  duties  assumed  and  owinp  to  the 

Taylor,  9  Cr.  51;   2  Kent  Cora.  313,  public,   State  v.   Pawtucket  Corpora- 

314 ;  Wilde  V,  Jenkins,  4  Paige,  481 ;  tion,    8    R.    I.    182;    32    Mich.    248; 

1  Bl.  Com.  485;  Abb.  Dig.  283;   Slee  Turnpike  Co.  v.  State.  3  Wall.  210: 

V.  Bloom,  5  Johns.  Ch.  380.     See,  as  or  obligations  imposed  for  reasons  of 

to  remedies,  supra,  §  241.  sound  public  policy,  State  v.  Milwau- 

In   England,   Parliament   may   dis-  kee  R.  R.,  45   Wis.   590.     For  unau- 

solve  a  corporation  and  deprive  it  of  thorized    exercise    of   a    franchise    or 

its    franchises    against    its     consent.  total    insolvency,    see    Morawitz,    §§ 

But    in    this    country,    State    legisla-  639-655    and    cases    cited;    Taylor,    § 

tures    are    restrained    from   doing   so  432. 

by  the  constitutional  provision  as  to  As  to  the  common-law  or  chancery 
impairing  the  obligations  of  con-  procedure  in  such  cases,  see  Mora- 
tracts.  Dartmouth  College  v.  Wood-  wetz,  ?§  656-659;  Ang.  &  Ames,  §§ 
ward,  4  Wheat.  658.  See  §  240,  731-765,  778;  High's  Extraordinary- 
supra.  Legal  Remedies,  §§  5D1-761. 

Among  causes  deemed  suflScient  for 

24  369 


§  244         THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

than  in  the  other  cases  of  dissolution  already  noticed.^  Charters 
may  be  expressly  limited  by  some  contingency;  but  where  a  for- 
feiture is  threatened  upon  condition  subsequent,  or  where  dissolu- 
tion per  se  is  in  doubt,  there  should  be  a  judicial  determination 
in  order  to  forfeit.^ 

§  244.     Effect  of  Dissolution  upon  Corporate  Property. 

The  effect  of  the  dissolution  of  a  corporation  upon  the  corpo- 
rate property  differs  according  to  whether  that  property  be  real  or 
personal.  The  theory  of  the  common  law  is  that,  upon  the  dis- 
solution or  civil  death  of  a  corporation,  all  the  real  estate  remain- 
ing undisposed  of  reverts  to  the  original  grantor  or  his  heirs, 
while  the  personal  property  vests  in  the  sovereign  gTanting  the 
charter, —  in  England  the  king,  in  this  country  the  people.  The 
debts  due  from  the  corporation  are  extinguished  altogether,  and 
the  suits  of  creditors  already  pending  fall  to  the  ground.^  But 
this  rule,  which  was  tolerable  only  so  long  as  few  trading  corpo- 
rations existed  and  none  were  dissolved,  has  long  since  become 
obsolete;  and  by  means  of  statutes,  and  the  interposition  of  the 
chancery  courts,  these  mischievous  consequences  are  now,  for  the 
most  part,  avoided.  In  England  insolvent  or  dissolved  moneyed 
corporations  have  not  been  practically  subjected  to  this  species  of 
wholesale  confiscation ;  and  our  own  tribunal  of  last  resort  declares 
that  a  statute  distributing  the  property  of  such  a  corporation 
amongst  its  stockholders,  or  giving  it  to  a  stranger,  or  seizing  it 

1.  Ang.  &  Ames,  §  778 ;  Bank  v.  sequences  of  a  dissolution  are  both 
Lockwood,  2  Harring.  8;  Bank  of  substantial  and  formal.  The  sub- 
Mississippi  V.  Wrenn,  3  Sm.  &  M.  stantial  consequences  are  that  the 
791;  Morawetz,  §  630;  People  v.  business  is  wound  up,  and  all  the 
Walker,  17  N.  Y.  502;  La  Grange  R.  legal  relations  subsisting  in  respect 
V.  Rainey,  7  Coldw.  432;  Matter  of  of  the  corporate  funds  are  liquidated. 
Brooklyn  R.,  81  N.  Y.  69.  The  formal  consequences  are  that  the 

2.  lb. ;  Morawetz,  §  631.  corporation  can  no  longer  act  as  such 

3.  Co.  Lit.  13  b;  1  Bl.  Com.  484;  2  either  before  the  courts  or  in  business 
Kyd,  516;  Morawetz,  §  660;  Abb.  transactions.  Taylor,  §  435;  National 
Dig.   Corp.    2%;    2   Kent   Com.    307;  Bank  v.  Colby,  21  Wall.  614. 

Ang.  &  Ames,  §§  195,  779.     The  con- 

370 


CHAP.  XI.] 


MEMBERS    OF    CORPORATIONS. 


§  244 


to  the  use  of  the  State,  would  as  clearly  impair  the  obligation  of 
contracts  as  a  law  giving  to  heirs  the  effects  of  a  deceased  natural 
person  to  the  exclusion  of  his  creditors.'* 

Equity  relieves  at  the  petition  of  stockholders  and  creditors 
against  the  inequitable  consequences  of  a  dissolution;  and  the 
legislature  may  reserve  the  assets,  in  any  special  case,  so  as  to 
enforce  the  liquidation  of  outstanding  claims,  or,  as  is  frequently 
the  case,  may  pass  general  statutes  for  that  purpose.^  In  effect, 
the  prevailing  rule  in  this  country  is,  that  upon  the  dissolution  of 
a  business  corporation  its  effects  are  a  trust  fund  in  equity  for  the 
pa;)Tnent  of  creditors,  who  may  follow  them  into  the  hands  of  any 
one  not  a  bond  fide  creditor  or  purchaser  without  notice;  all 
rights  under  the  defunct  corporation  are  fixed  at  its  dissolution; 
and  the  corporation  has  a  sort  of  nominal  existence  for  the  pur- 
pose of  closing  its  concerns  after  the  manner  of  administration 
upon  the  estate  of  a  deceased  individual.^ 


4.  Curran  v.  State  of  Arkansas,  15 
How.  312 ;  Bacon  v.  Robertson,  18 
How.  480;  2  Kent  Com.  307,  n. ;  Ang. 
&  Ames,  §  779,  and  cases  cited ;  Lin- 
coln V.  Fitch,  42  Me.  456;  Abb.  Dig. 
Corp.  298. 

5.  See  Pomeroy  v.  Bank  of  Indiana, 
1  Wall.  23;  Nevitt  v.  Bank  of  Port 
Gibson,  6  Sm.  &  M.  513;  Robinson 
V.  Lane,  29  Ga.  337. 

6.  Crease  v.  Babcock,  23  Pick.  334; 
Ourran  v.  State  of  Arkansas,  15  How. 
312 ;  Bacon  v.  Robertson,  18  How. 
480;  Ang.  &  Ame>i,  §  779;  Morawetz, 
§§  662-664;  Pomeroy  v.  State  Bank, 
1  Wall.  23 ;  Connecticut  Life  Insur- 
ance Co.  V.  Dinscomb,  108  Tenn.  724, 
69  S.  W.  345;  Craycraft  v.  National 
Building  &  Loan  Ass'n,  117  Ky.  229-, 
77  S.  W.  923. 

Just  before  the  dissolution  takes 
place,  the  corporation  may  assign  to 
a  trustee,  for  the  benefit  of  the  stock- 
holders,   the    corporate    property,    or 


through  its  proper  officer  indorse  over 
the  unpaid  paper;  and  thus  enable 
the  trustee  to  sue  in  his  own  name 
and  distribute  the  effects,  notwith- 
standing a  dissolution,  to  those  who 
occupy  more  properly  than  the  State 
the  position  of  next  of  kin  to  thia 
artificial  being;  for  our  policy  is  to 
give  stockholders  all  the  distributive 
balance.  Ingraham  v.  Terry,  11 
Humph.  572 ;  Cooper  v.  Curtis,  30 
Me.  488;  Folger  v.  Chase,  18  Pick. 
66.  And  see  Lum  v.  Robertson,  6 
Wall.  277.  But  notwithstanding  the 
charter  had  expired  bi'cauSe  of  for- 
feiture or  otherwisi',  a  corporation 
was  made  liable  under  a  national 
bankrupt  act  (now  repealed)  in  th« 
United  States  courts;  so  that,  if  the 
corporation  were  bankrupt,  its  prop- 
erty would  be  taken  wherever  found, 
even  in  the  hands  of  a  State  receiver, 
and  made  subject  to  distribution 
among     creditors    accordingly.       The 


371 


§    245  THE    LAW    OF    PEESONAI.    PROPERTY.  [PART  II. 

Where  there  is  no  insolvency  or  bankruptcy  the  title  to  the 
corporation  assets  after  dissolution  is  in  the  stockholders  as  ten- 
ants in  common,  subject  to  the  rights  of  creditors ;  ''  and  the  assets 
of  the  corporation  may  be  assessed  for  taxation  at  the  domicile 
of  the  sole  stockholder.^ 

To  avert  the  common-law  consequences  of  a  dissolution  more 
completely,  the  statutes  of  many  of  the  States  now  provide,  at 
length,  for  the  vpinding  up  of  dissolved  companies,  the  collection 
of  assets,  the  liquidation  of  debts,  and  the  just  distribution  of  the 
corporate  assets.^  Directors  who  carry  on  the  business  after  the 
legal  dissolution  of  the  corporation  and  before  its  affairs  are 
finally  wound  up,  are  bound  to  account  for  the  proceeds  of  such 
business.^ 

§  245.  Consolidation  or  Amalgamation  of  Private  Corporations; 
Secession. 
The  legislative  union  or  merger  of  two  corporate  bodies  in  one 
new  one  is  termed  in  this  country  "  consolidation,"  the  correspond- 
ing word  used  in  England  being  "  amalgamation."  The  amalga- 
mation or  consolidation  of  corporations  cannot  be  accomplished 
unless  by  express  grant  of  the  legislature  or  necessary  implication ; 
since   the   delegation   of   corporate    powers   by   one   company   to 

bankrupt  law   of   1867   explicitly  de-  7.  Baldwin  v.  Johnson,  95  Tex.  95, 

clared  that,  whenever  any  corporation  65  S.  W.  171. 

shall    be    declared    bankrupt,    all    its  8.  Ewald    v.     Louisville,     172     Ky. 

property  and  assets  shall  be  distrib-  451,  181  S.  W.  1095. 

uted  to  the  creditors  of  the  corpora-  9.  Morawetz,     §     665,     and     cases 

tion    in    the    manner    provided    with  cited;   Folger  v.  Chase,  18  Pick.   66; 

respect     to     natural     persons.        See  Mariners'    Bank    v.    Sewell,     50    Me. 

Bankruptcy     Act     of     1867,     §     37;  230;   Blake  v.  Portsmouth   E.   R.,   39 

Bump's   Bankruptcy,    1,   421;    Thorn-  N.    H.    435;    Ramsey    v.    Peoria    Ins. 

hill  V.  Bank  of  Louisiana,  3  Bank  R.  Co.,   55  111.   311;   Tuscaloosa  Ass^n  v. 

110.     And  see  Warrant  Finance  Co.'s  Green,  48  Ala.  346.     And  see  Mason 

Case,  L.  R.  4  Oh.  643,  as  to  the  Eng-  v.  Pewabie  Co.,  133  U.  S.  50. 

lis'h    practice.      See    also    our    later  1.  Mason  v.  Pewabie  Co.,  133  U.  S. 

United  States  bankruptcy  legislation  50. 

now    (1917)    in  effect,  as  set  out   in 

Collier  on   Bankruptcy. 

3Y2 


CHAP.  XI.]  MEMBEltS    OF    CORPOltATlOXS.  §    245 

another  is  not  within  its  ordinary  functions  nor  included  among 
the  objects  for  which  it  was  created.  Furthermore,  the  consent 
of  the  stockholders  of  each  corporation  is  generally  required  in 
this  country  to  complete  the  act  of  consolidation.^  The  effect  of 
consolidation,  when  accomplished,  is  to  confer  the  united  powers 
upon  that  corporation  which  takes  the  name  of  the  consolidated 
company;  also  to  transfer  the  debts  as  well  as  the  assets  of  the 
old  corporation,  unless  otherwise  specially  provided  against.^ 
Nevertheless,  the  question  resolves  itself  largely  into  the  construc- 
tion of  the  legislative  act.'*  Railroad  companies  frequently  seek 
to  consolidate  in  these  days  for  the  purpose  of  bringing  a  large 
transportation  route  under  one  management;  but  we  must  here 
distinguish  between  that  which  constitutes  a  legal  consolidation 
or  amalgamation  of  corporations  and  the  mere  connection  of  con- 
tinuous routes  by  lease  or  otherwise,  as  common  carriers.^  Com- 
mon carriers  once  more  owe  a  duty  to  the  public  which  they  are 
not  permitted  to  abnegate  at  pleasure ;  and  it  is  well  settled  that 
a  railroad  company  cannot  sell  or  lease  its  entire  property  and 
franchise  to  another  corporation  without  express  authority  of  law.^ 

2.  Canal    Co.    v.    Fulton    Bank,    7  though  a  corporation  of  that  State. 

Wend.    412;    Morawetz,    §§    533,    543-  See   Mullor    v.    Dows,    94    U.   S.    447; 

565;   Fisher  v.  Evansville,  &.c.,  R.  R.  Sage  v.  Lake  Sliore  R.,  70  N.  Y.  220; 

Co.,  7  Ind.  407;   Bishop  v.  Brainerd,  Quincy  Bridge  Co.  v.  Adams,   88   111. 

28     Conn.      298;      Railroad     Co.      v.  619.      Consolidation    of    corporations. 

Georgia,  98  U.  S.  Supr.  359;   Shields  Book  2G,  N.  Y.  Rpts.,  Bender  ed.,  note, 

V.  Ohio,  95  U.  S.  319;  Racing  R.  R.  p.  955.    Monopolies,  purcliase  of  stock 

V.   Farmers'   Trust   Co.,    49   111.    349;  in  other  companies.     Book  30,  N.  Y. 

Kean     v.     Johnson,     1     Stoekt.     401;  Rpts.,  Bender  ed.,  note,  p.  1111. 
Chappcll's  Case,  L.  R.  6  Ch.  9-02.     If  3.  Robertson   v.   City   of   Rockford, 

a   corporation   has   been   consolidated  21111.451.    See  Abb.  Dig.  202 ;  sup^-o, 

with   others  under  a  law  which  con-  §  232. 

tinues    all    its    liabilities,    an    action  4.  See   Morawetz,    §§    543-565,    and 

commenced   before   the   dissolution    is  cases  cited :  Taylor.  §  403  e«  srr/. 
not  thereby  abated.     Baltimore  R.  v.  5.  See  2  Redf.  Railw.,  3d  ed.,  656; 

Musvselman,   2  Grant,  348.  Pearce  v.  Madison  R.  R.  Co.,  21  How. 

A   corporation   formed  by   the  con-  441. 
solidation  of  several  companies  under  6.  Central    Trans.    Co.    v.    Pullman 

the  laws  of  different  Stated  is  treated  Car  C^.,  139  U.  S.  24;   Railway  Cos. 

within    each     State    jurisdiction     as  v.  Keokuk  Bridge  Co.,  131  U.  S.  371. 

373 


§  245a         THE  LAW  OF  PERSONAL  PROPERTY.        [PAUT  II, 

Nor  is  a  corporation  in  debt  permitted  to  transfer  its  entire  prop- 
erty by  lease  or  otherwise  so  as  to  prevent  the  application  of  the 
property  to  the  satisfaction  of  its  own  debts/ 

The  secession  of  corporations,  too,  gives  rise  to  legal  controver- 
sies; and  the  rule  is  that,  where  any  portion  of  the  members 
secede  and  erect  a  new  corporation,  the  corporate  property  will 
not  be  transferred  and  distributed  in  consequence,  but,  in  the 
absence  of  mutual  stipulations  to  the  contrary,  will  remain  with 
the  old  corporation.^  The  best  test  for  determining  which  of  the 
two  divisions  represents  the  legitimate  succession  in  a  case  of  this 
sort  is  to  ascertain  which  one  has  maintained  the  regnilar  forms 
of  organization  throughout.^ 

§  245a.     Holding  Companies. 

The  success  of  the  Government  in  the  various  .mti-Trust  suits 
in  breaking  up  trusts  and  other  combinations  of  capital  of  that 
nature  led  to  the  device  of  holding  companies,  so-called.  These 
are  simply  corporations  of  a  large  capitalization  which  do  no 
business  whatever,  and  have  no  property  except  the  stock  of  vari- 
ous operating  companies  which  it  is  desired  to  combine  under  one 
management.  This  form  of  corporate  organization  is  still  prac- 
ticed to  a  large  extent,  although  it  may  be  illegal,  as  being  an 
offense  against  the  anti-trust  laws,  under  various  decisions  of  the 
Supreme  Court.  The  courts  are  very  quick  to  look  through  the 
shell  or  sham  of  such  a  corporation,  especially  in  case  of  fraud, 
and  to  administer  the  rights  of  the  parties  as  if  it  did  not  exist, 
disregarding  the  separate  entities  of  the  various  subsidiary  com- 

The   same    reasoning   applies    to   cor-  293,  111  N.  E.  713  (corporation  act  of 

porations  generally.     lb.  an    added    corporation)  ;     Hyams    v. 

7.  Chicago  R.  v.  Third  Nat.  Bank,  Calumet  &  Hecia  Co.,  221  Fed.  529, 
134  U.  S.  276.  137   C.   C.   A.   239;    Colgate  v.   U.   S. 

8.  Abb.  Dig.  Corp.  818;  Ang.  &  Leather  Co.,  75  N.  J.  E.  229,  72  Atl. 
Ames,  §  194;  North  Hempstead  v.  126  (N.  J.'s  power  to  consolidate); 
Hempstead,  2  Wend.  135;  Smith  v.  Donald  Maekay  v.  New  York,  N.  H. 
Swormstedt,  16  How.  288.  &  H.  R.  R.  Co.,  82  Conn.  73,  72  Atl. 

9.  Kerr  v.  Trego,  47  Penn.  St.  292.       583,  24  L.  R.  A.  N.  s.  768,  n. 
See  Gray  v.  Hemenway,  223  Mass. 

3Y4 


CHAP.  XI.]  MEMBEBS    OF    CORPORATIONS.  §    246 

panies  and  treating  the  whole  as  one  company,  which  it  really  is. 
So,  where  fraud  is  charged,  the  court  may  grant  an  order  to  an 
aggrieved  stockholder  in  the  holding  company  to  examine  the 
books  of  the  subsidiary  companies.' 

§  246.     Revival  of  Private  Corporations. 

It  remains  only  to  say  a  few  words  concerning  the  revival  of  a 
corporation.  Mr.  Justice  Story  says  that  it  is  true  that  a  cor- 
poration may  retain  its  personal  identity,  although  its  members 
are  perpetually  changing;  for  it  is  its  artificial  character,  powers, 
and  franchises,  and  not  the  natural  character  of  its  members, 
which  constitute  that  identity;  and  that  for  the  same  reason 
corporations  may  be  different,  though  the  names,  the  oflScers,  and 
the  members  of  each  are  the  same.^  The  same  sovereign  power 
which  created  the  original  corporation  may,  after  its  dissolution, 
revive  or  renew  the  old  corporation  or  create  a  diiferent  one  in  its 
place;  and  the  revival  of  an  old  corporation  may  be  either  with 
the  old  or  a  new  set  of  corporators,  and  with  the  old  powers  alone, 
or  the  superaddition  of  new  powers.^  The  question  whether  a  new 
corporation  is  thus  created  or  an  old  one  revived  is  an  important 
one;  for  in  the  latter  case  all  the  rights  and  responsibilities  of 
the  old  corporation  become  renewed,  while  in  the  former  case  this 
would  be  impossible.'*  All  this  is  a  matter  of  statute  construction 
for  ascertaining  the  legislative  intent;  and  we  may  add  that  an 
old  corporation  may  be  as  well  revived  under  a  general  law  as  a 
special  charter.^  A  dissolved  corporation  is  not  to  be  renewed  or 
revived  without  the  consent  of  the  corporators ;  for  no  charter  is 
a  matter  of  legislative  compulsion.^ 

1.  Martin,    v.    D.    B.    Martin    Co.,  4.  lb.;  Smith  v.  Chicago,  Ac.  R.  R. 
fDol.  Oh.  1914)    88  Atl.  612.                       Co.,  18  Wis.   17:   Union  Canal  Co.  v. 

2.  Bellows    V.    Hallowell    Bank.    2       Younj:,   1   Wliart.   410. 

Mass.  43.  5.  Miller   v.    English,    1    Zabr.    317. 

3.  Ang.    &   Ames,    §    780;    Kinp:   v.       Sfo  Low  v.  Conn.  River  R.  R.  Co..  46 
Pasmore,   3   T.   R.   199,   241;    2    Kyd,      N.  H.  284. 

516;  Abb.  Dig.  Corp.  816-819;  Mora-  6.  Morawotz.  §  666;  People  v.  Man- 

wetz,  §§  566,  666.  hattan  Co.,  9  Wend.  381. 

375 


§  247  THE  LAW  OF  PERSONAL  PROPERTY,        [PART  IL 

§  247.     Summary   as  to  the  Kinds   of   Ownership   in   Personal 
Property. 

We  have  thus  endeavored  to  place  before  the  reader,  in  this 
and  the  three  preceding  chapters,  the  number  and  connection  of 
the  owners  of  personal  property;  pursuing  a  plan  similar  to  that 
which  our  common-law  writers  are  wont  to  apply  to  real  estate. 
We  have  shown  that  personal  property  may  be  rightfully  held  for 
beneficial  enjoyment,  not  only  in  severalty  (or  by  a  single  indi- 
vidual in  his  own  right),  but  by  joint  owners  and  owners  in  com- 
mon, corresponding  in  the  main  to  the  joint  tenants  and  tenants 
in  common  of  lands  and  tenements ;  by  partners,  whose  facilities 
for  managing  the  property  together  and  carrying  on  business  with 
it  so  as  to  buy,  sell,  and  make  profit,  are  far  greater  than  those 
of  either  joint  or  common  owaiers,  and  who,  besides,  enjoy  their 
respective  interests  without  being  subject  to  that  awkward  con- 
dition of  survivorship  which  renders  the  estate  of  joint  owners  so 
precarious;  by  members  of  a  limited  parttiership  or  of  a  joint- 
stock  company,  who  seek  to  invest  capital  in  business  without 
themselves  incurring  the  extensive  responsibility  of  ordinary 
partners ;  by  ship-owners,  whose  peculiar  rights  and  liabilities  are 
to  a  great  extent  controlled  by  commercial  usage ;  and,  finally,  by 
members  of  a  corporation,  that  fictitious  being  of  statute  law  and 
complete  image  of  State  or  municipal  sovereignty,  which  furnishes 
in  a  compact  organization,  in  the  power  of  perpetual  succession, 
and  in  a  responsibility  for  the  individuals  composing  it  dimin- 
ished to  the  lowest  practicable  point,  the  greatest  advantages  for 
combining  the  means  of  many  for  special  and  profitable  invest- 
ment and  enterprise  in  trade,  commerce,  manufactures,  and  the 
arts.  In  all  of  these  cases  the  ownership  of  each  individual  in 
the  combined  personalty  is  on  the  same  footing,  and  their  rights 
and  liabilities  coexist  at  the  same  time,  all,  however,  in  due 
proportions. 

But  property  in  things  personal  may,  in  another  sense,  belong 
to  two  or  more  at  the  same  time ;  that  is,  where  the  right  to  the 
thing  itself  is  separated  from  its  rightful  possession ;    as,  perhaps, 

376 


CHAP.  XI.] 


MEMBERS    OF    CORPORATIONS. 


§  247 


in  the  case  of  an  agent  (though  theoretically  an  agent  simplj 
represents  another),  and  certainly  where  a  bailee  of  goods  en- 
gages in  transporting  them  for  the  true  owner,  or  otherwise 
acquires  a  temporary  right.  Here  a  different  principle  of  law 
applies,  which  would  more  properly  be  considered  under  the  head 
of  title  to  things  personal,  and  which  we  shall,  in  fact,  consider 
hereafter  in  other  volumes ;  since  unity  of  oumership  in  the  same 
degree  is  our  present  topic  of  discussion.  Indeed,  there  may  be 
partners  or  corporations  concerned  in  a  bailment  or  agency  and 
having  the  immediate  possession  to  goods,  as  well  as  partners  or 
corporations  with  whom  is  the  ultimate  right  of  ownership  or  the 
right  of  property  therein;  and  joint  trustees  frequently  hold 
property  for  the  benefit  of  heirs  and  legatees  whose  interests  are 
joint  or  common,  according  to  the  terms  of  the  will  or  other 
instrument  which  created  the  trust.'' 


7.  Upon  the  subject  of  American 
private  corporations  the  reader  is  re- 
ferred at  length  to  Angell  and  Ames 
on  Corporations,  a  work  long  ago 
written,  but  still  annotated  by  other 
editors  in  later  editions;  also  to  the 
fresher  work  of  Mr.  Victor  Morawetz 
on  the  same  subject,  issued  in  1882, 
and  a  still  later  work  by  Mr.  Henry 
O.  Taylor.  There  are  various  digests, 
such  as  those  of  the  Messrs.  Abbott; 
besides  treatises  on  the  law  of  spe- 
cial corporations,  such  as  Rcdfield  on 
Railways  and  that  of  Dillon  on  Mu- 
nicipal   Corporations.      See    also   late 


treatises  of  W.  W.  Cook  and  Frank 
White  on  Corporations ;  S.  D.  Thomp- 
son; note  to  §  517a,  post.  All  of 
these  are  American  works,  and  in  this 
country  the  business'  of  private  cor- 
porations takes  a  wide  development, 
and  gives  rise  to  much  controversy 
in  the  courts. 

See  further,  as  to  title  in  personal 
property,  this  author's  second  volume 
on  Personal  Property  (Original  Acqui- 
sition, Gifts  and  Sales),  and  Schoul- 
er's  Bailments,  including  Pledge,  Inn- 
keepers and   Carriers. 


377 


CHAPTER    XII 

INCOME,    INTEREST    AND    USURY. 

§  248,  Usufruct  or  Income  of  Personal  Property;  General 
Remarks. 
Personal  property,  like  real  estate,  has  its  appropriate  usu- 
fruct, capable  of  being  reduced  to  a  money  valuation.  Some 
chattels,  to  be  sure,  are  naturally  consumed  in  the  use ;  pro- 
visions, food,  drink,  and  garments,  for  instance;  while  others, 
not  strictly  of  that  class,  wear  out  or  deteriorate  so  quickly  as  to 
yield  little  or  no  perceptible  return  apart  from  an  exhaustion  of 
the  thing.  Of  salaries,  annuities,  pensions,  and  the  like,  one 
often  says  that  they  are  mere  income ;  meaning  that,  at  all  events, 
their  payment  continues  periodically  for  a  time,  as  though  for 
one's  current  needs  and  benefit,  and  then  must  fail  altogether. 
Patents  and  copyrights  yield  likewise  only  a  periodical  return 
during  the  term  of  the  statute  monopoly.  Yet  the  usufruct  of 
personal  property  is  in  most  other  instances  of  distinct  appreciable 
value  as  compared  with  capital,  and  familiarly  taken  into  account 
by  business  men  as  a  certain  percentage  in  value  of  the  principal 
or  thing  itself,  enhancing  the  market  value  of  the  latter  accord- 
ingly. Animals  of  various  kinds  yield  a  profit,  not  only  in  the 
labor  they  perform,  the  exliibition  they  afford,  or  their  valuable 
products,  but  through  the  propagation  of  their  own  species,  which 
is  a  peculiar  source  of  emolument.  Ship-owners  derive  periodical 
profit  from  the  vessel  by  transporting  or  letting  it  for  transporta- 
tion; and  a  vessel,  though  wearing  out  in  time,  may  yet  outlast 
many  a  house,  yielding  meanwhile  a  recompense  corresponding 
to  a  rental.  Partners  and  business  men  generally  expect,  by  turn- 
ing over  their  personal  capital,  to  gain  periodical  profits,  while 
the  profits  of  a  stock  company's  business  are  regularly  declared  as 
dividends  among  the  shareholders.  All  prudent  men,  indeed, 
having  capital  in  a  civilized  community,  seek  to  invest  it  so  as  to 

378 


CHAP.  XII.]  I.NCO-MK,     INTEREST    AND    USURY.  §    249 

derive  a  good  and  regular  income ;  and  for  such  purposes,  personal 
property  may  be  found  not  less  desirable  than  real.  In  the 
present  age,  moreover,  safe  investments  are  made  in  the  well- 
secured  debts,  so  to  speak,  of  others,  or  so  as  to  supply  the  mone- 
tary needs  of  enterprising  men  of  a  community,  or  of  the  State 
itself.  These  debts,  represented  by  bonds  or  commercial  paper, 
are  payable  with  periodical  pecuniary  return  to  the  lender  and 
at  least  a  reciprocal  theoretical  advantage  to  the  borrower  himself. 
In  our  courts  of  equity,  questions  as  to  the  safe  investment  and 
reinvestment  of  trust  funds  in  personal  property  are  constantly 
arising,  and  the  respective  interests  of  beneficiaries  regarding 
capital  and  income  are  carefully  considered.^ 

The  statement  of  these  truths,  perhaps  truisms,  may  properly 
preface  an  exposition  of  the  law  of  usufruct  with  especial  refer- 
ence to  the  two  kindred  and  familiar  topics  of  interest  and  usury. 

§  249.  Origin  of  the  Practice  of  Taking  Recompense  on  Loans ; 
Primitive  Ideas  as  to  Interest  and  Usury. 
When  real  estate  is  let  by  the  owner  to  some  stranger,  the  one 
loses  for  the  time  being  his  beneficial  enjoyment  of  the  premises, 
while  the  other  gains  it;  and  accordingly  such  a  sum  is  made 
payable  by  the  latter  to  the  former  as  may  have  been  agreed  upon, 
by  way  of  recompense,  which  is  known  as  rent.  Now,  as  to  per- 
sonal property,  a  specific  chattel  is  often  loaned  by  the  owner, 
the  borrower  paying  a  sum  for  the  use  of  it  which  he  is  supposed 
to  make  good  by  liis  own  profits,  or  the  enjo^^nent  he  derives  from 
the  thing,  so  that  practically  he  reimburses  himself  for  such  a 
payment.  In  a  cultivated  ago  money  becomes  the  medium  of 
exchange ;  and  so,  instead  of  hiring  chattels,  men  in  the  course  of 
their  business  find  it  convenient  to  borrow  money  or  cash  as  an 
equivalent  or  the  means  of  procuring  other  kinds  of  property, 
upon  which  loan  they  hope  to  derive  some  enjoyment  or  profit. 
Whether  it  be  land  or  some  specific  chattel,  or  that  medium  of 
exchange  which  represents  them  all,  there  is  one  party  who  gives 

1.  See  supra,  c.  VII. 

.379 


§  250  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

up  the  temporary  use  of  his  own  property,  and  another  who  takes 
that  use  and  renders  an  equivalent  in  return. 

This  statement  of  the  transaction  between  borrower  and  lender 
in  its  simplest  form  may  aid  the  reader  towards  reaching  just 
conclusions  on  a  subject  which  has  greatly  disturbed  the  legis- 
lators and  statesmen  of  every  century.  Wise  men  of  a  primitive 
age,  who  would  not  scruple  to  take  compensation  for  the  hire  of 
their  cattle  or  the  occupation  of  their  lands,  have  regarded  with 
horror  the  thought  of  paying  correspondingly  for  the  use  of  that 
which  might  purchase  both.  This  was,  doubtless,  partly  because 
of  the  peculiar  and  hidden  characteristics  which  money  possesses, 
although  in  truth  a  species  of  property;  and,  on  more  general 
considerations,  because  of  the  jealousy  with  which  the  poor  man, 
the  embarrassed  debtor,  and  the  toiler  must  always  regard  the 
capitalist.  The  Mosaic  law  denounced  the  letting  of  money  upon 
usury,  and  yet  Jews  have  become  the  greatest  usurers  of  modern 
times.  Ancient  Rome  discouraged  and  for  a  time  abolished  the 
same  practice,  but  in  the  age  of  Roman  commerce  it  necessarily 
revived  and  extended.  Many  of  the  fathers  of  the  primitive 
Christian  church  considered  it  sinful  to  lend  money  on  compen- 
sation, and  the  canon  law  of  the  Middle  Ages  was  to  the  same 
effect;  and,  before  the  time  of  Henry  VIIL,  the  common  law 
and  statute  law  of  England  made  the  taking  of  recompense  under 
these  circumstances  not  only  unlawful,  but  an  offence  visited  with 
very  severe  penalties.^  Yet  in  mercantile  England  of  to-day, 
wealthy  and  prosperous,  and  in  our  own  land  too,  wherever  and 
whenever  there  is  a  nation  of  intelligent  capitalists,  whether  Jew, 
Christian,  or  Pagan,  we  find  them  loaning  upon  some  rate  of 
compensation,  or  not  loaning  at  all. 

§  250.     The  Same  Subject. 

The  reason  why  money  or  its  equivalent  yields  to  the  lender, 
when  left  free  and  uncontrolled,  some  percentage  of  compensation 
is  that  common  sense  and  the  justice  of  the  thing  demand  it.     A 

2.  See  Encycl.  Am.  "  Usury ;  "  Blydenburgh  on  Usury,  1-3. 
380 


CHAr.  XII.]  INCOME,    INTEREST    AND    USURY.  §    251 

man  might  as  well  be  expected  to  give  houses  and  lands  rent  free, 
or  to  put  stock  into  a  business  where  he  was  sure  of  making  no 
profit  and  might  lose  the  whole  of  it,  as  to  hazard  money  by 
loaning  it  to  a  stranger  and  hope  for  nothing  in  return  but  the 
capital  he  advanced.  The  laws  of  trade  exact  compliance  with 
this  reasonable  rule  of  requiring  interest  to  be  paid  upon  the 
principal  sum  advanced ;  and  if  legislation  be  stringent  and 
obstructive  in  this  respect,  various  shifts  and  devices  are  found 
for  evading  the  legal  penalties  against  usury;  and  since  men 
must  and  will  borrow  for  their  purposes,  whatever  be  the  cost,  the 
practical  consequence  inevitably  ensues  that  the  prevailing  rate 
advances  in  proportion  to  the  extra  risk  of  loss  and  punishment 
which  the  lender  encounters.  Contempt  for  the  law  follows  upon 
contemptible  legislation.  It  is  only  in  countries  where  trade  is 
hopelessly  stagnant,  or  borrowers  alone  make  the  laws,  that  we 
may  ever  expect  to  find  illiberal  notions  prevailing  in  this  matter 
of  interest  and  usury.  The  moment  capitalists  and  lenders  have 
their  voice  in  the  administration  of  affairs,  despite  the  jealousy 
with  which  the  poor  must  always  regard  the  wealthy,  the  right 
to  charge  for  the  loan  of  their  funds  is  sure  to  be  promptly  con- 
ceded to  them.^ 

§  251.     Modern  Legislation  Distinguishing  Interest  and  Usury. 

Thus   far,    then,    have    we    emphatically    progressed,    that    in 

England  and  the  United  States  persons  are  no  longer  forbidden 

to  lend  money  upon  a  recompensa     But  we  have  stood  in  both 

3.  The   usury   laws   of   Rome   were  the  over-scrupulous  Christians  appear 

doubtless  founded   in   heathen   policy.  to  have  overlooked :     where  the   folly 

But  as  legislators  in  England  and  the  of  the  man  who  buried  trust   money 

United   States   have   been   largely   in-  in    a    napkin,    instead    of    plaeinsr    it 

fluenced  in  opposin^f  interest  or  usury  where  it  would  have  jjained  "usury" 

by   arguments   drawn    from    the    sup-  for  the  owner,  was  rebuked    (see  St. 

posed  prohibitions  of  the  Holy  Scrip-  Luke  xix.   23).      If    is  rather  the  ex- 

tures  (or  rather  of  the  Mosaic  code),  tortion  of  greedy  and  avaricious  capi- 

it  micrht  be  well  to  call  attention  to  talists  which  the  Scriptures  condemn 

that  familiar  parable  of  the  servants  than  any  universal  practice  of  taking 

with   the   talents,  which  so  many   of  intcre.'^t  for  the  loan  of  money. 

381 


§  251  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  H. 

countries  upon  a  technical  distinction  which  the  statutes  com- 
monly make  between  interest  and  usury.  That  compensation 
which  is  paid  by  a  borrower  to  a  lender,  and  generally  by  one 
indebted  to  his  creditor,  for  the  use  of  money,  is  at  this  day  called 
interest,  provided  the  rate  be  a  legal  one  and  conform  to  the  law ; 
while  such  compensation,  if  in  excess  of  the  legal  rate,  is  stigma- 
tized as  usury,  and  of  course  is  attended  with  the  legal  penalties, 
whatever  these  may  be.  But  for  such  statute  limitations,  interest 
and  usury  would  be  correlative  terms,  since  no  one  could  take 
compensation  at  all;  and  as  every  State  has  its  own  usury  laws, 
we  find  different  rates  of  percentage  established,  theoretically 
based  upon  the  demands  of  trade,  though  in  many  localities  fall- 
ing far  short  of  these  demands  and  subject  to  constant  evasion. 
In  some  States  the  legal  rates  of  interest  rise  as  high  as  ten,  or, 
by  special  contract,  even  twenty  per  cent.,  in  others  it  has  been 
as  low  as  five  per  cent. ;  but  the  "  lawful  rate  "  usually  prevail- 
ing is  and  has  been  in  this  country  what  it  remained  in  England 
for  more  than  half  a  century  previous  to  the  passage  of  the 
Statute  of  Anne  in  1713 ;  namely,  six  per  cent.'*  So  frequently 
are  the  usury  laws  modified  in  these  later  times, —  though,  for 
obvious  reasons,  not  so  rapidly  as  the  wants  of  a  mercantile  com- 
mimity  call  for  a  change, —  that  to  attempt  to  find  any  moral  basis 
upon  which  to  predicate  the  statutory  offence  seems  hardly  pos- 
sible ;  and  it  can  only  be  said  that  he  who  transcends  the  arbitrary 
rates  established  by  a  local  legislature  is  technically  a  taker  of 
usury  instead  of  interest,  and  becomes  a  victim  to  the  penalties  of 
the  law,  which  in  some  jurisdictions  are  very  stringent. 

The  latest  policy,  however,  in  England  and  America,  appears 
towards  the  complete  abolition  of  interest  and  usury  laws,  so  as 
to  leave  parties  who  stipulate  for  a  loan  free  to  regulate  their 
contracts  according  to  their  own  wishes;  and,  in  effect,  to  estab- 
lish a  free  trade  in  money,  allowing  the  mercantile  law  of  supply 
and  demand  to  regulate  the  standard  of  interest  rates,  uncon- 

4.  See     Bouv.      Diet.      "Interest,"  "Usury;  "  Blyd.  Usury,  1-3;  Stat.  12 

Anne,  c.  16. 

382 


CHAP.  XII.] 


INCOAIE,    INTEREST    AND    USURY. 


251 


trolled  by  government.  By  an  act  passed  in  England  on  the  10th 
day  of  August,  1854,  all  the  laws  against  usury  in  that  country 
are  repealed.  But  where  interest  is  now  payable  upon  any  con- 
tract, express  or  implied,  for  payment  of  the  legal  or  current  rate 
of  interest,  or  where  interest  is  payable  by  any  rule  of  law,  the 
same  rate  is  recoverable  as  before  the  act.^  In  this  country,  too, 
there  are  several  States  (and  their  number  is  likely  to  increase) 
whoso  legislatures  adopt  the  plan  of  leaving  a  "  legal  rate  "  as 
before  for  ordinary  transactions,  while  permitting  parties  to  stipu- 
late in  writing  for  any  different  rate  they  please ;  or  else,  when 
inclined  to  be  somewhat  more  conservative,  permitting  written 
stipulations  to  be  for  any  different  rate  not  exceeding  another  rate, 
say  that  of  ten  per  cent.^ 


5.  Stat.  17  &  18  Vict.,  c.  90;  Wms. 
Pers.  Prop.,  5th  Eng.  ed.,  89.  See 
Aylesford  v.  Morris,  L.  R.  8  Ch.  484; 
London  R.  v.  South  Eastern  R.  (1893), 
App.  C.  429. 

6.  One  of  the  most  111)0 ral  of  these 
American  statutes  is  that  which  went 
into  effect  in  Massachusetts  on  the 
first  of  July,  1867.  See  Mass.  Acts 
1867,  c.  56.  See  also  Act  1870,  and 
Mass.  Rev.  Laws,  c.  73,  §  3.  Many 
States  have  limited  the  rate  of  in- 
terest chargeable  on  small  loans.  See, 
for  example,  Mass.  Rev.  Laws,  c.  102, 
§  51,  and  amendments.  And  see  sum- 
mary of  State  interest  laws,  in  Bouv. 
Diet.  "  Interest."  In  other  ways, 
Such  as  the  mitigation  of  severe  stat- 
ute penalties  against  the  offence  of 
usury,  the  progress  of  an  enlightened 
public  sentiment  on  this  subject  is 
plainly  perceptible. 

It  is  as  yet  too  early  to  judge  of 
the  probable  result  of  these  new  ex- 
periments in  usury  legislation.  While, 
in  the  main,  parties  who  are  left  free 
to  make  their  own  bargains  learn 
speedily  what  is  for  their  mutual  ad- 


vantage, it  is  doubtless  a  legitimate 
province  of  the  legislature  to  guard 
those  who  are  peculiarly  exposed  to 
a  creditor's  oppression  and  extortion. 
But  wiiile  incompetent  parties  should 
be  thus  protected  against  their  con- 
tracts generally,  any  attempt  of  the 
public  to  interfere,  not  on  behalf  of  a 
careless  and  improvident  class  of  pri- 
vate individuals,  but  with  reference 
to  a  class  of  private  transactions  in 
which  the  most  shrewd  and  intelli- 
gent might  engage  on  either  side  as 
well  as  tho  timid  and  inexperienced, 
certainly  appears  dangerous.  It  is 
said  that  Solon,  in  the  laws  which  he 
gave  to  the  Athenian  republic,  al- 
lowed parties  to  regulate  the  rate  of 
interest  by  their  own  contracts.  This, 
however,  we  are  told,  ih  the  only 
known  (exception  to  tht>  universal  prac- 
tice among  the  civilized  nations  of 
ancient  times,  where  the  taking  of 
int<»rest  was  pcnnitted  at  all. — 
namely,  of  drawing  a  distinction  be- 
tween legal  and  ill(>gal  rates,  and 
punishing  thast>  who  overstepped  the 
mark;    and  a  distinguished  scholar  of 


383 


§  253  THE  LAW  OF  PERSONAL  TROPERTY.       [PART  II. 

§  252.     Interest  and  Usury  to  be  Considered  in  Order. 

With  the  preliminary  caution  to  the  reader  that  he  stands  upon 
contested  ground,  we  proceed,  then,  to  consider  the  leading  doc- 
trines of  the  English  and  American  courts  touching  this  much 
controverted  subject  of  interest  and  usury;  first  treating  of  in- 
terest, or  that  rate  for  the  use  of  money  which  falls  within  the 
local  statute,  and  then  passing  to  usury,  or  the  rate  which  falls 
without  the  statute  and  is  illegal. 

§  253.     As  to  Interest;   When  Payable  on  Contracts. 

I.  Concerning  the  payment  of  interest,  it  may  be  stated  in 
general  that  interest  is  payable  whenever  by  express  agreement 
between  themselves  the  parties  have  stipulated  that  it  shall  be 
paid  by  the  one  to  the  other.  Any  express  promise  of  this  sort 
is  usually,  though  not  always,  expected  to  be  in  writing.  A  writ- 
ten contract  to  pay  interest  is  enforceable  according  to  its  tenor. 
Interest  is  likewise  allowed  where,  from  the  course  of  dealings 
between  the  parties,  a  promise  to  pay  interest  is  implied.  And 
hence  it  may  be  generally  said  that  interest  as  incident  to  a  debt 
is  founded  upon  the  agreement  of  the  parties,  express  or  implied.^ 

modern  times  states  that,  even  among  on   the   whole,   against  free   trade   in 

the  Athenians,  usage  fixed  the  rate  of  money,    and    favor   establishing   rates 

interest  at  twelve  per  cent,  in  certain  within    more   or    less    liberal    limits; 

eases,    and    at   eighteen    per    cent,    in  though    the    consequence    we    should 

others,  and  that  the  public  voice  cried  prefer  to  take  —  so  different  are  the 

out  against  all  who  did  not  conform  modern  from  the  ancient  methods  of 

to  this  usage, —  as,  indeed,  it  might.  trade   and   commerce,   not   to   add   of 

De  Pauw.  Reeh. ;   Phil.  5,  §  2 ;   Blyd.  social  discipline  —  is  that  of  learning 

Usury,  3-5,  and  authorities  cited.     In  some  lessons  from  our  own  experience. 
Rome  all   sorts  of   experiments   were  Penalties    are    imposed    by    statute 

tried ;     at    one    time   there    were    no  for  usury,  etc.,  but  a  contract  to  pay 

l-aws  against  usury ;    at  another  time  interest  is  not  a  penalty,  though  in- 

intcrest    was    not    allowable    at    all;  terest   is   sometimes   imposed    after  a 

but    in   the   time   of   Justinian   rates  penal  fashion.     Robbins  v.  Maddy,  95 

were  established  within  liberal  limits,  Kan.  219,  147  Pac.  826. 
while  the  practice  of  taking  more  ex-  7.  See     Bouv.     Diet.     "Interest;" 

orbitant      interest      was      punished.  Jones  v.  Mallory,  22  Conn.  386;  Hitt 

Blyd.  ib.     We  must  then  admit  that  v.   Allen,   13   111.   592;   McLaughlin  v. 

the  lessons  of  human  experience  are,  Sauve,  13  La.  Ann.  9'9.     The  law  of 

384 


CHAP.  XII.]  INCOME,    INTEREST    A^"D    USURY.  §    253 

Thu's,  an  agreement  to  pay  interest  may  be  inferred  from  a  course 
of  dealing  between  the  parties,  where  interest  has  been  charged 
and  allowed  before  under  the  like  circumstances.^ 

Mercantile  usage  is  a  good  ground  upon  which  to  charge  inter- 
est; by  which  we  mean  usage  in  the  particular  locality  and  with 
reference  to  the  particular  class  of  transactions  under  which  the 
question  of  interest  payment  arises.^  And  as  usage  bears  in  the 
direction  of  an  implied  contract,  we  may  add  that  the  custom  of 
a  creditor  to  charge  interest  which  has  not  been  brought  home  to 
the  debtor  will  not,  of  itself,  authorize  the  recovery  of  interest.^ 
Xor,  of  course,  can  mercantile  usage  avail  to  alter  the  express 
agreement  of  the  parties  in  this  respect.^ 

In  the  matter  of  debts,  something  is  usually  deemed  essential 
between  the  parties  to  fix  a  time  certain  for  payment;  and  inter- 
est does  not  begin  to  nm,  in  the  absence  of  their  agreement,  before 
this  time  certain  has  arrived.  But  where  a  party  stipulates  to 
pay  a  fixed  sum  by  a  certain  day,  and  fails  to  do  so,  interest  is 
chargeable  against  him.^     As  to  debts  generally,  interest  is  not 

England  does  not  allow   interest  ex-  interest  upon  debts  is  not  suspended 

cept   by   statute   or   contract,    or    the  as  between   citizens  of  the  same  bel- 

law  merchant.     Gosman,  Re,   17   Ch.  ligerent.     Williams  v.  State,  37  Ark. 

D.  771.     Or  by  way  of  award  as  dam-  463. 

ages  for  the  wrongful  withholding  of  9.  Watt  v.  Hoch,  25  Penn.  St.  411; 

money.      Webster    v.    Life    Assurance  Ayers  v.  Metcalf,  39  111.  307;  Veiths 

Society,  15  Ch.  D.  169.  v.   Hagge,   S   Clarke.    163;    Esterly   v. 

8.  Esterly   v.    Cole,    3    Comst.    502 ;  Cole,  3  Comst.  502 ;  Fi.sher  v.  Sargent, 

Carson   v.    Alexander,    34    Miss.    528.  10  Ciish.  250.     Common  knowledge  as 

But  an  action  will  not  lie  to  recover  to  rate  of  interest,  see  Chamberlayne 

interest  some  time  after  the  principal  Evid.,  §  794. 

has  been   paid   and   accepted,   on   anj'  1.  Rayburn  v.  Day,  27  111.  46. 

implied  contract.     Abbott  v.  Wilmot,  2.  Keener  v.  Bank  of  United  States, 

22    Vt.     437;     Robbins,    &e.,     Co.    v.  2  Penn.  St.  237. 

Brewer,  48  Me.  481.  3.  .Stevenson   v.   Maxwell,   2   Sandf. 

Interest,    it    is    held,    continues    to  Ch.  273.     Payment  promised  upon   a 

run  in  time  of  civil  war  on  debts  due  future  contingent  event   ia   not  at   a 

from  a  citizen  of  one  belligerent  to  a  time  certain;    and  a  suitable  demand 

citizen    of    the    other.       Spencer    v.  should  bo  made  before  the  Sum   can 

Brower,    32   Tex.    663.      See   Ward    v.  carry   interest.      London   R.   v.   South 

Smith,   7   Wall.   447;    Bean   v.   Chap-  Eastern  R.   (1893),  App.  C.  429. 
man,    62    Ala.    58.      The    running   of 

25  385 


§    253  THE    J.AW    OF    PEKSO.NAL    PROPERTY.  [PAKT  II. 

recoverable  where  there  is  no  presumption  that  the  debt  should 
have  been  paid  sooner;  and  upon  an  unliquidated  or  open  or 
disputed  account,  no  such  presumption  arises.  It  is  otherwise, 
however,  on  an  account  stated  or  other  liquidated  sum,  whenever 
the  debtor  knows  precisely  what  he  is  to  pay  and  when  he  is  to 
pay  it;  and  here  interest  is  usually  recoverable.'*  Where  no  time 
certain  is  fixed  for  payment  of  a  debt,  the  creditor  may  make  it 
certain  by  a  demand  of  pa^Tnent,  or  something  equivalent ;  and 
interest  will  then  begin  to  run  from  the  time  such  demand  was 
made,  unless  the  debtor  had  sufficient  excuse  for  delaying  longer. 
Any  unliquidated  claim  for  service  rendered  requires  a  demand 
showing  what  is  claimed,  in  order  to  set  interest  running.^ 
Demand  having  been  properly  made,  the  debtor  is  in  default  if 
he  neglect  to  pay;  and  hence  it  may  be  said  that  the  debtor's 
default  in  the  payment  of  what  is  due  is  a  good  reason  for  claim- 
ing interest  from  the  time  of  his  default.^  But  upon  a  running 
account  and  before  a  final  computation  of  balances  between  the 
parties,  there  is  usually  no  default,  and  consequently  no  interest 
payable/  The  presentation  of  a  bill  or  account  with  the  balance 
struck  is  a  frequent  method  of  demand.  Where  a  definite  credit 
is  agreed  on,  interest  is  calculated  from  the  expiration  of  the 
credit.^  And  a  single  cash  sale  will  bear  interest  immediately 
upon  a  delivery  of  the  goods.^  Mercantile  us.age,  however,  goes 
far  towards  controlling  this  whole  subject;    and  each  case  must 

4.  See  Bouv.   Diet.   "Interest;"    2      Adams  v.  Fort  Plain  Bank,  36  N.  Y. 
Burr.   1085;   McClintock's  Appeal,  29       255. 

Penn.  St.  360;  Brainerd  v.  Champlain  7.  This  does  not  prevent  parties 
Trans.  Co.,  23  Vt.  154;  Davis  v.  from  expressly  stipulating  for  inter- 
Walker,  18  Mich.  25;  Esterly  v.  Cole,  est  as  items  are  entered.  Willard  v. 
3  Comst.  502;  Crosby  v.  Mason,  32  Pinard,  65  Vt.  160. 
Conn.  482.  See  Vaughan  v.  Howe,  20  8.  See  Casey  v.  Carver,  42  111.  225; 
Wis.  497.  David  v.   Conard,  1   Iowa,  336;   Bate 

5.  Soule  V.  Soule.  32  N.  E.  663,  157  v.  Burr,  4  Harring.  130. 

Mass.   451;   Farr  v.   Semple,   81   Wis.  9.  Parke    v.    Foster,    26    Geo.    465; 

230.  Foote    v.    Blanchard,    6    Allen,    221; 

6.  See   Evans   v.    Beckwith,   37   Vt.  Waring  v.  Henry,  30  Ala.  721. 
285;  Maxey  v.  Knight,  18  Ala.  300; 

386 


CHAP.  XII.]  INCOME,    INTEREST    AND    USUEY.  §    254 

depend  to  a  considerable  degree  upon  its  own  merits ;  reasonable 
delays  being  excused,  and  our  business  usage  seeming  to  sanction 
the  idea  that  where  a  bill  is  sent  to  a  customer  for  a  debt  or  bal- 
ance struck,  no  interest  shall  be  computed  in  addition  unless  upon 
some  express  claim  or  warning  to  the  creditor,  or  when  payment 
is  vexatiouslj  dilatory,  and  dunning  or  a  suit  becomes  needful. 

§  254.     The  Same  Subject. 

As  instance  of  the  foregoing  rules,  the  loss  on  a  policy  of 
insurance,  if  payable  at  a  time  expressly  fixed,  will  bear  interest 
presumably  from  that  time.^  Where  the  contract  is  to  pay  after 
so  many  day*'  notice,  interest  would  not  be  payable  luitil  after 
the  expiration  of  that  period."  On  money  due  for  labor,  interest 
may  be  recovered  after  a  demand  of  payment  made  at  the  expira- 
tion of  a  reasonable  time."'  And  on  cash  advances  interest  is 
usually  allowable  from  the  date  of  such  advance.'*  But  in  ordi- 
nary cases,  where  there  is  no  express  promise  to  the  contrary,  a 
party  should  not  generally  be  made  liable  for  interest  before 
maturity  of  the  debt,  or  until  he  becomes  in  some  manner  put  in 
default  for  not  paying  the  principal.^  A  debtor  may,  however, 
under  extreme  circumstances,  be  at  fault  by  neglecting  to  ascer- 
tain the  amount  of  his  indebtedness ;  so  that  his  mere  readiness 
to  pay  will  not  always  suffice  to  absolve  him  from  interest.^ 

1.  Peoria,  &c.,  Ins.  Co.  v.  Lewis,  18  R.,  20  N.  Y.  463;  Hunimpl  v.  Brown, 
III.    5,53 ;    Swamscot   Machine    Co.    v.      24  Penn.  St.  310. 

Partridge,  5  Fost.  369.  See  Bright  v.  James,  35  R.  I.  492, 

2.  See  Cruikshank  v.  Comyns,  24  81  Atl.  316  (default  on  a  definite  pay- 
Ill.  602.  ment)  ;     Bradley    v.    McDonald,    157 

3.  Ford  V.  Tirrell,  9  Gray,  401.  App.  Div.  572,  142  N.  Y.  S.  702;  Hall 

4.  Field  v.  Burnam,  3  Bush,  518;  v.  Graham,  112  Va.  560,  72  S.  E. 
Grimes  v.  Hagood,  19  Tex.  246.  But  105;  I^e  v.  Hill,  92  S.  C.  114.  75  S.  E. 
see  Hubbard  v.  Charlestown  Branch  273  (disputed  items)  ;  Stoddard  v. 
R.  R.  Co.,  11  Met.  124.  Sagal,  86  Conn.  346,  85  Atl.  519. 

5.  Gay  v.  Gardiner,  54  Me.  477;  As  to  liquidated  or  unliquidated 
Hollingsworth  v.  TTammnnd,  30  Ala.  accounts,  s'ee  Buck  Co.  v.  Tietge,  156 
668.  N.    W.    313    (Iowa,    1916);    Kuhn    v. 

6.  See  MeMalion  v.  New  York,  &c.,  Powell,    111    N.    E.    639     (Ind.    App. 

387 


§  255 


THE  LAW  OF  PERSONAL  PEOPERTY. 


[part  II. 


§  255.  Rule  as  Affected  by  Statutes  Permitting  a  Higher  Rate 
of  Interest. 
Where  the  law  allows  parties  to  establish  a  higher  rate  than  the 
regular  legal  or  statute  rate  of  interest,  and  they  make  a  contract 
stipulating  for  payment  at  the  higher  rate  on  a  day  certain,  it 
would  appear  from  some  eminent  English  and  American  author- 
ities that,  on  default  of  payment,  the  rate  fixed  by  statute  in  the 
absence  of  contract,  and  not  the  higher  rate,  continues  from  the 
day  when  payment  was  due,  unless  the  contract  was  explicit  in 


1916)  ;    Chamberlain  v.    Des   Moines,      778,  117  C.  C.  A.  560'   (discretion  of 
172  Iowa,  500,  154  N.  W.  766;  Hoover      equity);    McCowen    v.    Pew,    18    Cal. 

App.    482,    123    Pac.    354;    Dame    v. 
Wood,  75  N.  H.  38,  70  Atl.  1081. 

As  to  unreasonable  delay  or  defaxilt 
in  payment  of  amount  due,  see  Inde- 
pendent Five  &  Ten  Cent  Stores  of 
K  Y.  V.  Earles,  57  Ind.  App.  241,  106 
K  E.  730,  1087;  Wakefield  v.  Spoon. 
100  S.  C.  100,  84  S.  E.  418;  Simon 
V.  Etgen,  213  N.  Y.  589,  107  N.  E. 
1066;  Rector  v.  Duntley  Co.,  189  111. 
App.  562 ;  Guynn  v.  Daugherty,  53 
Ind.  App.  598,  102  N.  E.  147;  Na- 
tional Soldiers'  Home  v.  Parrish,  194 
Fed.  940,  114  C.  C.  A.  576. 

See  further  Bellevue  Mills  v.  Bal- 
timore Trust  Co.,  214  Fed.  817  {trust 
company)  ;  Burr  v.  Commonwealth, 
212  Mass.  534,  99  N.  E.  323  (re- 
strained judicially)  ;  McGonnell  v. 
Railways  Co.,  234  Pa.  396,  83  Atl. 
282;  American  Iron  Co.  v.  Air  Line 
R.,  233  U.  S.  261,  34  S.  C.  502  (sale 
on  a  State  credit)  ;  DeWitt  v.  Key- 
stone ISTat.  Bank,  243  Pa.  534,  90 
Atl.  340;  Galpin  v.  Chicago,  159  111. 
App.  135.  94  X.  E.  961  (ownership  of 
a  fund  in  dispute)  ;  Brown  v.  First 
Nat.  Bank,  49  Colo.  393,  113  Pac.  483 
(misappropriation  of  fund)  ;  Stone- 
broker  v.  Littleton,  119  Md.  173,  86 
Atl.  150   (sale  of  stock). 


Co.  V.  Neill,  87  S.  E.  855  (W.  Va. 
1916)  ;  Simon  v.  Etgen,  213  N.  Y. 
589,  107  N.  E.  1066  (sixm  ascertain- 
able) ;  Geohegan  v.  Union  Ry.  Co., 
266  111.  482,  107  N.  E.  786;  Anthra- 
cite-Lumber Co.  V.  Lucas,  249  Pa. 
517,  95  Atl.  80;  Wright  v.  Tacoma, 
87  Wash.  334,  151  Pac.  837;  Roe  v. 
Snattinger,  91  Kan.  567,  138  Pac. 
581 ;  Casualty  Co.  v.  Beattie,  75 
Wash.  166,  136  Pac.  1153  (a  can- 
celled insurance  policy)  ;  Caldwell  & 
Drake  v.  Pierce,  154  Ky.  328,  159 
S.  W.  692;  Scott  v.  Reynolds,  163 
N.  C.  502,  79  S.  E.  960;  People  v. 
Willcox,  153  App.  Div.  759',  138  N.  Y. 
S.  1055 ;  People  v.  Willcox,  207  N.  Y. 
943,  101  N.  E.  174;  Bennett  v.  Federal 
Coal  Co.,  74  S.  E.  418  (W.  Va.  1912)  ; 
H.  C.  Browne  &  Co.  v.  Jno.  Sharkey 
Co.,  58  Ore.  480,  115  Pae.  156  (as- 
signee) ;  People  v.  Willcox,  207  N.  Y. 
743,  101  N.  E.  174  (arbitration  of 
claim).  Where  sum  is  easily  ascer- 
tainable interest  is  usually  allowed 
now. 

See  Geohegan  v.  Union  R.  R.  Co., 
266  111.  482.  107  N.  E.  786  (delay  in 
suit  for  which  defendant  was  not  to 
blame)  ;  Pennsylvania  Steel  Co.  v. 
New  York  City  R    R.  Co.,  198  Fed. 


388 


CHAP.  XII.] 


INCOME,    INTEEEST    AND   USTJET. 


§    255 


that  respect  or  some  new  understanding  is  created/  But  on  this 
point  the  authorities  are  somewhat  in  conflict,  and  a  decision 
might  turn  upon  the  interpretation  of  a  local  statute  or  of  the 
particular  contract.  The  well-considered  determination  of  the 
Massachusetts  courts  favors  the  opposite  construction,  and  relaxes 
as  against  the  lender;  in  other  words,  where  a  contract  stipulates 
a  certain  rate  of  payment,  such  rate  continues  until  payment  or 
judgment ;  and  such  is  the  rule  later  announced  of  many  other 
States.^ 

Conform?ahly  to  the  tenor  of  most  legislation  upon  this  subject, 
the  inference  is,  in  absence  of  express  stipulation,  that  only  the 
regular  statute  rate  of  interest  was  contemplated  under  the  regular 
rules  of  such  allowances.^  But  if  the  contract  contemplated  pay- 
ment  of  less  than  the  statute  rate,  that  contract,  so  long  as  cul- 
pable delay  cannot  be  alleged  against  the  debtor,  should  be  re- 
spected.^    And  wherever  a  higher  rate  of  interest  is  expressly 


7.  Brewster  v.  Wakefield,  22  How. 
118;  Ludwig  v.  Huntzinger,  5  W.  & 
S.  51;  Cook  V.  Fowler,  L.  R.  7  H.  L. 
27. 

8.  See  the  learned  opinion  of  Gray, 
C.  J.,  in  Union  Institution  v.  Boston, 
129  Mass.  82,  where  (in  a  case  rela- 
tive to  mortgage  interest)  the  au- 
thorities on  each  side  are  fullj'^  stated. 
The  English  case  of  Cook  v.  Fowler, 
supra,  is  here  criticised.  But  the 
Supreme  Court  of  the  United  States 
supports  a  similar  view.  Brewster 
V.  Wake  field,  sup>-a.  That  rule  has 
been  adopted  as  general  in  Kansas, 
Minnesota,  South  Carolina,  Rhode 
Island,  Kentucky,  Arkansas,  and 
Maine,  and  in  Pennsylvania  it  long 
ago  prevailed.  In  New  York  the 
question  appears  to  be  open.  But 
see  Sands  v.  Gilleran,  144  N.  Y.  S. 
337.  159  App.  Div.  37.  In  Indiana, 
California,    Texas,   New   Jersey,    Illi- 


nois, Wisconsin,  Iowa.  Nevada,  Ten- 
nessee, Ohio,  Michigan,  and  Virginia, 
the  doctrine  upheld  in  Massachusetts 
is  favored ;  though  in  some  of  these 
instances  because  of  statute.  See  also 
Wadesboro  Cotton  Mills  v.  Burns, 
114  N.  C.  353,  Iff  S.  E.  238. 

It  is  generally  admitted  that  at  all 
events  the  intent  of  the  parties,  if 
expressed  with  sufiScient  clearness, 
will  control  the  question.  Union  In- 
stitution v.  Boston,  129  Mass.  95. 

9.  See  Burns  v.  Anderson,  68  Ind. 
202;   161  S.  W.  26    (Tex.). 

1.  Pierce  v.  Savings  Bank,  129 
Mass.  425. 

As  to  the  constitutionality  of  cer- 
tain American  acts  relating  to  inter- 
est rates,  see  Hubbard  v.  Callahan.  42 
Conn.  524;  Winchester  v.  Building 
As.sociation,  12  Bush.  110;  Wilcox  v. 
Murtha,  41  App.  Div.  409. 


389 


§  256  THE  LAW  OP'  PERSONAL  PROPERTY.       [PART  II. 

reserved  to  be  paid  after  maturity,  such  interest  is  recoverable 
unless  the  statute  prohibits.^ 

§  256.     Interest  on  Negotiable  Instruments,  etc. 

The  computation  of  interest  on  bills  and  notes  is  frequently  a 
matter  of  judicial  cognizance ;  and  the  principles  already  noticed 
here  apply  with  some  variations.  It  is  usual  in  a  bill  or  note  to 
express  the  maker's  intention  of  paying  (whether  on  demand  or 
at  a  time  certain)  "with  interest,"  —  these  words  signifying  an 
intent  to  pay  the  legal  or  statute  rate  of  interest ;  or  if  the  statute 
gives  parties  .the  option  of  fixing  higher  rates  by  contract,  the 
expression  is  with  interest  at  such  other  rate  as  they  may  have 
plainly  agreed  upon.  Here  the  rate  is  inferable  from  the  con- 
tract; and  the  contract  may  of  course  be  to  pay  interest  from 
date,  though  the  note  be  payable  at  a  later  day.  But  on  a  time 
note,  where  interest  is  not  expressed,  interest  runs  only  from  its 
maturity.^  A  note  payable  on  demand  draws  no  interest  until 
a  demand  or  the  institution  of  a  suit,  unless  the  parties  have 
otherwise  expressed  their  intention.  But  a  note  payable  "  with 
interest,"  whether  on  demand  or  on  time,  would  bear  interest  from 
its  date.'*  Where  a  note  is  made  payable  at  a  day  certain  with 
less  interest  than  the  lawful  rate,  or  without  interest,  and  if  not 
then  paid  "  with  lawful  interest  until  paid,"  or  similar  expres- 
sions, lawful  interest  is  to  be  computed  from  the  date  of  the  note, 

2.  Sheldon  v.  Pruessner,  52  Kan.  permitted  contract.  As  to  unreason- 
579,  35  Pac.  201,  22  L.  R.  A.  409";  able  rate,  see  Gate  v.  Merrill,  109 
Spooner  v.  Roberts,  180  Mass.  191,  Me.  424,  84  Atl.  897.  Interest  im- 
62  N.  E.  4.  See  Harbison,  Re,  posed  for  misappropriation  of  funds 
107  S.  W.  849'  (Ark.)  (error)  ;  Went-  in  Earle  v.  Whiting,  196  Mass.  371, 
worth  V.  Manhattan  Co.,  218  Mass.  91,  82  N.  E.  32.  Cf.  Moylan  v.  Moylan, 
106  N.  E.  118;  Holmes  v.  Holt.  90  49  Wash.  341,  95  Pac.  271  (mere  mis- 
Kan.  774,  136  Pac.  246;  Atchison  v.  take)  ;  Pullis  v.  Somerville,  218  Mo. 
Golden  Gate  Co.,  21  Cal.  App.  168,  624,  117  S.  W.  736;  Lowndes  v.  City 
131  Pac.  107;  Cowgill  v.  Jones,  99  Nat.  Bank,  82  Conn.  8,  72  Atl.  150. 
Mo.  App.  390;  Sanford  v.  Litehen-  3.  See  2  Pars.  Bills  and  Notes,  392, 
berger,  62  Neb.  501,  87  N.  W.  305.  393. 

Custom,  of  course,  cannot  be  set  up  4.  lb.     And  see  Gardner  v.  Barnett, 

against    a    plain    statute    direction,  36  Ark.  476. 
though   it  might  as  presuming  some 

390 


CHAP.  XII.]  INCOME,    INTEEEST    AND    USURY.  §    256 

if  it  be  not  paid  at  maturitj.^  And  so,  too,  the  interest  on  a  note 
for  a  particular  sum,  payable  with  interest  on  the  happening  of  a 
certain  event,  should  be  computed  from  the  date  of  the  note.^ 
Where  a  note  bears  interest  from  maturity,  the  interest  begins  to 
run  from  the  day  of  payment  specified,  without  allowing,  as  it 
appears,  for  days  of  grace.^  It  might  be  fair  to  suppose  that  the 
rate  specified  in  a  note  continues  after  its  maturity,  rather  than 
the  lesser  or  ''  legal  rate,"  if  it  remains  unpaid ;  but  this,  we  have 
seen,  is  by  no  means  certain.^  Sometimes  notes  are  made  payable 
at  some  future  period  with  interest  annually  or  semi-annually,  or 
with  the  principal  payable  by  instalments ;  and  then  complicated 
questions  arise  as  to  compounding  interest,  in  case  of  the  maker's 
default,  or  concerning  a  computation  with  allowance  of  the  partial 
payments  he  has  made;  and  of  these  matters  we  shall  speak 
presently.  Sometimes,  again,  they  are  made  payable  at  a  future 
day,  and  instead  of  bearing  interest  are  sold  at  a  discount  to  banks 
or  individuals.  This  last  is  manifestly  an  indirect  method  of 
obtaining  interest;  and  we  presume  that  a  timo-note  thus  dis- 
counted would  bear  only  legal  interest  from  the  date  when  it  fell 
due,  whatever  the  rate  of  discount  might  have  been.'  The  main 
inquiry  is  as  to  what  the  parties  in  the  particualr  contract  intended 
expressly  or  with  reference  to  custom  or  statute  in  such  cases. 

Where  an  instrument  is  sued  upon  which  on  its  face  amounts 
simply  to  a  mere  acknowledgment  of  debt  and  not  a  promissory 

5.  Da|?gett  v.  Pratt,  15  Mass.  177;  Ramsddl  v.  Hulett,  50  Kan.  440,  31 
Hackenberry  v.  Shaw,  11  Ind.  392;  Pac.  1092 ;  Nye  v.  Kinpr,  94  Mich.  411, 
Pitman  v.  Barret,  35  Mo.  84.  54   N".   W.   178.     Interest  accept<Mi   in 

6.  Washband  v.  Washband,  24  advance  on  a  demand  loan  is  prima 
Conn.  500.  facie  evidence  of  an  ajireemont  to  for- 

7.  See  Ofifden  v.  Saunders,  12  WTieat.  bear  collection,  bnt  not  that  the  un- 
213 ;  Sparhawk  v.  Wills,  6  Gray,  164.  earned    interest   shall    be   refunded    if 

That  action  may  be  maintained  for  the  maker  pays  off  sooner.     Skelly  v. 

the  interest  provided  by  the  terms  of  Bristol    Bank,   63    Conn.    83,   26   Atl. 

a   note   after   the   principal   has  been  474,  19  L.  R.  A.  599. 
paid,  see  Hendry  v.  Hendry,  32  Tnd.  9.  See     United      States     Bank      v. 

349.  Ohapin,   9    Wend.    471 ;    Chambliss  v. 

8.  See  preceding  section.     And  see  Robertson,  23  Miss.  302. 

391 


§  256         THE  LAW  OF  PERSONAL  PROPEKTT.       [PART  II. 

note,  and  which  imports  nothing  as  to  the  payment  of  interest,  it 
is  held  that  interest  is  computable,  in  the  absence  of  contract, 
usage,  or  fraud,  only  from  the  date  of  the  writ  where  no  earlier 
demand  of  payment  was  made.^  But  as  illustration  of  what  a 
mutual  intent  outside  the  instrument  or  mere  usage  might  accom- 
plish, we  should  observe  that  various  cases  insist  that  a  promissory 
note  or  any  other  instrument  promising  specifically  to  pay  money, 
without  any  fixed  time  stated,  nor  words  requiring  a  demand,  is 
payable  in  law  immediately,  so  that  interest  should  run  from  its 
date.^ 

On  bank-notes,  though  redeemable  on  presentation,  interest 
does  not  accrue  before  a  demand  and  refusal  to  pay,  except,  per- 
haps, in  case  of  a  notorious  suspension  of  payment,  where  the 
demand  would  be  a  useless  formality.^  Nor  does  a  special  deposit 
of  funds  for  mere  safe-keeping  properly  draw  interest."*  The 
coupons  attached  to  railroad  and  other  bonds  draw  interest  after 
the  payment  of  them  has  been  unjustly  neglected  or  refused.^ 
So,  as  to  dividends  declared  on  stock,  interest  is  not  usually 
chargeable  until  demand  and  a  corresponding  default  of  payment.^ 

1.  Gay  V.  Rooke,  151  Mass.  115,  23  5.  Beaver  v.  Armstrong,  44  Penn. 
N.  E.  835,  7  L.  R.  A.  392.  St.  63;  Mills  v.  Jefferson,  20  Wis.  50; 

2.  Horn  v.  Hansen,  56  Minn.  43,  Aurora  City  v.  West,  7  Wall.  82; 
57  N".  W.  315,  22  L.  R.  A.  617  (the  Whitaker  v.  Hartford  R.,  8  R.  I.  47, 
case  of  a  "wheat  ticket"),  and  au-  78  S.  E.  772;  Humphreys  v.  Morton, 
thorities  cited;    Selleck  v.   French,   1  100  111.  592. 

Am.  Lead.  Cas.    (4th  ed.)    507.     Any  6.  State  v.  Baltimore  &  Ohio  R.  R. 

promissory  note  is  a  valid  unilateral  Co.,  6  Gill,  363. 

writing,    supported    by    consideration.  But   as  to  the   warrants   and   obli- 

and  not  within  the  Statute  of  Frauds.  gations  of  a  State  or  municipal  eor- 

Henee  the  transaction  may  be  proved  poration,  a  different  rule    (as,   e.   g., 

by  the  writing  and  by  parol  together.  that  of  statute  authority)  may  apply, 

3.  Crawford  v.  Bank  of  Wilming-  so  as  to  prevent  the  recovery  of  in- 
ton,  Phill.  (N.  C.)  136;  In  re  Here-  terest  altogether.  See  Allison  v.  Ju- 
fordshire,  &c.,  Co.,  L.  R.  4  Eq.  250.  niata  County,  50  Penn.  St.  351;  Pekin 
But  see  2  Pars.  Bills  and  Notes,  88.  v.  Reynolds,  31  111.  529':  Ashe  v.  Har- 

4.  Duncan  v.  Magette,  25  Tex.  245.  ris  County,  55  Tex.  49;  Gray  v.  State, 
But  as  to  damages  by  way  of  punish-  72  Ind.  567 ;  §  262,  post. 

ment  for  a  default  in  surrendering, 
see  §  257,  post. 

392 


CHAP.  XII.] 


INCOME,    INTEKEST    AND    USDEY. 


§    256 


If  there  are  no  funds  at  the  place  where  coupons  are  to  be  pre- 
sented for  payment,  a  demand  does  not  appear  to  be  necessary  in 
order  to  make  them  draw  interest.^  But,  on  the  other  hand,  it  is 
held  that  where  the  interest-bearing  loans  of  a  corporation  are  made 
payable  at  a  fixed  place  and  time,  and  the  corporation  is  prepared 
to  pay  accordingly,  the  interest  thereon  ceases  at  that  time, 
whether  the  bond  or  evidence  of  indebtedness  be  presented  or  not.^ 
The  disposition  of  our  latest  cases  is  to  regard  interest  coupons 
which  are  expressed  in  form  like  individual  promissory  notes,  as 
bearing  interest  each  from  maturity  for  simple  default  if  duly 
presented  and  dishonored ;  ^  and  a  similar  rule  is  applied  to 
instalments  of  interest  on  a  note  with  semi-annual  or  other 
periodical  rests.  ^ 


7.  North  Penn.  R.  R.  Co.  v.  Adams, 
54  Peuu.  St.  94. 

8.  Eiulen  v.  Lehigh  Coal  Co.,  47 
Penn.  St.  76. 

9.  See  Beattys  v.  Solon,  64  Hun, 
120,  19  N.  Y.  S.  37;  Solon  v.  VVil- 
liamsburgh  Sav.  Bank,  114  N.  Y.  122, 
21  N.  E.  168;  Hall  v.  Scott,  90  Ky. 
340,  13  S.  W.  249.  Supposing  such 
interest,  together  with  inU're&t  on 
the  principal  sum,  not  to  exceed  the 
maximum  legal  rate  of  interest  on 
the  principal.  Murtagh  v.  Thomp- 
son, 28  Neb.  358,  44  N.  W.  451.  But 
such  interest  coupons  ought  to  have 
been  duly  presented  for  payment. 
Bailey  v.  Buchanan,  115  N.  Y.  297,  22 
N.  E.  155,  6  L.  R.  A.  562,  n.  And 
some  cases  disincline  to  applying  the 
rule  of  interest  coupons  to  a  note 
with  periodical  rests.  Bowman  v. 
Neely,  151  HI.  37,  37  N.  E.  840. 

1.  In  Hall  V.  Scott,  90  Ky.  340,  13 
S.  W.  249,  Bennett,  J.,  lays  down  the 
rule,  that  where  a  promissory  note 
provides   that   it  shall   bear    interest 


"  payable  semi-annually,"  each  semi- 
annual instalment  of  interest  bears 
interest  from  its  own  maturity  until 
paid,  as  any  other  interest-bearing 
debt;  but  the  interest  should  be 
computed  semi-annually  only  until 
the  maturity  of  the  note,  after  which 
interest  on  the  whole  note  should  be 
presumably  computed  in  tlie  ordinary 
way ;  though  interest  on  each  preced- 
ing instalment  then  unpaid  should  run 
until  paid.  Why  this  same  rule 
should  not  be  applied  to  interest  in- 
stalments falling  due  after  the  note 
matures,  appears  founded  on  the  pre- 
sumption that  no  such  undertaking 
existed;  for  the  agreement  to  pay 
interest  by  instalments  before  matur- 
ity of  the  debt  itself  is  a  special  con- 
tract by  which  the  creditor  receives 
more  benefit  than  by  taking  principal 
with  interest  at  maturity ;  such  a  con- 
tract beyond  maturity  must  therefore 
specially  appear.  See  §  263.  And  see 
Burke  v.  Trabue,  137  Ky.  580,  126 
S.  W.  125. 


393 


§    257  THE    J>AW    OF    PERSONAL    PROPERTY.  [PART  II. 

§  257.     Interest  Imposed  by  Way  of  Punishment. 

A  debtor  who  is  in  default  for  not  paying  money  in  pursuance 
of  bis  contract  is  often  considered  liable  for  interest  by  way  of 
indemnity,  or  as  a  punishment  for  wrongfully  detaining  what  he 
owed.  And  we  find  interest  allowed  in  the  nature  of  damages 
for  breach  of  contract,  for  unreasonable  and  vexatious  delay  in 
payment  of  debts,  and  in  certain  wrongful  acts  of  a  similar  char- 
acter; and  local  statutes,  too,  are  frequently  explicit  in  this  re- 
spect.^ But  to  make  what  the  law  deems  an  unreasonable  and 
vexatious  delay,  and  generally  to  justify  the  allowance  of  interest 
in  the  nature  of  damages,  it  is  not  enough  that  something  was  due 
over  which  there  had  been  an  honest  controversy;  nor  that,  by 
some  mutual  mistake  of  the  parties,  the  whole  sum  due  had  not 
been  paid,  or  too  much  had  been  received ;  but  there  should 
appear  to  have  been  a  want  of  good  faith  and  fair  dealing  on  the 
part  of  the  one  from  whom  interest  is  claimed  on  any  such 
ground.^  A  holder  of  collateral  securities  who  appropriates  the 
fund  to  his  own  use  is  liable  for  interest.'^  And  for  the  wrong- 
ful detention  of  money  due  for  goods  sold  and  delivered, —  the 
time  of  payment  having  been  previously  agreed  upon, —  interest 
may  be  claimed  by  way  of  damage,  if  not  by  virtue  of  the  con- 
tract itself.^  But  whether,  for  a  mere  non-delivery  of  goods  by  a 
common  carrier  or  other  person,  there  being  no  delinquency,  fraud, 
or  injustice  on  his  part,  interest  is  always  allowable  as  a  matter  of 
law,  is  in  dispute  and  may  well  be  doubted.*^  Where  an  excessive 
amount  is  demanded,  and  the  debtor  offers  to  pay  all  that  is  actu- 

2.  Jones  v.  Mallory,  22  Conn.  386;  5.  National  Lancers  v.  Lovering,  10 
Sammis  v.  Clark,  13  111.  544;  Leake,       Fost.  511. 

&c..    Orphan   House   v.    Lawrence,    11  6.  See   Chicago,    &c.,   R.    R.    Co.   v. 

Paige,   80;    Drury   v.    Cross,   7    Wall.  Ames,   40   111.   249;   Kyle  v.   Laurens 

299;    Rogers    v.    West,    9    Ind.    400;  R.    R.    Co.,    10   Rich.    382;    Fowler  v. 

Devine  V.  Edwards,  101  111.  138.  Davenport,    21    Tex.    626;     Dana    v. 

3.  Hubbard  v.  Charlestown  Branch  Fieldler,  12  N".  Y.  40;  Richmond  v. 
R.  R.  Co.,  11  Met.  124;  Passenger  Bronson,  5  Denio,  55.  In  case  of  a 
Railway  Co.  v.  Philadelphia,  51  Penn.  loss  for  which  a  carrier  is  found  lia- 
St.  465.  ble,  interest  is  recoverable  upon  the 

4.  Tarpley  v.  Wilson,  33  Miss.  467.  value  of  the  property  from  the  date 

394 


CHAP.  XII.] 


INCOME,    INTEREST    AND    USURY. 


257 


ally  due,  the  creditor  cannot  claim  interest  on  the  proper  balance 
from  the  time  of  the  demand;  for  the  delay  is  through  his  own 
fault.'' 

Independently  of  this  consideration  of  unreasonable  and  vexa- 
tious delay  and  wrongful  conduct,  interest  cannot  be  allowed  upon 
unliquidated  damages  for  the  non-performance  of  a  contract; 
and  this  principle  is  of  general  application.^  And  where  the 
condition  of  a  penal  bond  is  the  performance  of  some  collateral 
act,  interest  upon  the  assessed  damages  does  not  necessarily 
accrue.^  In  an  action  for  the  breach  of  a  contract  by  whose  terms 
damages  for  the  breach  are  liquidated,  interest  is  properly  charge- 
able upon  the  amount  fixed  as  with  reference  to  the  date  when 
default  occurred  in  paying  such  damages.^ 


of  loss.    Mote  V.  Chicago  R.,  27  Iowa, 
22. 

7.  Lusk  V.  Smith,  21  Wis.  27.  For 
the  application  of  the  rule  of  recov- 
ering interest  by  way  of  damages  to 
debts  maturing  under  a  special  con- 
tract, which  provides  for  other  than 
the  usual  or  legal  rate,  &ee  Gray, 
C.  J.,  in  Union  Institution  v.  Boston, 
129  Mass.  82,  commenting  upon  the 
various  discordant  authorities.  Large 
rates  .«tated  in  case  the  note  is  not 
paid  at  maturity  are  penal  in  their 
nature  and  not  to  be  favored  in  a 
simple  default.  Richardson  v.  Camp- 
bell, 34  Neb.  181,  51  N.  W.  753. 

8.  Buckmaster  v.  Grundy,  3  Gilm. 
626. 

9.  Trice  v.  Turrentine,  13  Ired.  212. 
See  Ward  v.  Smith,  7  Wall.  447. 

1.  Winch  V.  Mutual  Benefit  Ice  Co., 
86  N.  Y.  618.  But  a  bond  for  the 
payment  of  a  fixed  sum  is  presumed 
to  bear  interest  from  its  date,  though 
no  time  of  payment  is  mentioned  and 
nothing  is  said  therein  experssly  of 
demand  or  interest.    Forster  v.  Wand- 


lass,  7  T.  R.  117,  120;  Purdy  v.  Phil- 
lips, 11  N.  Y.  406. 

Shepard  v.  New  York,  216  N.  Y. 
251,  110  N.  E.  435  (waiver  of  inter- 
est)  ;  Gimbel  v.  Barrett,  218  Fed.  880 
(Pa.  D.  C.  19'14)  (carrier's  over- 
charges) ;  Kretzinger  v.  Emering,  169 
Iowa,  59,  150  N.  W,  1038  (interest 
recovered  later  than  payment  of  prin- 
cipal) ;  Geohegan  v.  Union  Ry.  Co., 
266  111.  483,  107  N.  E.  786;  Wash  v. 
Noel,  160  Ky.  547,  170  S.  W.  197; 
Easter  v.  Virginian  Ry.  Co.,  86  S.  E. 
37  (W.  Va.  1916)  (as  to  tort  ac- 
tions) ;  Shoop  v.  Fidelity  Co.,  124 
Md.  135,  91  Atl.  753  (interest  added 
by  jury)  ;  Kimball  v.  Williams,  36 
App.  D.  C.  43  (waiver  of  interest)  ; 
Bas.sick  Gold  Mine  Co.  v.  Boardsley, 
49  Colo.  275,  112  Pac.  770;  Kauf- 
mann  v.  Kaufniann,  239  Pa.  42,  86 
Atl.  634. 

Where  a  fund  in  litigation  is  de- 
posited in  a  bank  paying  interest  by 
order  of  the  court,  this  interest 
should  .suffice.  Delta  Land  Co.  v. 
Sherwood,  187  III.  App.  167. 


395 


§  258  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

§  258.     Interest  Where  Suit  is  Brought. 

The  principles  already  discussed  apply  to  suits,  whether  at  law 
or  in  equity  or  admiralty;  while  at  the  same  time  matters  of 
practice  must  depend  largely  upon  local  usage  and  the  local  stat- 
utes. In  general,  upon  unliquidated  and  practically  unascer- 
tained demands,  interest  can  be  recovered  only  from  the 
commencement  of  the  suit,  and  not  from  a  previous  demand, 
unless  fraud,  bad  faith,  or  vexatious  delay  is  imputable  against 
the  defendant;  and  where  the  debt  ordinarily  bears  no  interest 
before  demand  and  default  of  payment,  a  demand  must  be  proved, 
or  else  a  like  rule  will  be  applied  in  the  computation  of  interest.^ 
But  the  commencement  of  a  suit  is  a  sort  of  judicial  demand;  and 
even  an  award  will  carry  interest  from  the  date  of  its  entry  and 
not  from  that  of  judgment  upon  it."^  The  allowance  of  interest 
in  suits  by  way  of  damages  is,  after  all,  hardly  a  matter  of  strict 
law,  and  may  be  said  to  rest  mainly  in  the  discretion  of  a  jury.* 
And  while  judgments  do  not  at  the  common  law  bear  interest,  it 
is  now  tho  practice  in  most  parts  of  this  country  to  allow  a  judg- 
ment or  decree  to  carry  interest  until  paid,  if  there  be  no  special 
reason  for  disallowance.^  One  who  is  enjoined  against  paying 
over  money  may  protect  himself  by  paying  the  money  into  court ; 

Interest  makes  sometimes  a  distinct  No   interest   in  insolvent   proceedings 

cause  of  action.  usually.     Atlanta  Nat.  Bank  v.  Four 

2.  Palmer    v.    Stockwell,    9    Gray,  States    Grocer    Co.,    135    S.    W.    1135 

237;  Ordway  v.  Colcord,  14  Allen,  59;  (Tex.).     No  interest  on  funds  in  liti- 

Hunt    V.    Smith,    3    Rich.    Eq.    465;  gation,  see  Brooks  v.  Kerr,  223  Fed. 

Stimpson    v.    Green,    13    Allen,    .326;  1016,  139  C.  C.  A.  612. 

Lyon  V.  Byington,  10  Iowa,  124 ;  Hall  3.  Buckman  v.  Davis,  28  Penn.  St. 

V.  Farmers  Bank,  55  Iowa,  612;  Um-  211;  Neal  v.  Freeman,  85  N.  C.  441. 

bria,  The,  11  U.  S.  App.  691.     Where,  Unless  a  claim  be  such  that  interest 

after  a  public  officer's  death,  his  bond  can  be  set  running  by  a  demand,  in- 

was   sued   without    previous   demand  terest    cannot    be    allowed    from    the 

on  his   representatives   or    notice    to  time     of     commencing     the     action, 

the  sureties,  it  was  held  that  inter-  White  v.  Miller,  78  N.  Y.  393;  Hall 

est  could  only  be  recovered  from  the  v.  Farmers'  Bank,  55  Iowa,  612. 

date  of  service  of  the  writ.     United  4.  Lincoln  v.  Claflin,  7  Wall.  13^. 

States  V.  Curtis,  100  U.  S.  119.     As  5.  See   Hemmenway   v.    Fisher,    20 

to  interest  after  demand,  see  §  253.  How.  255. 

396 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    259 

and  as  to  a  garnishee  or  trustee,  unless  he  uses  or  makes  profit 
upon  the  money  for  which  he  is  liable,  or  has  been  bound  by 
express  or  implied  contract  to  pay  interest  upon  it  independently 
of  the  suit,  he  is  not  chargeable  with  interest,  the  presumption 
being  that  he  keeps  the  fund  intact  to  answer  the  judgment  of 
the  eourt.^ 

§  259.  Interest  in  Transactions  Relating  to  Real  Estate;  on 
Rents,  Mortgage  Debts,  etc. 
Interest  is  frequently  chargeable  in  transactions  relating  to  real 
as  well  as  personal  property.  Thus  interest  is  frequently  allowed 
upon  rent  from  the  time  it  becomes  due ;  though  the  right  to  claim 
it  independently  of  some  demand  and  default  under  a  lease  might 
be  affected  by  the  usual  course  of  dealing  between  landlord  and 
tenant  or  their  mutual  agreement.''  And  the  judgment  in  a  fore- 
closure suit  brought  to  enforce  the  payment  of  a  real-estate  mort- 
gage note  may  be  permitted  to  include  interest  for  the  whole 
period  claimed,  though  a  suit  upon  the  note  were  barred  by  the 
Statute  of  Limitations;  the  covenants  of  the  mortgage  bearing 
up  the  whole  transaction.^  But  where  a  tender  of  the  debt  has 
been  made  by  the  mortgagor  pursuant  to  law,  and  there  is  delay, 
through  fault  of  the  mortgagee,  in  discharging  the  mortgage  and 
restoring  the  premise?,  interest  should  not  be  allowed  on  the  debt 
subsequently  to  the  tender.^     Of  course,  if  the  party  having  the 

6.  Irwin  v.  Pittsburgh,  &c.,  R.   R.  ored,  in  decroeinpr  interest  on  a  long 

Co.,    43    Penn.    St.    488:     Rennell    v.  account.      Wilson    v.    Cobb,   31    N.   J. 

Kimball,  5  Allen,  350:  Moore  v.  Low-  Eq.  91:  Taylor  v.  \^■ing,  84  N.  Y.  471. 

rey,  25  Iowa,  336;   Blodgett  v.  Card-  7.  Stockton   v.  Guthrie,  ."j  Harring. 

iner,  45  Me.  542;  Candee  v.  Webster,  204;    White   v.   Walker.   31    111.   422; 

9  Ohio  St.  452;  Lilley  v.  Life  Ins.  Co.,  McQuesney   v.   Heister,   33   Penn.   St. 

92   Mich.  153,   .52  N.  W.   631;   Mass.  435;   Burnham  v.  Best,   10  B.  Monr. 

V.  Western  Un.  Tel.  Co.,  141  U.  S.  40.  227:    Van    Rensselaer    v.    Jcwett,    2 

General  works  on   Damages,  Prae-  Comst.    135;    Wagstaff    v.    Smith,    4 

tice,   &c.,  may  well   be   consTilted,   as  Ircd.  Eq.  1 ;  West  Chicago  Works  v. 

to  the  judicial   allowance  of   interest  Sheer,   8   Til.   App.   3C7. 

in  suits.     Fluctuations  of  the  statute  8.  Wiswell  v.  Baxter,  20  Wis.  680. 

as   to  allowance   of   interest,   consid-  9.  Brown  v.  Simons,  45  N.  H.  211. 

397 


§  2 GO  THE  LAW  OF  PERSONAL  PROPEKTY.       [PART  II. 

right  to  redeem  tenders  the  mortgage-money  on  a  condition  which 
ho  had  no  right  to  make,  he  cannot  after  a  refusal  insist  on  an 
abatement  of  the  interest.^  The  question  still  recurs  constantly, 
which  party  was  at  fault?  As  to  interest  in  general  on  a  real- 
estate  mortgage,  the  terms  of  the  bond  or  note  for  which  the  mort- 
gage is  security  should,  in  connection  with  our  present  discussion, 
determine  its  amount.^ 

§  260.     Interest  as  to  Those  Holding  Trust  Funds,  etc. 

But  interest  is  not  only  in  practice  allowed  on  the  ground  of 
an  express  or  implied  contract,  or  by  way  of  essential  damage  for 
some  misconduct.  In  the  case  of  guardians,  trustees,  factors,  and 
others  entrusted  with  the  management  of  funds  which  do  not 
belong  to  them,  a  fair  element  of  consideration  is  that  property 
ordinarily  earns  a  regular  percentage  of  profit,  which  percentage 
belongs  no  less  to  the  true  owner  on  a  just  reckoning  than  the 
original  capital ;  and  this  is  a  good  reason  why  such  persons,  so 
far  as  their  connection  with  funds  is  for  management,  and  not  a 
temporary  custody  and  control,  should  be  charged  with  interest  on 
the  property  where  the  opportunity  to  invest  has  been  neglected, 

1.  Rives  V.  Dudley,  3  Jones  Eq.  126.  Atl.  128   (guardian  of  lunatic)  ;  Wat- 

2.  Union  Institution  v.  Boston,  129  son  y.  McManus,  223  Penn.  583,  72 
Mass.  82',  and  cases  cited.  A  mort-  Atl.  1066;  Feigner  v.  Slingluff,  109 
gagee's  verbal  promise  to  reduce  the  Md.  474,  71  Atl.  978 ;  Roberts-Man- 
rate  of  interest  specified  in  the  mort-  Chester  Co.  v.  Wise,  140  111.  App.  443 
gage  is  not  binding  if  without  consid-  (valid  legal  statute)  ;  Street  v. 
eration.  Harris  v.  Creveling,  80  Mich.  Thompson,  229'  111.  613,  82  K  E.  367; 
249.  Matter  of  Burke,   191   N.  Y.   437,   84 

Interest  on  separate  mortgage  notes  N.    E.    405;    Maryland    Casualty    Co. 

should  be  computed  apart.     Lowe  v.  v.  Omaha  Co.,  157  Fed.  514,  85  C.  C. 

Schuyler,   187   Mich.   526,   153   N.   W.  A.    106;    Bell   v.    San   Francisco   Sav. 

786.      See    West    End    Trust    Co.    v.  Union,    153    Cal.    64,    94    Pac.    225; 

WethercU,  77  N.  J.  Eq.  590,  78  Atl.  Rosenberger  v.   Express  Co.,  129  Mo. 

756;  American  Mortgage  Co.  V.  Wood-  App.     105     (express    money    order); 

ward,  83  S.  C.  521,  65  S.  E.  739  (right  Newburyport  v.  Fidelity  Ins.  Co.,  197 

to  contract   for  highest   statute   rate  Mass.    596,    84    N.     E.     895     (public 

on    overdue    interest)  ;    Hennessey    v.  money)  ;  Britton  v.  Chamberlain.  234 

Walsh,   142   111.   App.   237;    Cxoldberg  111.  246,  84  N.  E.  895    (foreign  judg- 

V.  West  End  Co.,  78  N.  J.  L.  70,  73  ment). 

398 


CHAP.  XII.]  INCOME,    IXTEEEST    AXD    USURY.  §    260 

without  some  good  excuse;  though  it  may  be  well  enough  said 
that  the  interest  allowed  in  such  case  is  because  of  one's  default 
or  misconduct.''  Agents,  factors,  and  attorneys  are  chargeable 
with  interest  on  the  moneys  unreasonably  detained  which  they 
have  been  instructed  to  remit,  though  not  ordinarily  for  moneys 
collected  and  held  subject  to  the  owner's  order;  executors  and 
administrators,  on  account  of  the  temporary  nature  of  their  trust, 
are  shown  much  greater  indulgence  than  guardians  and  trustees 
in  this  matter  of  liability  for  interest,  and  generally  need  not 
account  for  interest  at  all ;  and  all  parties  holding  property  in 
trust  will  be  allowed  a  reasonable  time  to  invest.  Of  course,  no 
one  is  allowed  to  appropriate  the  profits  made  by  the  use  of  funds 
committed  to  his  keeping,  but  the  gain  accrues  to  principal,  client, 
or  cestui  que  trust,  as  the  case  may  be.'*  Yet  one  who  is  a  mere 
stakeholder,  and  liable  at  the  same  time  to  answer  to  one  or  an- 
other party,  is  held  not  liable  for  interest  upon  money  in  his 
hands,  though  he  makes  a  profit  by  its  use ;  ^  an  exception  which 
cannot  be  safely  extended  far.*^ 

On  the  other  hand,  there  are  circumstances  under  which  one 
holding  a  place  of  trust  may  claim  the  allowance  of  interest  for 
advances  made  out  of  his  private  funds  for  the  benefit  of  the 
trust/ 

3.  See  Perry  Trusts,  §  471 ;  Sclioul.  unreasonable  time  entitles  the  bof- 
Dom.  Rel.,  §  354;  Clemens  v.  Cald-  rower  to  a  rebate  of  interest.  Dodge 
well,  7  B.  Monr.  171  ;  Bryant  v.  v.  Tulleys,  144  U.  S.  451.  And  wher- 
Craig,  12  Ala.  354 ;  Sclioul.  Ex'rs,  ever  the  lender,  on  security  or  other- 
§  538  ;  Johnson  v.  Hedrick,  33  Ind.  wise,  refuses  to  receive  his  money  on 
129.  reasonable  tender,  he  loses  the  right 

4.  lb.  And  see  Hauxhurst  v.  to  further  interest.  Loomis  v.  Knox, 
Hovey,  26  Vt.  544;  Barney  v.  Saun-  60  Conn.  343,  22  Atl.  771.  Where 
ders,  16  How.  535;  Hill  v.  Hunt,  9  money  is  paid  into  the  bank  at  which 
Gray,  66.  the  note  was   payable,  no   interest  is 

5.  Jones  v.  Mallory,  22  Conn.  386.  payable    after    the    maturity    of    the 

6.  See  Moors  v.  Washburn,  159  note.  Cheney  v.  Libby,  134  U.  S.  68. 
Mass.  172,  34  N.  E.  182.  7.  2  Schoul.  Wills  &  Ex'rs,  §§  1541, 

When  a  loan  is  negotiated,  the  re-       1543. 
tention   of  part  of  the  fund   for   an 

399 


§  263  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

§  261.     Interest  upon  Legacies  or  Annuities. 

Interest  is  frequently  payable  upon  legacies  and  annuities; 
but,  where  no  time  is  fixed  by  the  testator's  will,  the  general  prac- 
tice is  not  to  allow  interest  until  the  expiration  of  one  year  from 
the  death  of  the  testator,  at  which  time  a  legacy  is  properly  de- 
mandable;  exception  being  made  in  favor  of  a  child  who  is  left 
without  other  provisions  for  maintenance  in  the  mean  time,  and 
who  should  be  paid  sooner.^ 

§  262.     Immunity  and  Privilege  of  Government  as  to  Interest. 

From  a  liability  for  interest,  the  State  usually  claims  exemp- 
tion, save  so  far  as  concerns  loans  made  on  its  express  contract 
and  with  legislative  authority.  The  usage  of  government  is  not 
the  usage  of  individuals ;  and  constitutional  limitations  of  author- 
ity are  imposed  upon  the  State  and  even  upon  municipal  corpora- 
tions, which  are  of  no  application  elsewhere.^ 

§  263.     Compound  Interest. 

Compound  interest,  or  interest  upon  both  principal  and  inter- 
est, may  be  demanded  in  certain  cases;  and  the  right  to  it  some- 
times arises  in  the  case  of  a  note  with  interest  payable  annually 
or  at  other  designated  periods,  where  the  debtor  runs  into  arrears 
on  the  payment  of  the  instalments  as  well  as  of  the  principal. 
Ordinarily,  simple  interest,  or  interest  by  computation  upon  the 
principal  sum  for  the  entire  period  of  default,  can  alone  be 
allowed  upon  a  debt;  and  it  is  thought  hard  and  iniquitous  for 
one  to  exact  compound  interest,  even  where  he  can  legally  claim 

8.  2  Redf.  Wills,  572,  and  cases  as  to  refunding  duties.  Marine  v. 
cited;  Allen  v.  Crosland,  2  Rich.  Eq.  Lyon,  62  Fed.  153.  See  §  256.  The 
68;  Gill's  Appeal,  2  Penn.  St.  221;  State  does  not  relax  the  right  to 
Roberts  v.  Malin,  5  Ind.  18;  Burtis  claim  interest  from  those  with  whom 
V.  Dodge,  1  Barb.  Ch.  77;  2  Sohoul.  it  has  business  relations.  See  Dean 
Wills  &  Ex'rs,  §§  1481.  1482.  v.  Texas,  54  Tex.  313.     But  interest  is 

9.  Gordon  v.  United  States,  7  Wall.  not  allowable  on  taxes  unless  the 
188;  Pekin  v.  Reynolds,  31  111.  523;  statute  gives  it.  West-ern  Union  Tel. 
State  V.  Mayes,  28  Miss.  706 ;  Tillson  Co.  v.  State,  55  Tex.  314. 

V.  United  States,  100  U.  S.   43.     So 

400 


CHAP.  XII.] 


INCOME,    INTEREST    AND    USURY. 


§    263 


it,  unless  the  debtor  was  guilty  of  some  gross  and  intentional  mis- 
behavior.^ Where  there  is  no  special  agreement  incorporated  into 
the  contract  or  established  between  the  parties,  interest  on  interest 
certainly  cannot  be  allowed.^  And  if  interest  is  due  upon  a  mort- 
gage note  with  annual  or  semi-annual  instalments,  some  special 
agreement  is  required  in  many  States,  after  the  interest  becomes 
due,  to  change  that  interest  into  principal  and  make  it  bear  in- 
terest in  futuro.^  ISot,  according  to  some  decisions,  should  the 
usage  among  merchants  to  strike  annual  balances  be  regarded  as 
justifying  of  itself  the  annual  compounding  of  interest.'* 

For  gross  negligence  or  intentional  misconduct,  as  in  the  case 
of  trustees  who  speculate  and  waste  trust  funds  committed  to  their 
keeping,  the  courts  sometimes  make  annual  rests  and  charge  the 
delinquent  parties  with  compound  interest  by  way  of  penalty.^ 


1.  See  Blyd.  Usury,  68,  69,  and 
cases  cited;  Rayner  v.  Bryson,  29 
Md.  473. 

2.  See  Toll  v.  Hiller,  11  Paige,  228; 
Rose  V.  City  of  Bridgeport,  17  Conn. 
243. 

3.  lb. ;  Banks  v.  McClellan,  24  Md. 
62;  Van  Huson  v.  Kanouse,  13  Mich. 
303;  Gunn  v.  Head,  21  Mo.  432; 
Stone  V.  Locke,  46  Me.  445 ;  Ferry  v. 
Ferry,  2  Cush.  92 ;  Dyar  v.  Slinger- 
land,  24  Minn.  267.  Wliero  a  prom- 
issory note  is  given  with  a  stipulation 
that  interest  is  to  bo  paid  semi-annu- 
ally (or  annually,  &c.),  the  maker  is 
chargeable  with  interest  at  the  like 
rate  upon  each  deferred  payment  of 
interest  as  if  he  had  given  a  promis- 
sory note  for  the  amount  of  such  in- 
terest. Bledsoe  v.  Nixon,  69-  N.  C.  89. 
But  the  English  chancery  rule  is  that, 
in  the  absence  of  a  special  agreement, 
simple  interest  alone  can  be  charged 
in  a  mortgage  account.  Daniell  v. 
Sinclair,  6  App.  CaS.  181.  Interest 
may  be  computed  on  overdue  and  un- 
paid express  instalments;  but  no  in- 


stalments of  semi-annual  interest  will 
be  considered  as  due  after  the  matu- 
rity of  the  note;  because  after  that, 
both  the  accruing  interest  and  prin- 
cipal are  due,  not  on  any  particular 
day,  but  every  day  until  paid.  Whea- 
ton  V.  Pike,  9  R.  I.  132.  And  see 
Cramer  v.  Lepper,  26  Ohio  St.  59; 
§  256,  supra.  An  agreement  to  pay 
interest  upon  interest  must,  in  order 
to  be  valid,  be  made  after  the  interest 
which  is  to  bear  interest  has  become 
due,  and  it  must  !»  supported  by 
sufficient  consideration;  e.  g.,  a  for- 
bearance to  sue.  Young  v.  Hill,  67 
N.  Y.  162.  As  to  a  peculiar  pro- 
vision in  a  promissory  note,  see  White 
v.  litis,  24  Minn.  43;  Page  v.  Wil- 
liams, 54  Cal.  562. 

4.  Von  Hemert  v.  Porter,  11  Met. 
210.  See  Wright  v.  Eaves,  10  Rich. 
Eq.  582;  Carpenter  v.  Welch.  40  Vt. 
251 :  Preston  v.  Walker.  26  Iowa.  205: 
Reusens  v.  Arkenburgh.  135  App.  Div. 
75.  119  N.  Y.  S.  821. 

5.  Ford  V.  Vandyke.  11  Ired.  227; 
Attorney-General  v.  Alford,  4  De  G. 


26 


401 


§    265  THE    LAW    OK    PERSONAL    TROPERTY.  [PART  II. 

And  upon  coupon  obligations  in  these  days,  which  amount  to 
promissory  notes,  a  practical  compounding  of  interest  on  the 
principal  obligation  is  judicially  sanctioned.^ 

§  264.     Rule  of  Interest  in  Partial  Payments. 

Since  partial  payments,  however,  are  frequently  made  on  an 
interest-bearing  debt,  it  becomes  important  to  apply  the  well- 
known  rule  of  Chancellor  Kent,  which  the  courts  of  this  country 
have  commonly  ret^ogiiized :  namely,  to  apply  the  payment  in  the 
first  place  to  the  discharge  of  the  interest  then  due;  if  the  pay- 
ment exceeds  the  interest,  to  carry  the  surplus  towards  discharg- 
ing the  principal,  and  compute  the  subsequent  interest  on  the 
balance  of  the  principal  remaining;  but  if  any  payment  be  less 
than  the  interest  due,  not  to  take  the  surplus  of  interest  to  aug- 
ment the  principal,  but  cast  the  interest  on  the  former  principal 
until  the  period  when  the  payments  taken  together  exceed  the 
interest  due.^  This  rule  is  fairer  to  the  lender  than  the  rule  of 
compound  interest,  and  is  preferred  both  in  the  courts  and  among 
business  men. 

§  265.     As  to  Usury ;    Characteristics  of  Usury  Laws. 

II.  And  now  to  pass  from  interest  to  usury.  If  proof  were 
needed  of  the  practical  difficulties  which  block  the  enforcement 

M.  &  G.   851;    Perry  Trusts,   §   471;  cantile  Co.  v.  Lanoe,  16  Ga.  App.  592; 

Johnson  v.  Hedrick,  33  Ind.  129.  Palm   v.    Fanclier,    93    Miss.    785,    48 

6.  Swpra,  %  256.     On  the  principle  So.  818,  33  L.  R.  A.  N.  s.  295,  n. 
of  a  domand  for  payment  of  a  debt  7.  Connecticut  v.  Johnson,  1  Johns, 

which  was  actually  due  at  a  certain  Ch.  13.     See  Anketel  v.  Converse,  17 

time,  and   the   debtor's   default,   why  Ohio  St.   11;    Townsend  v.   Riley,   46 

.should  not  the  payee  have  a  right  to  N.    H.    300;    Dean    v.    Williams,    17 

demand  and  exact  interest  for  one's  Mass.  417 ;  Leonard  v.  Wildes,  36  Me. 

t:nreasonable  dela}'  in  paying  a  peri-  265 :    Baker   v.   Baker,   4    Dutch.    13 ; 

odical    interest    instalment?      See    §§  Smith  v.  Coojjers,  9  Iowa,  376;  Riney 

253,  254.     S<^  Lowe  v.  Schuyler,  187  v.   Hill,   14   Mo.   500;    Abbey,   Re,   83 

Mich.  526,  153  N.  W.  786;  West  End  N.  J.   Eq.   689,   93   Atl.   801;    Boston 

Trust  Co.  V.  Wetherell,  77  N.  J.  Eq.  Investment   Co.    v.    Board   of   Educa- 

590,  78  Atl.  756 ;  Ute  Indians  v.  U.  S.,  tion,  33  S.  D.  1,  144  N.  W.  129. 
45  Ct.  CI.  440.    And  see  So.  Ga.  Mer- 

402 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    266 

of  usury  laws,  it  might  readily  be  found  by  examining  the  current 
decisions  of  our  State  courts.  The  later  American  reports  are 
full  of  distinctions  in  usurious  contracts,  which,  though  true  in 
the  main  to  certain  leading  principles,  vary  widely  in  their  appli- 
cation with  the  intrinsic  merits  of  each  case,  the  consequences  of 
illegality,  and  local  public  sentiment,  whether  for  or  against  re- 
straints of  this  nature  upon  mercantile  traffic.  In  the  matter  of 
contrivances  for  evading  the  legal  penalties  against  usury,  human 
ingenuity  exhausts  itself;  and  many  are  the  cunning  expedients, 
not  merely  of  felons  and  social  reprobates,  but  of  bankers  and 
business  men  of  high  standing,  which  are  found  to  fail  when  sub- 
mitted to  the  test  of  litigation ;  while  it  can  hardly  be  doubted 
that,  in  every  State  where  a  rigid  policy  prevails,  mercantile 
transactions  in  violation  of  the  usury  laws  are  constantly  carried 
on  between  parties  who  take  all  legal  risks  and  know  theii  mutual 
interests  too  well  to  call  upon  the  courts  for  direction.*^ 

§  266.     What  Contracts  Are  Usurious;    Questions  of  Intent. 

But,  upon  the  whole,  what  contracts  may  and  what  may  not  be 
pronounced  usurious  ?  And  where  is  the  line  to  be  drawn  be- 
tween them?  It  is  a  well-settled  principle,  to  begin  with,  that 
the  essence  and  not  the  form  of  a  contract  will  determine  whether 
or  not  the  contract  is  usurious ;  and  no  matter  what  the  ostensible 
purposes  of  a  transaction  may  have  been,  or  the  language  em- 
ployed, the  courts  will  explore  the  truth;  and  if  they  find  that 
the  object  was  a  loan  of  money  at  more  than  the  legal  rate  of 
interest,  they  will  pronounce  it  usurious.  Usury  is  mainly  and 
fundamentally  a  question  of  intent ;    and   to  constitute  a  usurious 

8.  The  repeal  of  the  En<?lish  usury  note,    p.    41.      Locus    of    contract  — 

laws  {supra,  §  251)   does  not  deprive  usury.     Book  5.  N.  Y.  Rpts.,  Bender 

equity  of  its  jurisdiction  as  to  reliev-  ed.,  note,  p.   861.     Usury  dett^rmined 

ing  expectant  heirs,  &c.,  ajjainst  un-  by   what  statute,   contracts   made    in 

conscionable   barj^ains.      L.    R.    8    Ch.  one  State  to  be  performed  in  another. 

484;  Nevill  V.  Snelling,  15  Ch.  D.  679.  Book    26,    N.    Y.    Rpts.,    Bender    ed.. 

Usury    as    governed    by    what    law.  note,  p.  675.     See  nest  chapter. 
Book    19,    N.    Y.    Rpts.,    Bender   ed., 

403 


§    2G6  THE    LAW    OF    PERSONAL    PROPERTY.  [PAET  IL, 

contract  as  usually  found,  there  should  be  first  a  loan,  and  next  an 
agreement  to  pay  more  than  legal  interest  upon  it.  No  sham, 
no  device,  no  trick  of  the  parties  to  the  contract,  can  be  set  up  to 
defeat  the  operation  of  the  usury  laws,  where  these  two  elements 
concur;  it  being  also  understood  that  the  money  borrowed  is  to 
be  repaid  in  any  event.^ 

And  yet  where  the  thing  or  amount  borrowed  is  not  necessarily 
to  be  returned,  but  the  principal  is  bond  fide  put  at  hazard,  it  is 
frequently  held  that  more  than  the  legal  interest  can  be  taken. ^ 
And  if  a  payment  be  conditional,  and  that  condition  is  in  the 
power  of  the  debtor  to  perform,  so  that  the  creditor  may  by  the 
debtor's  act  be  deprived  of  any  extra  payment,  it  follows  that  the 
transaction  is  not  usurious.^  But  the  rule  of  hazard  or  contin- 
gency is  to  be  applied  with  caution ;  for  a  loan  upon  a  merely 
colorable  or  very  slight  contingency  contrived  so  as  to  avoid  the 
statutes  against  usury  might  not  stand.  The  principal  being 
placed  in  jeopardy,  however,  in  case  of  a  life  annuity,  the  annual 
payments  thereon  are  not  usurious."'  Nor  can  usury  ordinarily 
result  from  the  act  and  intention  of  one  of  the  parties  to  the  con- 
tract alone ;  for  both  must  have  been  cognizant  of  the  facts  which 
constitute  the  usury.'^  Again,  an  error  in  calculation,  an  acci- 
dental omission  of  credit,  or  a  transfer  by  mistake  of  an  item  from 
one  account  to  another,  will  not  alone  make  a  security  usurious ;  ^ 
but  the  mistake  should  be  rectified  rather.     But  if  a  contract  be 

9.  See  Blvd.  Usury,  33 ;  Cowp.  114 ;  2.  Sumner  v.  People,  29  N.  Y.  387 ; 

Wetter    v.     Eardesty,     16     Md.     11;  Lawrence  v.  Cowles,  13  111.  577. 

Jarvia'  Appeal,  27  Conn.  432 ;    Scott  3.  Howkins  v.  Bennet,  7  C.  B.  N.  s. 

V.   Lloyd,   9  Pet.   418;    Fitzsinions  v.  507.     See  Spain  v.  Hamilton,  1  Wall. 

Baum,  44  Penn.  St.  32.     A  mere  re-  604 ;  Waite  v.  Mining  Co.,  37  Vt.  608. 

newal     does    not    purge    of     usury.  4.  Hayward   v.    Le    Baron,    4    ^la. 

Eslava    v.    Crampton,    61    Ala.    507;  404;    Aldricli    v.    Reynolds,    1    Barb. 

National    Bank   v.    Lewis,    75    N.   Y.  Oh.  43.     See  Simpson  v.  Fullenwider, 

516.     But  under  some  statutes  usury  12  Ired.  334. 

may  exist  without  a  loan  of  money.  5.  Marvine    v.    Hymers,    18    N.    Y. 

See  Crawford  v.  Johnson.  11  Ind.  258.  223 ;     Blyd.     Usuiy,     32 ;     Busby     v. 

1.  See    Pomeroy    v.    Ainsworth,    22  Finn,     1     Ohio    St.     409 ;     Marsh    v. 

Barb.  118;  Blyd.  Usury,  33-37.  Martindale,  3  B.  &  P.  150. 

404 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    267 

clearly  usurious,  and  more  than  legal  interest  be  intentionally 
taken,  whether  the  party  knows  that  the  transaction  is  within  the 
usury  laws  or  not,  the  legal  consequences  must  follow ;  the  transac- 
tion speaks  for  itself.^  Once  more,  the  question  of  usury  refers 
to  the  time  of  the  transaction;  and  the  use  which  the  borrower 
makes  afterwards  of  the  money  cannot  change  the  result  and  is 
not  a  proper  subject  of  inquiry/  And  of  course,  where  there  is 
no  usurious  agreement,  the  question  whether  there  was  an  usurious 
intent  is  immaterial.^ 

The  situation  of  the  parties  to  the  usurious  transaction,  and 
the  character  of  the  transaction,  may  sometimes  affect  the  action 
of  the  court  in  such  matters ;  as,  for  instance,  where  they  do  not 
deal  on  equal  terms,  where  the  lender  gets  some  undue  advantage 
over  the  borrower,  or  uses  fraud  or  force ;  for  unconscionable  bar- 
gains should  not  be  sustained,  though  all  usuary  laws  were 
abolished.^ 

§  267.     Change  or  Renewal  of  Usurious  Contract. 

If  a  contract  be  usurious  in  its  inception,  no  renewal  of  it  or 
change  in  the  form  can  alter  its  original  character.  Thus,  where 
a  bond  is  given  upon  a  usurious  agreement,  which  is  afterwards 
destroyed  and  another  bond  given  upon  the  same  terms,  the  sub- 
stitution of  the  one  for  the  other  cannot  avail  the  parties  to  the 
usury;  because,  as  the  second  bond  was  given  in  consideration  of 
the  first  which  was  invalid,  it  must  follow  that  the  second  is 
invalid  also.^  And  the  substitution  of  a  new  security  for  the  same 
usurious  debt  renders  the  new  security  invalid,  as  was  the 
original.^ 

6.  Cro.  Jae.  507;  Bank  of  Salina  v.  9.  See  Miller  v.  Cook,  L.  R.  10  Eq. 
Alvord,   31   N.   Y.   573;   Thompson   v.  641;  Cowp.  116;  15  Cli.  D.  679. 
Nesbit,   2   Rich.    73.     And   see   Craig  1.  Blvd.     Usury,     91;     Stanley     v. 
V.  Pleiss,  26  Penn.  St.  271.  Westrop,    16    Tex.    200;    Pearson    v. 

7.  Bondurant  v.  Commercial  Bank,  Bailey,  23  Ala.  537;  Tutliill  v.  Davis, 
8  S.  &  M.  533;  Brown  v.  Nevitt,  27  20  Johns.  285;  Nelson  v.  Hurford.  11 
Miss.  801.  Neb.  465. 

8.  Smith  V.  Paton,  31  N.  Y.  66.  2.  lb.;     Campbell     v.     McHarfr.     9 

405 


§  2G7  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

But  parties  may  determine  to  free  themselves  from  the  vice  of 
usury  and  start  anew ;  and  where  they  destroy  the  usurious  security 
and  make  a  settlement  of  the  transaction,  and  substitute  new 
securities  in  good  faith  for  an  actual  loan,  and  then  have  no 
further  intent  of  evading  the  usury  laws,  the  new  contract  and 
new  securities  will  stand.  And  although  the  new  principal  be 
for  the  same  sum  as  the  old,  and  though  usurious  interest  were 
taken  upon  the  loan  as  it  formerly  existed,  which  has  not  been 
refunded,  the  new  transaction  is  not  thereby  vitiated.^  The  legal 
invalidity  of  usury  affects  all  securities  given  to  secure  the  orig- 
inal loan ;  "*  but  this  invalidity  does  not  extend  to  a  promise  on  new 
consideration,^  as  where  the  original  usurious  mortgage  was  dis- 
charged and  a  new  mortgage  given  in  consideration  of  the  mort- 
gagee allowing  the  placing  of  an  intervening  lien  on  the  property.^ 
It  has  been  said  that  the  substance  of  the  older  decisions  amounts 
to  this:  that  inasmuch  as  an  actual  agreement  between  borrower 
and  lender  on  the  one  part  to  pay,  and  on  the  other  to  receive, 
more  than  the  legal  rate  of  interest,  is  necessary  to  constitute 
usury;  so,  an  actual  agreement  between  the  same  parties  or  their 
legal  representatives  to  cleanse  the  transaction  is  also  necessary  to 
render  valid  any  subsequent  promise  for  the  payment  of  the  orig- 
inal principal.^  But,  according  to  the  later  American  cases,  it 
would  appear  that  the  rule  has  relaxed  further,  and  that  an  actual 
agreement  need  not  now  be  shown,  if  the  circumstances  sufficiently 
imply  a  mutual  intent  of  the  parties  to  get  rid  of  the  usury  on  a 
renewal  or  substitution  of  securities,  or  otherwise,  which  intent 

Iowa,    354;    Jackson    v.    Packard,    6  4.  Nicrosi  v.  Walker,  139  Ala.  369, 

Wend.  415;   Wales  v.  Webb,  5   Conn.  37   So.    97;    Cobe   v.    Guyer,    237    111. 

154;  Cross  v.  Mann,  53  Vt.  501;  Ens-  568,  86  N.  E.  1088. 

lava  V.  Crampton,  61  Ala.   507 ;  Nat.  5.  Hoopes    v.    Ferguson,    57    Iowa, 

Bank  v.  Lewis,  75  N.  Y.  516.  39,  10  N.  W.  286;  Kent  v.  Walton,  7 

3.  Hoyt  V.  Bridgewater,  &c.,  Co.,  2  Wend.    (N".  Y.)   257. 

Ha1st.   Ch.   253;    Smith   v.    Stoddard,  6.  Blohm  v.  Hannan,  83  N.  J.  Eq. 

10  Mich.   148;    De  Wolf   v.   Johnson,  347,  88  Atl.  622. 

10   Wheat.    367.      And    see    Blvd.    91  7.  See  Blyd.  Usury,  96. 
et  seq.,  and  cases  cited;  Hammond  v. 
Hopping,  13  Wend.  505. 

406 


CHAP.  XII.] 


INCOME,    INTEREST    AND    USURY. 


§  267 


has  been  carried  out  by  their  own  acts.^  The  great  diflSculty  lies, 
however,  in  distinguishing  between  a  bond  fide  substitution  of 
new  securities  for  old,  with  a  new  promise,  and  the  mere  carrying 
along,  extending,  or  renewing  an  old  usurious  loan  with  a  mere 
pretence  of  substituting  new  securities.  When  parties  have  come 
to  a  genuine  settlement  after  actually  paying  and  taking  usury, 
and  then  made  new  securities  which  include  the  actual  loan  and 
no  more,  the  new  contract  is  not  to  be  regarded  as  usurious.  But 
if  they  keep  the  original  usurious  transaction  with  its  security  out- 
standing, or  if  they  make  a  new  security  which  embraces  a  claim 
for  unpaid  usurious  interest,  or  if  they  substitute  securities  with- 
out the  intervention  of  some  new  and  distinct  and  proper  consid- 
eration, it  can  hardly  be  doubted  that  the  whole  transaction,  in- 
cluding the  securities,  will  be  treated  as  infected  with  the  original 
usury.  ^ 


8.  A  usurious  contract  may  be 
purged  of  usury  by  refunding  the 
usurious  payments  already  made, 
and  thereafter  drawing  the  legal  rate 
of  interest.  Phillips  v.  Building  As- 
sociation, 53  Iowa,  719.  Something 
depends,  perhaps,  upon  the  statute 
consequences  of  usury ;  whether  in 
making  the  contract  "  void,"  or 
otherwise.  See  §  283,  post.  And  cf. 
Marks  v.  McGehee,  35  Ark.  217. 

1.  See  Hazard  v.  Smith,  21  Vt.  123 ; 
Smith  V.  Stoddard,  10  Mich.  148; 
Miller  v.  Hull,  4  Denio,  104.  As  to 
the  taking  of  several  notes  at  a  bank 
at  usurious  rates,  and  paying  the  full 
balance  by  a  new  note,  see  Ticonic 
Bank  v.  Johnson,  31  Me.  414.  And 
see  Coulter  v.  Robertson,  14  S.  &  M. 
18;  Turneys-  v.  Hunt,  8  B.  Monr.  401; 
Hightower  v.  Beall,  66  Ga.  102; 
Hoopes  v.  Ferguson,  57  Iowa,  39. 
The  payment  of  usurious  interest  for 
a  period  already  elapsed  on  a  note 
or  other  monev  obligation,  is  a  good 


consideration  for  an  agreement  to  ex- 
tend the  time  of  payment ;  notwith- 
standing the  usurious  interest  might 
be  recouped.  Lemmon  v.  Whitman, 
75  Ind.  318.  Cf.  Kendig  v.  Linn.  47 
Iowa,  62.  For  a  usurious  tran«iction 
where  interest  was  regularly  paid  on 
the  note  in  advance,  see  Sanner  v. 
Smith,  89  111.  123.  To  agree  to  pay 
more  than  legal  interest  for  past  for- 
bearance, or  in  consideration  of  ex- 
tending the  time  of  payment,  is  usuri- 
ous. But  an  agreement  in  ad\"ance 
to  pay  a  sum  of  money  by  a  day  cer- 
tain, and  more  than  legal  interest  by 
way  of  penalty  if  the  debt  be  not 
punctually  paid,  is  lidd  not  usurious, 
if  the  parties  had  not  intended  at 
the  time  to  evade  the  usury  laws. 
See  Davis  v.  Rider.  53  III.  416;  Wil- 
son v.  Dean,  10  Iowa,  432;  Rogers  v. 
Sample,  33  Miss.  310;  Mitchell  v. 
Doggett.  1  Fla.  356;  Fisher  v.  Otis, 
3  Chand.  (Wis.)  83.  The  rule  ap- 
pears to  be  otherwise  in  some  States. 


407 


§  268  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

§  268.  Taking  Usury  Where  a  Contract  Was  not  Originally 
Usurious,  etc. 

In  order  to  defeat  a  contract  on  the  ground  of  usury,  it  must 
havo  been  usurious  in  its  inception,  or  when  originally  made ;  and 
if  the  contract  was  not  usurious  then,  it  will  not  become  so  through 
the  receipt  of  usurious  interest  upon  it  afterwards ;  though  a  stat- 
ute penalty  for  taking  usurious  interest  would  appear  to  be  in- 
curred whenever  one  takes  it.^  And  when  the  payee  of  a  note 
which  is  good  as  it  originated  makes  a  special  contract  for  a 
usurious  rate  afterwards  to  forbear  enforcing  payment,  it  is  the 
special  contract  of  forbearance  which  is  usurious,  while  the  orig- 
inal note  remains  untainted."'  Where,  however,  money  is  loaned 
at  the  highest  legal  rate,  any  special  contract  to  pay  a  sum  addi- 
tional in  consideration  of  extension  would  be  usurious."^  A  re- 
newed note  may  thus  be  usurious  when  the  original  note  was 
not.^  These  same  principles  apply  to  bonds  and  various  other 
instruments.^ 

A  transaction  which  is  inseparable  is  liable  to  the  penalties  of 
the  statute  if  tainted  with  usury ;  but  where  of  separate  and  inde- 
pendent transaction  one  is  usurious  and  not  the  other,  the  latter 
is  free  of  the  taint,  even  though  contemporaneous  and  between  the 
same  parties.'' 

See  Waller  v.  Long,  6  Munf.  71.     And  3.  Mallett   v.    Stone,    17    Iowa,   64; 

simple  interest  paid  for  the  forbear-  Cobb  v.  Morgan,  83  N.  C.  211. 

aiice  of  usury  is,  of  course,  no  usury.  4.  Rosebrough  v.  Ansley,  35  Ohio  St. 

Briggs  V.  Sholes,  15  N.  H.   52.     And  107. 

as  to  miscellaneous  points,  see  Fry  v.  5.  McDonald  v.  Beer,  42  Neb.   437. 

Coleman,  1  Grant  Cas.  445;   Coon  v.  6.  See  Ware  v.  Thompson,  2  Beasl. 

Swan,  30  Vt.  6.  66 ;  Ballinger  v.  Edwards,  4  Ired.  Eq. 

2.  Blyd.  97;  Busby  v.  Finn,  1  Ohio  449. 

St.    409;     Swartwout    v.    Payne,    19  7.  See  Jackson  v.  May,  28  111.  App. 

Johns.  294 ;  Drury  v.  Morse,  3  Allen,  305,  where  such  separate  loans  were 

445;  Ware  v.  Thompson,  2  Beasl.  66;  protected  try  the  same  mortgage  se- 

Godfrey  v.   Leigh,    6   Ired.    390.      See  curity. 
§  289. 

408 


CHAP.  XII.]  INCOME,    INTEREST    AND    USUET.  §    269 

§  269.  Compounding  Interest,  Discounting,  Selling  Notes,  etc., 
not  Usurious. 
A  contract  that  interest  falling  due  from  time  to  time  shall 
be  turned  into  principal  and  boar  interest,  if  not  paid  when  due, 
is  not  usurious;  for,  as  we  have  seen,  compound  interest  may 
lawfully  be  taken,  upon  a  delinquency,  if  the  parties  so  choose.^ 
And  notwithstanding  the  rate  of  interest  is  fixed  by  law  at  so 
much  per  annum,  a  contract  may  lawfully  be  made  for  the  pay- 
ment of  that  rate  before  the  principal  comes  due,  in  periods 
shorter  than  a  year.^  Furthermore,  where  one  who  is  entitled  to 
collect  interest  and  principal  at  a  certain  date  takes  instead  a  new 
note  for  the  total  amount  bearing  legal  interest,  this  is  not  a 
usurious  transaction.'  In  short,  compounding  or  anticipating 
interest  is  not  usurious,  even  though  public  policy  in  the  particu- 
lar instance  should  disallow  it,^ 

An  advantage  even  superior  to  that  of  compounding  interest 
is  gained  by  the  lender  Avhen  a  discount  is  allowed ;  for  here  he 
secures  interest  in  advance,  by  reserving  it  from  the  amount  lent, 
and  may,  by  investing  the  sum  reserved,  gain  interest  upon  inter- 
est. Money  is  now  frequently  loaned  in  this  way  upon  time 
notes ;  and  the  practice  is  well  established  as  legal,  not  only  in 
bank  loans,  but  in  those  of  individual  capitalists,  so  far  as  concerns 
discounts  at  a  legal  rate.^  By  an  English  statute  of  the  reign  of 
William  IV.,  the  business  of  discounting  short  notes  was  expressly 

8.  Supra,    §   263;    Hale   v.   Hale,    1  9.  Meyor  v.  MuspatiiiP.  1  Wall.  384. 

Cold.     233;     Brown     v.     Vandyke,     4  And  st^  Hoyt  v.  Brid.ujewator,  &c.,  Co., 

Halst.  Ch.  795;  Stewart  v.  Petree,  55  2  Halst.  Ch.  253. 

N.    H.    621;    Hawlcy    v.    Howell,    60  1.  Holland    v.    :Mostoller,    6    Jones 

Iowa,    79',    14    N".    W.    Rep.    199;    114  Law,  582. 

N.    W.    279    (Neb.).      But   see    Kim-  2.  Bowman  v.  Neoly,  151  111.  37,  37 

brough  V.  Lukins,  70  Ind.  373;  Dean  N    E.  840. 

V.  Herrick,  54  Vt.   573.     The  custom  3.  Blvd.  58.  50;   Parker  v.  Cousins, 

of    stockbrokers    to   debit    and    credit  2  Gratt.  372:  Marvino  v.  Hymers.  12 

interest  monthly,   computing   interest  N.    Y.    223;    Cowles    v.    MrVickar.    3 

on   balances',   is  not  necessarily    ilsu-  Wis.  725;  Maxwell  v.  Wiliett,  49  111. 

rious.     Hatch   v.    Douglas,    48   Conn.  App.  564. 
116. 

409 


§  2(>9  THE  LAW  OF  PERSONAL  PEOPERTY.       [PART  II. 

excepted  from  the  operation  of  the  old  usuarj  laws;  and  similar 
enactments  maj  be  found  in  parts  of  the  United*  States."*  The 
practice  of  discounting  was  first  recognized  as  lawful  on  behalf 
of  banks,  -and  eighty  years  ago  our  courts  seem  to  have  been 
disposed  to  confine  its  operation  to  bankers  and  those  who  dealt 
in  commercial  paper  by  way  of  trade;  but  the  tendency  of  the 
day  is  towards  a  more  liberal  allowance  of  the  practice,  so  long 
as  the  lender  bond  fide  advances  the  whole  principal,  and  deducts, 
only  legal  rates  of  interest.  Whether,  on  a  discount  of  a  bill  or 
note,  it  is  usurious  to  reckon  the  month  at  thirty  days  and  the 
year  at  three  hundred  and  sixty  days  and  compute  accordingly, 
seems  in  dispute;  but  mercantile  usage  is  probably  in  its  favor. ^ 
But  where,  under  the  pretext  of  discounting  a  note,  more  than  the 
legal  rate  is  taken  out  by  the  lender,  th^  transaction  is  usurious.^ 
A  court  is  not  to  be  misled  by  appeaBances'  in  such  a  case ;  and 
whether  maker,  payee,  indorser,  indorsee,  or  any  holder  is  con- 
cerned, he  will  be  affected*  by  participation  in  the  usury.  N^or 
does  it  matter  in  civil  consequences,  that  the  lender  acted  in  good 
faith  and  without  actual  intention  of  evading  the  law  which  is 
violated.^ 

Yet  when  it  comes  to  the  sale  of  commercial  paper  for  less  than 
its  face,  and 'at  a  discount,  new.  considerations  are  found  to  arise, 
which  receive  much  attention  in  our  courts;  and  certainly  the 
present  tendency  is  towards  sustaining  the  bond  fide  sale  and  pur- 
chase of  negotiable  securities  for  any  rate  of  discount,  through 
brokers  or  otherwise,  and  this  although  the  practical  effect  might 

4.  Stat.  3  &  4  Wm.  IV.,  c.  98.  See  v.  Wolfe,  34  111.  App.  23.  An  agree- 
Wms.  Pers.  Prop.,  17th.  Eng.  ed.,  245.  ment  to  pay  periodically  in   advance 

5.  Cf.  Parker  v.  Cousins,  supra,  and  the  highest  legal  rate  of  interest  for 
Utica  Ins.  Co.  v.  Tillman.  1  Wend.  the  use  of  money  is  not  usurious. 
555.  Rose    v.    Munford,    36    Neb.    148,    54 

6.  Gebhart  v.  Sorrels,  9  Ohio  St.  N".  W.  129.  And  this,  although  the 
461;  Nichols  v.  Levins,  15  Iowa,  362;  money  loaned  was  not  paid  over  to 
Simpson  v.  Evans,  44  Minn.  419;  the  borrower  until  after  interest  be- 
Connor  v.  Donnell,  55  Tex.  167.  gan    to    run,    provided    the    fault   for 

7.  Equitable  Trust  Co.  v.  Fowler,  such  delay  was  that  of  the  borrower. 
141  U.  S.  384,  12  Sup.  Ct.  1;  Dniry  lb. 

410 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    271 

be  to  defeat  the  policy  of  the  usury  laws.^  In  this  respect,  as  in 
others,  the  business  community  are  apt  to  strain  a  doubtful  point, 
and  lend  the  sanction  of  business  usage  in  advance  of  judicial 
interpretation.  In  principle,  such  sales  correspond  closely  to  the 
familiar  transaction  of  purchasing  coupon  bonds  or  stock  at  mar- 
ket rates,  whether  above  or  below  par ;  and  the  element  of  probable 
solvency  enters  into  all  such  values. 

§  270.     Whether  Charging  for  Exchange  is  Usurious. 

It  is  not  usury  to  charge  the  customary  market  rates  of  ex- 
change, where  the  loan  is  made  in  one  place  and  is  payable  in 
another.  But  where,  as  is  too  frequently  the  case,  this  charge  of 
exchange  is  a  mere  device  and  cover  for  usury,  and  the  note  is 
executed  and  payable  at  home,  the  transaction  becomes  usurious.^ 
And  while  rates  of  "  exchange  "  are  usually  as  between  one  State 
or  country  and  another,  it  is  held  not  to  be  usurious  for  the  lender 
of  money  to  take  advantage  of  the  difference  of  exchange  between 
the  place  of  the  loan  and  the  place  of  the  payment,  where  both 
places  are  within  the  State. ^ 

§  271.     Whether  Taking  Gift,  Bonus,  Fee,  etc.,  is  Usurious. 

Usury  is  often  taken  in  the  shape  of  a  gift  or  bonus ;  and  where 
one  lends  money  and  simultaneously  takes  back  part  of  the  loan 
by  way  of  a  special  premium,  but  without  special  consideration, 
this  is  a  usurious  device  of  the  thinnest  kind.^     But  as  concerns 

8.  See  Noble  V.  Walkor,  32  Ala.  456 ;  9.  Price  v.   Lyons   Bank,   33   N.   Y. 

May  V.  Campboll,  7  Humph.  450;  Van  55:    Blvd.    52;    Buckin-xham    v.    Mc- 

Duzor  V.  Howe,  21  N.  Y.   531 ;   Gaul  Lean,   13   How.   I'A  :    Dwrkce   v.   City 

V.   Willis,  26  Penn.   St.  259;   Metcalf  Bank,  13  Wis.  210. 

V.   Pilcher,   6   B.   Monr.    529;    Dicker-  1.  Ea^le  Bank  v.  UiRncy,  33  N.  Y. 

man  v.  Day,   31   Iowa,   444;   Maas  v.  C13.    And  see  Kiljjore  v.  Dempsey,  25 

Chatficld,    90   N.    Y.    1;    Colehour   v.  Ohio  St.   413. 

Savings     In.stitution,     90     HI.     152;  2.  See  N.  Y.  Dry  Dock  Co.  v.  Amer- 

Belden  v.  Lamb,  17  Conn.  441;  Chase  lean,    &c.,    Co.,    3    Sandf.    Ch.    215: 

Nat.   Bank   v.   Faiirot,   72   Hun,    373.  Hawkeye    Loan    Ass'n    v.    Blackburn. 

And    see    §    275,    post.      As    between  48   Iowa,  385;   Lockwood  v.  Mitchell, 

business    and    accommodatiou    paper,  7   Ohio   St.    387;    Jarvis'   Appeal.   27 

see  §  275.  Conn.  432;  Grubb  v.  Brooke,  47  Penn 

411 


§  271  THE  LAW  OF  PERSONAL  PROPEETY.       [PART  II. 

compensation  for  special  services,  the  repayment  of  expenses, 
attorney's  fees,  commissions,  and  the  like,  the  rule  may  be  other- 
wise, nnder  some  circumstances.  In  order  that  the  extra  allow- 
ance may  not  taint  the  whole  transaction,  it  must  be  reasonable 
and  proper,  and  stand  for  some  real  service  distinct  from  the  loan 
itself.  A  disguised  gratuity  inuring  to  the  lender  under  the  name 
of  a  commission  will  infect  the  contract  of  loan  with  usury;  but 
for  certain  special  services,  which  are  well  understood  in  the  mer- 
cantile world,  the  lender  who  has  rendered  them  in  good  faith  is 
permitted  to  charge  something  in  addition  to  the  lawful  rate  of 
interest, —  as  for  accepting  the  drafts  drawn  by  a  customer,  and 
purchasing  supplies  for  him, —  provided  always  that  the  charge 
be  well  founded  and  reasonable  in  amount.^  And  while  the  lender, 
who  takes  something  above  legal  interest  from  the  borrower  under 
all  such-  circumstances,  is  to  be  narrowly  watched,  there  is  no 
doubt  that  the  reasonable  charges  of  third  persons  in  connection 
with  the  transaction  are  properly  allowable;  such  as  attorney's 
fees,  or  the  commissions  of  a  broker.'*  Usury  is -not  created  by  the 
fact  that  the  lender  is  compensated  for  the  expense  of  making  the 
loan  and  of  selling  stock  required  to  make  it  and  for  the  dividends 
and  rise  in  value  of  the  stock,  during  the  period  of  the  loan.^ 
And  whether  all  charges  of  this  character  are  excessive  or  not  will 
depend   upon   the   ordinary   rules.^     What,    it   should   be    asked 


St.  485;  Stark  v.  Sperry,  6  Lea,  411;  usual   scope   his   principal   is   usually 

Walter  v.  Foutz,  52  Md.  147.  bound;     but   it   appears   that,   if   the 

3.  See  Blvd.  57;  Byrne  v.  Grayson,  agent  of  the  lender  takes  a  usurious 
15  La.  Ann.  457 ;  Beadle  v.  Munson,  bonus  for  himself  without  the  lender's 
30  Conn.  175 ;  Corlies  v.  Estes,  31  authority  or  knowledge,  the  contract 
Vt.  653;  Jones  v.  McLean,  18  Ark.  is  not  thereby  rendered  usurious. 
456.  See  Bell  v.  Day,  33  K  Y.  165;   Bal- 

4.  Tallman  v.  Truesdell,  3  Wis.  linger  v.  Bourland,  87  111.  513;  Aus- 
443;  Billingsley  v.  Dean,  11  Ind.  331;  tin  v.  Harrington,  28  Vt.  130;  Eogers 
Smith  V.  Wolf,  55  Iowa,  555;  Dayton  v.  Buckingham,  33  Conn.  81.  Such  is 
V.  Moore,  30  N.  J.  Eq.  543.  the  pronounced   rule  of  Some   States. 

5.  De  Moltke-Huitfeldt  v.  Garner,  Van  Wyck  v.  Watters,  81  N.  Y.  352 ; 
145  N.  Y.  App.  Div.  766,  130  N.  Y.  Brigham  v.  Myers,  51  Iowa,  397. 
Supp.  558.  Loan  not  made  usurious  by  the  fact 

6.  For   an   agent's    act   within   the  that  the  borrower's  agent  receives  a 

412 


CHAP.  XII.] 


INCOME,    INTEREST    AND    USUEY. 


§  271 


(though  this  may  not  be  the  full  criterion),  was  the  intention,  and 
what  were  the  motives  of  the  parties  at  the  time  of  the  transac- 
tion.'' A  bonus-  paid  by  the  borrower  to  his  own  agent  for  pro- 
curing a  loan  is  no  part  of  the  sum  loaned  and  raises  no  issue  of 
usurj.^ 

Sometimes  a  bonus  or  gratuity  is  really  usurious,  though  taken 
rather  by  way  of  special  advantage  than  as  a  direct  payment  iu 
cash.  Thus,  where  a  loan  of  money  is  made  to  a  corporation  on 
condition  that  the  lender  shall  be  employed  in  some  official  posi- 
tion, which  is  in  fact  a  sinecure,  and  shall  receive  a  salary  with- 
out rendering  equivalent  services,  this  is  a  mere  usurious  device, 
and  the  transaction  is'  illegal ;  though  sometimes  a  special  contract 
of  this  sort  might  be  separated  from  the  loan,  and  pronounced 
invalid  simply  by  itself.^  So,  too,  an  agreement  to  pay  a  lender 
a  share  of  the  business  profits  of  the  borrower  in  addition  to  prin- 
cipal and  interest  is  usurious.^  But  not  a  bond  fide  contract  to 
perform  certain  work  for  a  corporation  at  specified  prices  and  to 


commission  wliicli  he  divides  with  the 
lender's  agent.  Dickey  v.  Brown,  56 
Iowa,  426.  And  see  Smith  v.  Mack, 
105  Ark.  653,  151  S.  W.  431.  Nor 
because  an  attorney,  with  the  mort- 
gagor's assent,  deducts  money  to  a 
reasonable  amount  from  the  principal 
of  the  mortgage  for  legal  services  as 
to  the  title  and  drawing  the  papers, 
no  part  thereof  being  received  by  the 
mortgagee.  White  v.  Dwyer,  31  N. 
J.  Eq.  40;  Kihlholz  v.  Wolf,  10,3  111. 
362;  Ammondson  v.  Ryan,  111  111. 
506;  Goodwin  v.  Bishop,  145  111.  421; 
Daley  v.  Minn.  Loan  Co.,  43  Minn. 
517.  Otherwise,  semble,  if  the  benefit 
enures  directly  to  the  lender.  Kilholz 
V.  Wolf,  103  111.  362.  Money  to  a 
reasonable  amount  deducted  from  a 
loan  and  paid  to  the  agent  who  se- 
cured the  loan  for  the  borrower  does 
not  constitute  usury.  Oooflwin  v. 
Bi&hop,  145  111.  421,  34  N.  E.  47.   BUt 


as  to  one  procuring  the  loan  who  is 
the  lender's  agent,  see  Ginn  v.  Mort- 
gage Security  Co.,  92  Ala.  135,  8  So. 
388. 

7.  Fraud  in  obtaining  extra  sum 
from  borrower  as  expense  incurred 
in  procuring  loan,  distinguished  from 
usury.  Morton  v.  Thurber,  85  N.  Y. 
550.  Stipulation-  (c.  g.,  in  a  mort- 
gage) for  the  payment  of  attorney's 
fees  in  case  of  default  and  suit  ia 
not  usurious.  Weatherly  v.  Smith, 
30  Iowa,  131 ;  Minor  v.  Pari.s  Bank. 
53'  Tex.  559;  Shelton  v.  Aultman,  83 
Ala.  315.  Nor  is  the  agreement  by 
the  borrower  to  pay  the  tax  instead  of 
the  lender.  Diibose  v.  Parker,  13  Ala. 
779. 

8.  Drj-fu*  v.  Burnes,  53  Fed.  410. 

9.  Griffin  v.  New  Jersey,  &c.,  Co.,  3 
Stockt.  49 ;  WaiU>  v.  Windham,  &c., 
Co.,  37  Vt.  608. 

1.  See  Sweet  v.  Spence,  35  Barb.  44. 


413 


§  '272 


TllK    LAW    OF    PElJSO.NAJ>     IMJOPKHTY. 


PART  II. 


roceivc  payment  in  its  bonds.^  And  though,  under  some  circum- 
stances, an  agreement  on  a  loan  of  money  thiat  the  lender  shall 
receive  as  recompense  the  rents  and  profits  of  land,  might  be 
deemed  usurious,  this  will  not  be  taken  as  a  cover  for  usury 
unless  the  facts  aiford  a  very  strong  presumption  of  usurious 
intent,  as  where  the  rent  is  excessive.^ 

§  272.     Rule  of  Usury  Applied  to  Banks. 

Th^  business  of  discounting  and  charging  rates  of  exchange  on 
loans  belongs  especially  to  banks;  and  not  only  are  the  rights  and 
liabilities  of  such  corporations  defined  to  a  considerable  extent  by 
charter,  but  general  legislation  tends  to  place  them  upon  a  footing 


2.  White  Water,  &e.,,  Co.  v.  Val- 
lette,  21  How.  414. 

3.  Sessions  v.  Eiehmond,  1  K.  I. 
298;  Cross  v.  Hepner,  7  Ind.  359.  As 
to  usury  -under  color  of  a  leavse,  see 
Phelps  V.  Bellows,  53  Vt.  539';  Lass- 
man  V.  Jacobson,  125  Minn.  218,  146 
N.  W.  350,  51  L.  R.  A.  N.  S.  265,  n.; 
Sterling  v.  Gogebic  Co.,  165  Mich. 
498,  131  N.  W.  109;  Shwarz  v. 
Sweitzpr.  202  N.  Y.  87,  94  N.  E. 
1090;  Ringer  v.  Virgin  Timber  Co., 
213  Fed.  1001;  Gault  v.  Thurmond, 
39'  Okla.  673,  136  Pac.  742  (abstract 
of  .title  and  registry)  ;  Smithwick  v. 
WJwtley,  152  K  C.  366,  67  S.  E.  914, 
28  L.  R.  A.  N.  S.  113,  n.;  Briggs  v. 
Steel,  91  Ark.  458,  12r  S.  W.  754 
(bond  fide  purchase  and  sale)  ;  Cobe 
V.  Guyer,  237  111.  516,  86  N.  E.  1071 
( attornej^'s  fee) . 

See  In  re  Fishel,  198  Fed.  464,  167 
C.  C.  A.  2-24;  Iif  re  Mesibovsl^y,  200 
Fed.  562  (bankrupt  borrower)  ; 
First  Nat.  Bank  v.  Davis,  135  Ga. 
687,  70  S.  E.  246,  30  L.  R.  A.  N.  S. 
134,  n.  (consideration  of  a  deed)  ; 
Spofford  V.  State  Loan  Co.,  208  Mass. 
84,    94    N.    E.    227     ("small    loans" 


act)  -.  Nat.  Bank  v.  Thompson,  90 
Neb.  223,  133  N.  W.  199:  Sedbury  v. 
Duffy,  158  N.  C.  432.  74  S.  K  355 
(usurious  discount)  ;  Continental  Nat. 
Bank  v.  Fleming,  170  Mich'.  624,  134 
N.  W.  6.56;  Milholen  v.  Meyer,  161 
Mo.  App.  491,  140  S.  W.  540  (exten- 
sion of  chattel  mortgajje)  ;  Jones  v. 
Gay,  39  N.  Y.  S.  138  (Sup.  Ct.  E.  T. 
1912)  (attorney  of  lender)  :  Van  der 
Velde  V.  Wilson,  176  Mich.  185,  142 
N.  W.  553  (Mich,  tax  act)  ;  Washing- 
ton Ins.  Co.  V.  Maple  Co.,  77  Wash. 
686,  138  Pac.  553;  Lassnian  v.  Jacob- 
son,  125  Minn.  218,  146  Minn.  350 
(Minn,  registry  tax)  ;  Spain  v.  Tal- 
cott,  165  App.  Div.  815.  152  N.  Y.  S. 
611  (factor  and  principal)  :  In  re  El- 
more Cotton  Mills.  217  Fed.  810;  Sea- 
men's Bank  v.  M'Cullough,  166  App. 
Div.  271,  151  N.  Y.  S.  600;  Turgrim- 
son  V.  J.  P.  Seeburg  Piano  Co..  192 
111.  App.  512;  CisSna  Loan  Co.  v. 
Gawley,  87  Wash.  438,  151  Pac.  792 
(option  to  pay  before  maturity)  : 
Hartley  v.  Eagle  Ins.  Co..  167  App. 
Div.  230.  152  N.  Y.  S.  686:  Chicago 
City  Bank  v.  Bremer,  189  111.  App.  258 
(accelerating   clause). 


414 


CHAP.  XT!.]  IXCOME,    INTEREST    AND    USUKY.  §    272 

quite  (litferent  from  that  of  individuals,  with  privilegos  and  re- 
strictions entirely  their  own.  Yet,  in  the  absence  of  special  statute 
provisions,  it  may  fairly  be  supposed  that  general  usury  laws  have 
the  same  application  to-  banks  as  to  natural  persons."'  To  take 
interest  in  advance  on  loans  has  long  been  within  the  established 
rules  of  banking;  but  a  bank  cannot  take  more  than  legal  rates 
upon  a  note  after  it  has  become  payable,  any  more  than  an  indi- 
vidual. Cases  are  not  uncommon  where  a  bank  has  violated  the 
general  usury  laws  and  been  held  liable  accordingly,  to  say  noth- 
ing of  charter  restrictions-  upon,  its  powers ;  and  the  question  of 
usurious  intent  is  here  quite  as  material  as  in  ordinary  instances.^ 
Banks  often,  give  advantages  to  depositors  which  those  desiring 
an.  occasional  discount  are  not  slow  to  discover.  And  if  a  person 
obtaining  discounts  voluntarily  -allows  a  sum  to  remain  on  deposit 
with  the  expectation  that  he  may  thus  obtain  discounts  more  read- 
ily, but  without  any  agreement  or  understanding  that  he  may  not 
draw  his  money  at  any  time,  there  can  be  no  usury  in  the  practice.* 
Even  where  there  is  a  distinct  understanding  at  the  time  of  the 
discount  that  the  bank  shall  receive  the  borrower's  deposits,  and 
an  extra  profit  results  in  consequence,  the  courts  appear  reluctant 
to  infei-  usury  from  that  circumstance;  though  in  a  very  hard 
and  clearly  established  bargain  they  probably  would. ^  Banks,  like 
individuals,  are  sometimes  entitled  to  compensation  for  collection 
of  a  draft;   and  it  is  held  that  w^here  such  charge  is  made  in  good 

4.  See  Browcr  v.  Haifflit,  18  Wis.  East  River  Bank  v.  Hoyt.  32  N.  Y. 
102;  Niagara  County  Bank  v.  Baker,  119:  Rock,  &c..  Bank  v.  Wooliscroft. 
15  Ohio  St.  68:  Farmers'  Bank  v.  16  Wis.  22.  See  Belmont  Branch 
Burchard,  3.3  Vt.  346.  Bank  v.  Hope,  3.5  N.  Y.  6.5:   Crowell 

5.  Thus,  an  arrangement  by  which  v.  Jones,  167  K.  C.  386.  83  S.  E.  551. 
one  seeking  a  discount  at  a  bank  is  6.  Appleton  Bank  v.  Fiske.  8  Allen, 
required  to  obtain  a  discount  of  paper  301. 

amounting  to  fifteen  hundred  dollars  7.  See  Bcals  v.  Benjamin.  33  N.  Y. 

to  secure  the  application  to  his  use  of  61.      As    to    usury    paid    in    dealings 

one  thousand  dollars  of  the  proceeds,  with   a  Tiational    l>ank.   <e<'   Driesbach 

without    the    right    to    use    the     re-  v.   Wilkesbarre  Bank.    104   T'.   S.   52: 

mainder    thereof    except    in    payment  Kates  v.  ^lontgomcry  Bank,  100  U.  S. 

of  the  paper  discounted,  when  it  shall  239:  Auburn  Bank  v.  Lewis,  81  N.  Y. 

become  due,   has   been    held    uMirious.  15. 

41.5 


§  273  THE  LAW  OF  PEESONAL  PROPERTY.       [PAET  II. 

faith  and  paid  in  advance,  the  transaction  is  not  rendered  usurious 
by  the  subsequent  retention  of  the  draft  by  the  bank  at  the  request 
of  the  drawer,  and  its  payment  at  maturity  without  any  deduction 
of  the  charge.^  A  bank  may,  by  agreement,  lawfully  charge  a 
customer  with  interest  on  his  overdrafts  in  making  up  monthly 
balances.^ 

§  273.     Rule  of  Usury  as  to  the  Loan  of  Productive  Chattels, 

To  take  collateral  security  on  a  loan  is  of  course  perfectly 
proper ;  and  so,  too,  a  party  may  lend  stock  as  stock  to  be  replaced, 
or  he  may  lend  the  produce  of  it  as  money,  or  he  may  give  the 
borrower  the  option  to  repay  either  in  one  way  or  the  other.  But 
he  cannot  legally  reserve  to  himself  the  right  to  determine  which 
it  shall  be.  A  loan  of  stock  to  be  replaced  at  a  future  day  with 
its  dividends  is  a  transaction  where  the  lender  takes  the  risk  of 
depreciation  in  the  meantime,  and  this  is  lawful ;  but  to  lend  the 
produce  of  stock  with  an  agTeement  that  it  shall  be  returned  as  so 
much  money,  while  reserving  the  dividends  by  way  of  interest, 
this  is  usurious,  if  the  dividends  amount  to  more  than  the  legal 
rate  on  the  produce  of  the  stock.  The  collateral  advantage  Avhich 
the  lender  here  seeks  to  enjoy  is  usurious;  for  it  is  a  cover  for 
getting  a  usurioirs  rate  of  interest  on  a  loan  of  money.  ^  Where 
animals  are  sold  or  loaned,  as  is  sometimes  the  case,  with  a  reser- 
vation of  increase,  like  considerations  of  usury  sometimes  arise; 
and  such  transactions  are  sustainable,  where  it  does  not  appear 
that  a  loan  of  money  is  disguised  under  the  name  of  a  loan  or  sale 
by  way  of  mutuum  of  live  stock.^     A  loan  of  corn  to  be  returned 

8.  Central  Bank  v.  St.  John,  17  2.  See  Gilmore  v.  Fergiison,  28  Iowa, 
Wis.  157.  220;  Bull  v.  Eice,  1  Seld.  315.     If  the 

9.  Timberlake  v.  First  Nat.  Bank,  lender  to  an  adventure  receives  a 
43  Fed.  231.  Charging  a  "banker's  share  of  the  profits,  usury  cannot  be 
eommission "  specially  under  a  loan,  alleged,  provided  he  were  responsible 
is  a  device  for  usury.  Bowdoin  v.  under  the  terms  of  the  contract  for 
Hammond,  79  Md.  173.  losses.     Goodrich  v.   Rogers,   101   111. 

1.  See  Blyd.  Usxiry,  45-47:   Tate  v.       523. 
Wellings,   3  T.   R.   531;    Cleveland   v. 
Loder,  7  Paige,  557. 

416 


CHAP.  XII.]  INCOME,    I^TEKEST    AND    USURY.  §    274 

in  kind  may  be  good,  regardless  of  the  per  cent,  in  amount  which 
is  to  be  added ;   for  this  is  a  mutuum.^ 

§  274.     Various  Usurious  Devices. 

Another  trick  sometimes  attempted  is  that  of  forcing  goods  upon 
the  borrower,  in  connection  with  the  loan,  at  an  estimate  far  above 
their  true  worth,  instead  of  making  a  cash  loan  for  the  full  amount. 
To  distinguish  between  the  legal  and  illegal  here  is  not  easy ;  and 
each  case  must  depend  somewhat  upon  the  willingness  or  reluctance 
of  the  borrower  to  take  the  goods,  the  hardness  of  the  bargain,  and 
other  facts  which  serve  to  manifest  what  the  law  deems  an  usuri- 
ous intent."*  Thus,  the  issue  being  mainly  one  of  fact  in  each  case, 
where  a  certain  sum  is  loaned,  and  as  part  of  the  same  transaction 
the  borrower  purchases  a  mill,  giving  much  more  than  it  is  worth, 
both  parties  knowing  the  facts  at  the  time,  the  transaction  may  be 
pronounced  usurious,  even  though  nothing  special  was  said  as  to 
the  real  value  of  the  mill.^  And  a  contract  for  labor  or  for  com- 
modities at  an  unfair  price,  when  made  as  the  condition  of  the 
loan,  may  render  the  loan  usurious.^  So,  too,  where  the  lender 
makes  the  borrower  give  him,  before  receiving  all  the  money,  his 
wagon  at  a  depreciated  value.^  A  fair  criterion  by  which  to  detect 
usury  in  all  such  cases  is  to  compare  the  market  value  of  the  goods 
with  the  gain  to  the  lender  in  charging  and  obtaining  more  than 
the  market  value.^     We  here  suppose  that  the  apparently  external 

3.  Easterlin  v.  Rylandor,  59  Ga.  292.  O'Neal,  33  W.  Va.  159,  6  L.  R.  A. 
And  see  Garrity  v.  Cripp,  4  Baxter,      N.  s.  427. 

86.  7.  Cummins  v.   Wire,   2   Halst.   Ch. 

4.  Blyd.    Usury,    42-45,    and    cases      73. 

infra.  8.  See   Mumford   v.    American,   &c., 

5.  Low  V.  Prichard,  36  Vt.  183.  Insurance  Co.,  4  ComSt.  463;  Collier 
And  see  Miller  v.  Bates,  35  Ala.  580;       v.  Bnrr.  64  Ala.  543. 

Tarleton    v.    Einmons,    17    N.    H.    43;  For  application  of  this  rule  to  an 

Heath    v.    Page,    48    Penn.    St.    130;  agreement  to  pay  insurance  premium.s, 

Wilson  V.  Kirby,  88  111.  566.  see    1    McCrary,    234;    Braynard    v. 

6.  See  Root  v.  Pinney,  11  Wis.  84;  Hoppock,  32  N.  Y.  571.  As  to  an 
Parker  v.  Maxwell,  51  Minn.  523,  53  agreement  concerning  stock  of  the 
N.  W.   754;    49  Minn.   Ill:   Roger  v.  corporation  which  lent  the  money,  see 

48  Md.  455. 

27  417 


§    275  THE    LAW    OF    PEllSOIMAL    PROPERTY.  [PART  II. 

harsh  arrangement  is  part  of  the  loan  transaction  itself,  and  not 
entirely  distinct,  so  as  to  stand  or  fall  on  its  own  merits. 

To  make  a  loan  in  depreciated  bank-notes,  expecting  to  receive 
payment  in  money  at  par,  would  not  generally  constitute  usury; 
certainly  not  where  the  parties  acted  in  good  faith.^  Nor  neces- 
sarily would  the  transfer  of  a  debt  at  par  coupled  with  a  loan  of 
money,  though  the  debt  afterwards  prove  uncollectible.  Yet  even 
here  the  facts  might  be  such  as  to  taint  the  whole  transaction. 
And  the  same  may  be  said  of  a  transfer  of  our  modern  securities, 
which  might  amount  to  a  fair  sale  of  them  on  credit  or  a  usurious 
loan,  according  to  circumstances.^ 

An  exchange  of  negotiable  obligations  to  raise  money,  and  so 
made,  is  a  loan  within  the  usury  laws ;  and  if  by  such  exchange 
the  amount  ultimately  to  be  paid  by  the  borrower  is  greater  than 
that  to  be  paid  by  the  lender,  and  it  is  one  loan  transaction,  there 
is  generally  usury.^  But  we  presume  that  premiums,  commis- 
sions, and  the  like  may  be  stipulated  for,  as  in  other  cases.  Mak- 
ing out  the  borrower's  note  for  a  larger  sum  than  the  lender 
advanced  or  antedating  it,  is  a  palpable  device  for  usury.^ 

§  275.     Distinctions  as  to  the  Purchase  and  Sale  of  Commodities. 

And  this  brings  us  to  an  inquiry  which  the  courts  and  legisla- 
tures have  not  as  yet  fully  answered ;  namely,  where  shall  the  line 
be  drawn  between  a  usurious  loan  and  a  bond  fide  sale  or  exchange 
of  commodities  at  a  profit  exceeding  the  interest  rates, —  the  one 

9.  See  Hayward  v.  Le  Baron,  4  Fla.  with    the    premium    on    gold,    is,    in 

404;  Gregory  v.  Bewley,  4  Eng.  22.  times  of  legal  tender  currency,  usuri- 

1.  Brown  v.  Nevitt,  27  Miss.  801;  ous,  see  Gates  v.  Hackenthal,  57  111. 
Thomas  v.  Murray,  32  N.  Y.  605;  534.  But  where  A  owes  B,  and  B 
Bank  of  Washington  v.  Arthur,  3  owea  C,  an  agreement  between  A  and 
Gratt.  173;  Dean  v.  Herrick,  54  Vt.  C  that  C  should  give  B  further  time 
573 ;  §  275.  upon  a  payment  of  extra  interest  by 

2.  See  Hyde  v.  Finley,  26  Miss.  A  is  not  usurious.  Gleason  v.  Childs, 
468;    Nickerson    v.    Babcock,    23    111.  52  Vt.   421. 

561;     Schermerhorn    v.     Talman,     14  3.  See  44  Minn.   121;   Vail   v.  Van 

N.   Y.    93.      \^%ether   a   loan   payable      Doren,  45  Neb.  450,  63  N.  W.  787. 
either    in  gold   coin   or    in    currency, 

418 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    275 

transaction  being  illegal  and  the  other  perfectly  legal.  In  our 
later  cases  this  subject  is  discussed  frequently,  and  as  to  most  of 
the  wealthier  States  the  courts  seem  disposed  to  shield  parties  from 
the  harsh  consequences  of  usury  as  far  as  possible.  It  has  been 
well  said  that  in  every  instance  where  the  contract  is  in  form  one 
of  sale  or  exchange,  if  the  court,  in  looking  at  the  whole  transac- 
tion, can  see  that  the  value  secured  to  the  vendor  was,  in  good  faith, 
only  the  price  of  the  thing  sold  or  exchanged  by  him,  there  can  be 
no  usury,  whatever  the  price  may  be  or  the  mode  in  which  it  may 
be  reserved."*  And  it  is  certainly  a  familiar  rule  that  the  seller 
of  goods  may  ask  one  price  in  cash  and  a  higher  price  on  credit. 
But  in  order  to  render  a  transfer  valid,  on  any  such  ground,  the 
sale  must  be  fair  and  honest  and  above  board ;  and  the  substance 
of  the  transaction,  not  the  form  of  words,  is  to  be  regarded  by  the 
court.  ^ 

Inquiries  of  this  sort  are  usually  raised  on  the  transfer  of  bills 
and  notes ;  and  a  distinction  may  here  be  made  between  business 
and  accommodation  paper.  Where  a  note  is  made  without  con- 
sideration, and  merely  to  enable  the  payee  to  raise  money  upon  it, 
the  maker  is  not  bound  by  it  until  it  has  been  negotiated ;  and  if 
the  payee  gets  it  discounted  at  a  greater  rate  than  the  lawful 
interest,  the  transaction  is  regarded  as  a  loan  by  the  indorsee  and 
prima  facie  usurious.'^     But  a  sale  of  bills  and  notes  at  a  discount 

4.  See    Gardiner,   J.,    in    Dry   Dock  of  that  period  the  buyer  pave  his  note 

Bank  v.  American,  &c.,  Co.,  3  Com&t.  for  the  aggregate  amount,  with  inter- 

344,  359.    And  see  supra,  §  269;  Bank  est  as  from  the  date  of  purchas<».  the 

V.   Mann,   9'4   Tenn.    17;    Edelstein    v.  transaction  was  held  usurious.     White 

Mecklowitz,  92   Misc.   170,   155  N.  Y.  v.  Friedlander.  35  Ark.  52.     Cf.  Ford 

S.    258;     Gate    City    Nat.    Bank    v.  v.  Hancock,  36  Ark.  248. 

Thrall,   85   Kan.    594,    116   Pae.    487;  6.  Tufts  v.   Shepherd,   49   Me.   312; 

Real   Estate   Co.   v.   Wilmington   Ry.,  Richardson    v.    Scohee,    10    B.    Monr. 

1  Boyce   (Del.)    321,  77  Atl.  75G.  12:  Whitton  v.  Hayden.  7  Allen.  407; 

6.  See  Beete  v.  Bidgood,  7  B.  &  Cr.  Belden   v.   Lamb,   17  Conn.   441.     The 

453;    Leavitt  v.  De  Launy,   4  Com.«t.  sale    of    accommodation    paper    at    a 

364;   Newman   v.   Williams,   29   Miss.  discount   greater   than    legal    interest 

212;  Vail  v.  Heustis,  14  Ind.  607.  is  usurious  and  void  under  New  York 

Where    goods    were    bought    on     a  statutes.       Claflin     v.     Boorum,     122 

stated   credit,   and   at   the   expiration  N.  Y.  385,  25  N.  E.  360. 

419 


§  276  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  II. 

exceeding  the  legal  rates  would  not  be  usurious  if  the  transaction 
proved  not  to  be  a  cover  for  a  loan.''  And  it  appears  to  be  now  well 
settled  that  a  bill  or  note  valid  in  its  inception  and  binding  be- 
tween the  original  parties,  and  in  fact  all  negotiable  paper  in  the 
hands  of  those  who  have  taken  it  by  way  of  business  and  not  ac- 
commodation, may  be  purchased  in  good  faith  as  a  marketable 
commodity  at  any  rate  of  discount,  though  practically  exceeding 
legal  interest.^  So  a  debtor  may  purchase  debts  due  from  his 
creditor  to  others  at  a  greater  discount  than  legal  interest,  and 
demand  a  set-off  to  the  full  amount  with  legal  interest.^  It  is  not 
a  usurious  transaction  to  purchase  below  par,  railroad,  municipal, 
or  other  negotiable  bonds,  bearing  interest  periodically  due ;  even 
though  bought  directly  from  the  government  or  corporation  in 
question  at  such  a  discount  from  their  face.^ 

§  276.     Usury  with  Reference  to  a  Former  and  Latter  Loan. 

A  party  in  making  a  further  loan  may  insist  upon  security  for  a 
former  loan,  and  may  even  make  the  giving  of  such  security 
a  condition  of  the  new  loan,  and  yet  the  loan  is  not  necessarily 
usurious  in  consequence.     The  question  in  such  a  case  is,  whether 

7.  Durant  v.  Banta,  3  Dutch.  624;  S43,  88  Atl.  151  (voluntary  pay- 
Otto  V.  Durege,  14  Wis.  571.  See  ment)  ;  Schanz  v.  Sotscheck,  86  Misc. 
Atwell  V.  Gowell,  54  Me.  358;  Bay-  121,  149  X.  Y.  S.  145;  Warasie  v. 
liss  V.  Cockroft,  81  N.  Y.  363.  Radford,   142   Ga.  113,  82   S.  E.  442; 

8.  Newman  v.  Williams,  29  Miss.  Brown  v.  Jones,  29  Misc.  538,  152 
212;  Corcoran  v.  Powers,  6  Ohio  St.  N.  Y.  S.  571  (charge  for  a  guaranty)  ; 
19;  Williams  v.  Reynolds,  10  Md.  57.  Brown  v.  Jones,  29  Misc.  538,  152 
And  see  Kitchel  v.  Sehenck.  29^  N.  Y.  N.  Y.  S.  571  (borrower's  agent)  ;  Title 
515;  Diekerman  V.  Day,  31  Iowa,  444.  Trust  Co.  v.  Wheatfield,  123  Md.  458, 

9.  Young  V.  Miller,  7  B.  Monr.  540.       91    Atl.    757     (indirect    benefits    not 
1.  See  City  of  Memphis  v.  Bethel.       usurious)  ;    Cobe   v.    Guyer,    237    111. 

3  Tenn.  Cas.  205 ;  Richter  V.  Burdock,  516,    86   N.    E.    107     (interest   in    ad- 

257  III.  410,  100  N.  E.  1063.  advance). 

See  Thompson  v.   Koch,   62   Wash.  A  mortgage  not  usurious,  executed 

438,  113  Pac.  1110;  Continental  Nat.  to  a  bond  fide  mortgagee,  may  be  sold 

Bank    v.     Fleming,     170     Mich.     624  thereafter   at  a   discount.     Schanz  r. 

(lender's   lond   fide   services)  ;    Chip-  Sotscheck,  86  Misc.  121,  152  N.  Y.  S. 

man  v.  Farmers'  Nat.  Bank,  121  Md.  851. 

420 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    278 

the  object  was  in  reality  to  get  security  for  the  old  debt,  or  ouly 
to  make  a  loan  with  such  security  as  a  usurious  premium." 

§  277.     Usury  Consists  in  Actual  Taking, 

In  absence  of  controlling  words  in  local  statutes  to  the  contrary, 
the  offence  of  usury  may  be  said  to  consist  not  in  the  attempt  to 
take,  but  in  the  actual  taking  of  more  than  the  legal  rate  of 
interest.  And,  as  a  general  rule,  the  offence  of  usury  is  not  con- 
summated until  a  lender  has  received  more  than  principal  and 
interest,  bonus  iueluded,  for  the  sum  actually  advanced.^  But 
this  is  not  an  invariable  rule,  for  the  language  of  legislation  varies 
in  different  States. 

§  278.     Usury,  Who  May  Plead,  etc. 

It  is  a  general  rule  that  usury  is  a  personal  defence,  and  cannot 
be  set  up  by  a  stranger;  in  other  words,  that  no  person,  unless 
legally  implicated  in  the  usurious  transaction,  or  having  a  legal 
interest  in  the  property  subject  thereto,  can  interpose  such  a  plea. 
For  it  is  a  general  principle  that  a  mere  stranger  has  no  right  to 
intermeddle  with  the  concerns  of  others.  And  one  very  good 
reason  why  the  rule  should  be  thus  applied  is  that,  notwithstand- 
ing the  general  policy  of  the  usury  laws,  the  courts  leave  the  bor- 
rower free  to  waive  such  a  defence,  and  stand  by  his  contract  if 
he  chooses  to  do  so.'* 

The  borrower,  then,  and  his  heirs  and  personal  representatives, 
may  set  up  the  defence  of  usury.^  But  the  borrower  cannot  trans- 
fer to  another  the  right  to  plead  usury  which  is  in  himself.^     N'or 

2.  See  Jarvis'  Appeal,  27  Conn.  Conn.  142;  Pritchett  v.  Mitchell,  17 
432:  Saunders  v.  Lambert,  7  Gray,  Kan.  355;  Holladay  v.  Holluday,  13 
484.  Orepr.  523;  Moses  v.  Loan  Association, 

3.  See  Bre&tle  v.  Mehaffie,  19  Penn.  100  Ala.  465. 
St.     117;     Mitchell     v.     Doggett,     1  5.  lb. 

Branch,  356.  6.  BuUard  v.  Raynor.  30  X.  Y.  197; 

4.  See  Blyd.  Usury,  106,  107;  Liv-  Cain  v.  Gimon.  36  Ala.  168;  Xat. 
nigston  V.  Harris.  11  Wend.  32?;  Bank  of  Glovorsville  v.  Place,  15  Hun, 
People's  Savings  Bank  v.   Collins.  27  564. 

421 


§  278  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

can  he  set  up  usury  paid  by  a  third  person  in  connection  with  the 
transaction/  And  an  assignment  by  a  debtor  in  trust  to  pay  a 
certain  usurious  debt  cannot  be  avoided  by  a  creditor  of  the 
assignor  upon  the  ground  that  the  debt  thereby  secured  was  usu- 
rious, though  it  is  otherwise  with  a  judgment  creditor  who  has 
acquired  a  legal  lien  upon  the  property  encumbered  by  the  usu- 
rious security.  And  we  need  hardly  add  that  a  lender  cannot 
avoid  his  own  usurious  contract  on  the  ground  of  his  own  usury.^ 

Privies  in  law  of  the  debtor,  as  the  assignee  in  bankruptcy  or 
the  sheriff  in  execution,  may  usually,  it  would  appear,  set  up  the 
plea  of  usury  against  his  unpaid  debts ;  though  not  so  as  to  recover 
illegal  interest  which  the  debtor  has  already  paid.^ 

A  surety  of  the  borrower  in  the  usurious  contract,  who  has  not 
been  repaid,  and  whose  conduct  has  been  honest,  is  entitled  to  the 
defence  of  usury;  also  bail  of  the  borrower;  also  a  joint  obligor.^ 
But  where  B  borrows  from  A,  and  gives  him  two  bonds,  on  one  of 
which  C  is  surety,  and  afterwards  pays  the  other  bond  on  which 
usurious  interest  was  reserved,  C  cannot  avail  himself  of  the  pay- 
ment of  such  usurious  interest  in  defence  of  an  action  on  the  bond 
in  which  he  is  surety.^  And  if  a  surety  to  a  usurious  contract 
pays  usurious  interest,  knowing  it  to  be  such,  he  cannot  recover  it 
again  from  his  principal.^  A  usurious  contract  giving  the  prin- 
cipal debtor  indulgence  in  payment  will  not  discharge  his  surety, 
though  carried  out  afterwards,  if  the  law  makes  such  contracts 
illegal  and  void.'* 

Where  an  executor  or  administrator  loans  the  money  of  his 
intestate  at  a  usurious  rate  of  interest,  the  debtor  may  make  the 
same  defence  as  if  the  money  had  belonged  to  the  administrator  as 

7.  McArtbur  v.  Schenck,  SI  Wis.  1.  See  12  Mod.  193;  Osborne  v. 
673;  Schmidt  v.  Gaukler,  156  Mich.  Fridrich,  134  Mo.  App.  449,  114  S.  W. 
243,  120  N.  W.  746.  1045;    Goodhue    v.    Palmer,    13    Ind. 

8.  Riley  V.  Gregg,  16  Wis.  666 ;  Car-  457;  Kirkpatrick  v.  Wherritt,  7  B. 
ter  V.  Dennison,  7  Gill,  157.  Monr.    388 ;    Saflford   v.   Vail,   22    111. 

9.  See  Morse  v.   Crofoot,   4   Comst.  327. 

114;    Lee   v.    Fellowes,    10   B.    Monr.  2.  Cantey  v.  Blair,  2  Rich.  Eq.  46. 

117.    But  see  Low  v.  Prichard,  36  Vt.  3.  Jones  v.  Joyner,  8  Geo.  562. 

183.  4.  Gilder  v.  Jeter,  11  Ala.  256. 

422 


CHAP,  XII.]  IjSTCOME,    INTEREST    AND    USURY.  §    279 

an  individual.^  Fiduciary  officers  of  this  character  are  respon- 
sible, as  such,  for  usury  received  by  the  deceased  in  his  lifetime ; 
but  it  seems  certain  that  they  cannot,  if  innocent,  be  made  to 
suffer  personally  the  penal  consequences.^ 

§  279.     The  Same  Subject. 

Usury  is  a  defence  to  a  suit  to  foreclose  a  mortgage,  just  as  it 
is  upon  the  usurious  note  which  secures  it ;  and  any  one  claiming 
under  a  mortgagor  and  in  privity  with  him  may  raise  the  defence 
of  usury  in  the  mortgage.^  But  a  subsequent  mortgagee  cannot 
take  advantage  of  usury  in  a  prior  mortgage,  since  he  is  a  stranger 
and  not  a  privy  to  it,  and  cannot  be  injuriously  affected  by  enforce- 
ment of  the  contract.^  And  the  same  holds  true  in  general  of  the 
subsequent  grantee  of  premises  subject  to  a  usurious  mortgage, — 
or  at  least  of  one  who  purchases  the  equity  of  redemption,  or  who 
agrees  to  assume  the  mortgage  as  part  of  his  consideration ;  since, 
as  to  the  right  of  a  general  grantee,  under  such  circumstances, 
there  appears  some  uncertainly.^  Such  rules  are  often  controlled 
by  legislation;  and  it  must  be  considered  that  a  court  of  equity 
proceeds  upon  its  own  equitable  theory,  where  its  jurisdiction  is 
invoked.^  But  in  New  York  the  bond  fide  purchaser,  under  a 
statute  foreclosure  of  a  mortgage  which  was  tainted  with  usury, 
acquires  a  good  title.^ 

The  statutes  of  some  States  expressly  prohibit  corporations,  and 

5.  Norcum  v.  Lum,  33  Miss.  299.  lington    Loan   Association    v.    Ileider, 

e.  See  Proctor  v.  Terrill,  8  B.  Monr.  55  Iowa,  424.     The  maker  of  a  not^ 

451;  Heath  v.  Cook,  7  Allen,  59.  secured  by  mortgage  should  not,  after 

7.  Wright  V.  Bundy,  11  Ind.  398;  .such  conveyance,  set  up  usury  in  a 
Ramsay  v.  Warner,  97  Mass.  8;  Bro-  suit  which  seeks  no  personal  judg- 
lasky  V.  Miller,  1  Stockt.  807.  ment  against  him.     Burlington   Ix)an 

8.  Churchill  v.  Cole,  32  Vt.  93;  Ass'n  v.  Heider,  52  Iowa,  354.  But 
Rexford  v.  Widger,  3  Barb.  Ch.  640;  see  Newman  v.  Kershaw,  10  Wi.«.  333. 
Pritchett  v.  Mitchell,  17  Kan.  355.  And  see   Dolman  v.  Cook,   1   McCart. 

9.  Post  V.  Bank  of  Utica,  7  Hill,  5G;  Gunnison  v.  Gregg.  20  N.  H.  100. 
391;  Sands  v.  Church,  6  N.  Y.  347:  1.  See  §§  282,  285.  post.  But  cf. 
Cramer  v.  Lepper,  26  Ohio  St.  59;  Kenny  v.  T^nion  Ry.  Co.,  106  App.  Div. 
Hough  V.  Horsey.   36   Md.   181;   Bur-  497.  152  N.  Y.  S.  121. 

2.  .lackson  v.  Henry.  10  Johns.  185. 

423 


§    279  THE    LAW    OF    PEliSOA'AL    PROPEETY.  [PAKT  II. 

especially  banks,  from  interposing  the  defence  of  usury. ^  And  in 
a  controversy  as  to  the  validity  of  a  levy  of  execution  upon  a  cor- 
poration, a  stockholder  cannot  object  on  the  ground  of  usury.'' 

The  accommodation  indorser  of  a  note  may,  like  any  surety, 
take  advantage  of  the  plea  of  usury,  as  well  as  the  borrower ;  ^ 
and  so  may  any  indorser  when  charged  upon  the  note,  if  not 
chargeable  with  bad  faith,^  And  the  indorsee  who  takes  a  note 
with  notice  that  it  is  tainted  with  usury  takes  it  subject  to  that 
defect;  so  that  where  accommodation  paper  in  any  form  is  dis- 
counted by  a  party  knowing  its  true  character,  the  defence  of 
usury  may  be  set  up  between  the  parties  to  the  paper  and  the  party 
by  whom  it  is  originally  discounted.''  As  to  whether  the  plea  of 
usury  may  be  set  up  against  hond  fide  holders  for  value,  the  rule 
is  not  uniform ;  and  it  may  depend  somewhat  upon  local  statutes, 
which  are  frequently  explicit  in  this  respect.  Thus  usury  makes 
"  void  "  according  to  some  State  codes ;  while  in  others  the  pen- 
alty is  far  less  severe.^  In  some  States  usury  is  deemed  a  good 
defence  for  the  maker  of  business  paper  pro  tanio,  though  the 
note  be  in  the  hands  of  an  innocent  holder  for  value,  who  has 
received  it  in  the  ordinary  course  of  business;  but  the  better 
opinion  is  that  the  plea  is  not  available  imder  such  circumstances, 
in  the  absence  of  a  positive  statutory  provision  to  that  effect.^ 

But  where  a  debtor  gives  a  new  security  for  a  usurious  debt,  to 

8.  See  Schermerhorn  v.  Talman,  14  Eq.    334:    Veazie   Bank   v.   Paulk,    40 

N.    Y.    93;     Rosa    v.    Butterfield,    33  Me.    109;    Clark  v.    SisSon,   22   X.   Y. 

N.  Y.  665;  Hartford,  &c.,  Ins.  Co.  v.  312. 

Hadden,   28   111.   260.     And   see  Bach  8.  See  Claflin  v.  Boorum,  122  N.  Y. 

V.  Lanman,  24  Penn.  St.  435.  385,  25  N.  E.  360,  which  turned  upon 

4.  Chaffin  v.  Cummings,  37  Me.  76.  the  statute  expression  "  void." 

As  to  plea  by  the  surety  of  a  eorpo-  9.  See   William   v.    Wilder,    37    Vt. 

ration,    see    Freese    v.    Brownell,    35  613;    Tucker   v.    Wilamouicz,    3    Eng. 

N.  J.  L.  285.  157:   Kendall  v.   Robertson,   12   Cus-h. 

5.  See  Gray  v.  Brown,  22  Ala.  262.  156;     Bacon    v.    Lee,    4    Iowa.    490; 

6.  And  this,  even  though,  ignorant  Cutehen  v.  Coleman,  13  Ind.  5G8. 
of  the  usury,  he  has  given  his  OAvn  The  hond  fide  holder  of  a  note  given 
note.  First  N'at.  Bank  v.  Planking-  for  usurious  interest  who  purchases 
ton,  27  Wis.  177.  for  less  than  its  face  value  may  re- 

7.  Simpson  v.  Fullenwider,  12  Ired.  cover    only    the    actual    consideration 

424 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    280 

the  bona  fide  assignee  of  the  debt,  who  took  the  original  debt  and 
takes  the  substituted  security  without  any  knowledge  of  the  usury, 
auch  debtor  cannot  afterwards  set  up  w&wvy  as  a  defence  to  the 
substituted  paper.*  And  if  the  maker  of  a  usurious  note  gets  a 
third  person,  who  had  no  connection  with  it,  to  give  his  note  which 
is  free  from  usury  for  the  amount  in  pa^nncnt  of  the  usurious  note, 
this  third  party  cannot  afterwards  defend  on  the  plea  of  usury 
between  the  former  parties;  though  it  would  probably  be  other- 
wise if  this  note  had  been  given  not  in  payment,  but  as  a  mere 
renewal  or  substitution  for  the  original  usurious  note.^ 

§  280.     The  Same  Subject. 

Upon  the  whole,  then,  as  to  parties  entitled  to  plead  usury,  while 
the  question  is  often  dependent  upon  the  legislation  and  public 
policy  of  each  State,  and  it  is  impossible  to  lay  down  a  rule  which 
may  completely  reconcile  all  the  cases,  it  may  be  stated  that  the 
right  to  set  up  such  a  defence  depends  mainly  upon  the  character 
of  the  party  as  the  original  borrower  or  his  legal  representative 
and  substitute,  or  else  upon  the  party's  liability  to  prejudice  or 
injury  through  the  enforcement  of  the  usurious  contract.  The 
policy  of  the  usury  statutes  that  the  borrower  is  not  under  the 
same  taint  as  the  lender  ^  is  well  illustrated  by  the  fact  that  even 
a  director  of  a  corporation  who  participates  in  a  usurious  loan  by 

paid,    together    with    logal     interest.  A.  n.  s.  622,  n.,  80  N.  E.  1082    (wife 

Cheney  v.  Campbell,  28  Neb.  376,  44  as  to  spendthrift  husband). 

N.  W.  451.  Where  various  loans  are  made  un- 

1.  See  Cuth'bert  v.  Haley,  8  T.  R.  der  a  contract,  see  Chase  A  Baker  v. 
390;  Dix  v.  Van  Wyck,  2  Hill,  522;  National  Trust  Co.,  215  Fed.  633.  As 
Houghton  V.  Payne,  26  Conn.  396.  to  a  guarantee  of  land  subject  to  a 
And  see  Wendlebone  v.  Parks,  18  mortgage,  see  Grove  v.  Great  North- 
Iowa,  546.  ern  Loan  Co.,  17  N.  D.  352.  llf.  N.  W. 

2.  Hanley  v.  Kempton,  30  Mo.  118,  345:  Tidball  v.  Schm.'ltz.  77  Kan. 
and  cases  cited.  And  see  Macungie  440,  94  Pac.  794;  First  Nat.  Bank  v. 
Bank  v.  Hottenstein,  89  Penn.  St.  328.  Drew,  226  111.  622. 

6ee    Armstrong    v.    Middaugh,    74  3.  Brown  v.  Mcintosh,  39  N.  J.   L. 

Miec.  45,  133  N.  Y.  S.  647 ;  First  Nat.  22 ;  Horner  v.  Nitscb,  103  Md.  498, 
Bank  v.  Drew,  226  111.   622,  10  L.  A.       63  Atl.  1052. 

425 


§  281  THE  LAW  OF  PERSONAL  PROPERTY.        [PART  II. 

the  corporation  to  himself  can  recover  from  the  corporation.'*  And 
even  where  usury  may  be  pleaded,  the  defence  must  be  seasonably 
made ;  for  lapse  of  time,  especially  when  actual  benefits  have  been 
taken  by  the  party  under  the  contract  alleged  to  be  usurious,  or  he 
has  otherwise  by  his  conduct  manifested  an  intent  on  his  part  to 
waive  the  defence  of  usury,  proves  a  fatal  barrier.^ 

§  281.     Usury,  How  to  be  Pleaded  and  Proved. 

Usury,  too,  is  a  defence  which,  as  a  general  rule,  must  be 
strictly  proved ;  and  the  court  will  not  presume  a  state  of  facts  to 
sustain  that  defence  where  the  instrument  is  consistent  with  cor- 
rect dealing.  Hence,  it  is  held  that  a  note  dated  on  one  day  for 
a  sum  payable  with  interest  from  a  day  previous,  will  be  deemed 
prima  facie  a  note  given  subsequently  for  a  loan  which  was  actually 
made  on  the  former  date.^  ~^ot  will  it  avail  the  party  to  prove 
usury  if  the  case  of  usury  proved  is  not  that  set  up  in  defence ;  nor 
to  make  out  a  case  which  leaves  to  conjecture  and  does  not  prove 
usury.  Usury  must  in  general  be  specially  pleaded;  and  the 
corrupt  agreement  must  be  distinctly  set  out  and  must  be  proved 
as  alleged.^  This  doctrine  prevails  both  in  law  and  in  equity; 
though  in  the  action  of  assumpsit  at  law  every  defence  which  shows 
that  the  plaintiff  never  had  any  cause  of  action  may  be  given  in 
evidence  under  the  general  issue.^  But  the  manner  in  which 
usury  must  be  pleaded  and  proved  is  to  be  determined  by  the 
statute  in  force  at  the  time  of  suit ;   and  the  practice  of  the  differ- 

4.  MacRackan  v.  Bank  of  Columbus,  7.  New  Jersey,  &c.,  Co.  v.  Turner,  1 
164  N.  C.  24,  80  S.  E.  184.  See  Bank  McCart.  326 ;  Vroom  v.  Ditraas,  4 
of  Cadiz  V.  Slemmons,  34  Ohio  St.  Paige,  526;  Manning  v.  Tyler,  21 
142.  N.  Y.   567;    Frank  v.   Morris,   57   111. 

5.  See  Davis  v.  Converse,  35  Vt.  138;  Omaha  Hotel  Co.  v.  Wade,  97 
503 ;  Smith  v.  Marvin,  27  N.  Y.  137 ;  U.  S.  13 ;  Kessner  v.  Trigg,  98  U.  S. 
Lucas  v.  Spencer,  27  111.  15;  Furlong  50. 

V.  Pearce,  51  Me.  299.     But  see  Ken-  8.  lb. ;      Comyn     Usury,     201-203 ; 

dig  v.  Marble,  55  Iowa,  386.  Holland    v.    Chambers,    22    Geo.    193; 

6.  See  Marvin  v.  Feeter,  8  Wend.  Stockham  v.  Munson,  28  111.  51 ;  Bond 
533;  Ewing  v.  Howard,  7  Wall.  499;  v.  Worley,  26  Mo.  253. 

Andrews  v.  Hart,  17  Wis.  307;   Wet- 
ter v.  Hardesty,  16  Md.  11. 

426 


CHAP.  XII.] 


INCOME,    INTEREST    AND    USURY. 


§    282 


ent  States  is  not  altogether  uniform  in  this  respect.  In  many  cases 
the  party  pleading  usury  must  first  tender  to  the  usurer  the  amount 
admitted  to  be  due;  and  yet  the  formality  of  tender  is  now  fre- 
quently dispensed  with;  and  it  seems  to  have  always  been  rather 
a  requirement  of  equity  than  the  law  courts.' 

§  282.     Usury  as  a  Defence  in  Chancery. 

As  a  general  rule  relief  cannot  be  obtained  in  equity  against 
usury  where  the  party  has  omitted  to  plead  it  at  law  and  shows 
no  excuse  for  the  failure;  nor  will  a  bill  of  discovery  be  enter- 
tained in  chancery  after  judgment  at  law,  where  the  facts  sought 
to  be  elicited  are  matters  of  legal  defence,  and  no  excuse  is  offered 
for  not  having  shown  it  earlier.*  And  usury  paid,  under  a  decree 
in  chancery,  cannot  be  recovered  again  by  a  suit  in  chancery.- 


9.  Kuhner  v.  Butler,  11  Iowa,  419; 
Newman  v.  Kershaw,  10  Wis.  333. 
And  see  Heath  v.  Page,  48  Penn.  St. 
130.  An  agreement  not  to  plead  usury 
or  to  withdraw  the  plea  is  against 
public  policy  and  void.  Maybee  v. 
Crozier,  22  Hun,  264.  But  our  later 
courts  disincline  to  permit  such  plea 
to  be  waived  or  withdrawn,  and  then 
reasserted.  Clark  v.  Spencer,  14 
Kan.  398;   St.  Albans  Bank  v.  Wood, 

53  Vt.  491.  A  scaled  release  of  all 
claims  for  usury,  executed  at  the  time 
of  the  usurious  transaction,  is  a  mere 
subterfuge,  and  does  not  bar  a  subse- 
quent plea  of  usury.    Herrick  v.  Dean, 

54  Vt.  568. 

See  Western  Union  Tel.  Co.  v. 
Sights,  34  Okla.  461,  126  Pac.  235; 
Lawler  v.  Vette,  166  Mo.  App.  342, 
149  S.  W.  43  (suit  prematurely 
brought)  ;  Schanz  v.  Sotscheck,  160 
App.  Div.  798,  145  N.  Y.  S.  778  (con- 
spiracy to  collect  usury)  ;  Cotton  v. 
Beatty,  162  S.  W.  1007  (Tex.  Civ. 
App.  1913,  compromise)  ;  Chas.  S. 
Riley  Co.  v.  W.  T.  Sears  Co.,  154  N.  C. 


50?,  70  S.  E.  997 ;  Loew  v.  Mclnerney, 
159  App.  Div.  513,  144  N.  Y.  S.  546 
(usury  pleaded  as  a  counterclaim)  ; 
Richter  v.  Burdock,  257  111.  410,  100 
N.  E.  1063;  Ringer  v.  Virgin  Timber 
Co.,  213  Fed.   1001    (corporation). 

The  burden  of  proof  rests  upon  the 
party  alleging  usury.  77  Wash.  686, 
138  Pac.  553.  In  re  Canfield,  190 
Fed.  266,  113  C.  C.  A.  562;  Sabine  v. 
Paine,  148  App.  Div.  730,  132  N.  Y. 
S.  813  ("value  received");  Grannis 
v.  Stevens,  216  N.  Y.  583,  111  N.  E. 
2-63;  Houghton  v.  Burden,  228  U.  S. 
161,  33  S.  Ct.  491.  But  a  contract 
usurious  on  its  face  was  made  pre- 
sumably with  unlawful  intent.  Dar- 
den  V.  SehuesSler,  154  Ala.  372,  45 
So.  130. 

1.  Jones  V.  Kirksey,  10  Ala.  579; 
Smith  V.  Walker,  8  S.  &  M.  131; 
Brown  v.  Swann.  10  Pet.  497;  Blyd. 
117.  See  Busby  v.  Finn.  1  Ohio  St. 
409. 

2.  Thompson  v.  Ware,  8  B.  Monr. 
26.    See  §  285,  post. 


427 


§  283  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

§  283.     Legal  Consequences  of  Usury. 

The  legal  consequences  of  usury  were  under  the  old  statutes  very 
disastrous.  Every  contract  which  was  founded  in  usury  was 
treated  as  ipso  facto  void,  and  the  contract  and  security  became,  to 
borrow  the  usual  phrase,  extinct  at  its  very  inception.^  But  public 
opinion  in  the  matter  of  usury  laws  has  so  greatly  changed  during 
the  last  century,  and  legislation  with  it,  that  to  know  truly  what 
are  the  legal  consequences  in  any  particular  State, —  if  indeed 
usury  remains  a  legal  offence  with  penal  consequences  at  all, — 
we  must  consult  the  latest  statutes.  In  England  and  in  certain 
parts  of  this  country  the  usury  laws  are  abolished."*  Some  States, 
which  still  hesitate  to  wipe  them  out  altogether,  connive  at  a  re- 
form by  making  the  penalties  so  light  that  the  borrower  would 
seldom  find  it  advantageous  to  carry  his  grievance  to  the  court. 
The  favorite  rule  in  many  States  is  to  make  a  contract  tainted 
with  usury  void  only  to  the  extent  of  the  illegal  interest  reserved 
therein,  and  enforceable  for  the  residue;  or,  in  other  words,  to 
allow  the  principal  and  legal  interest  to  be  taken  by  the  lender.^ 
Another  rule,  also  sanctioned  by  legislation  in  some  localities,  is 
to  impose,  as  a  penalty  for  usury,  the  forfeiture  of  all  interest 
accruing  subsequently  to  the  usurious  contract,  so  that  the  lender 
may  recover  his  principal  and  no  more.^  This,  though  not  per- 
haps so  fair  as  the  preceding  rule,  has  the  advantage  of  imposing 
a  penalty  sufficient  to  discourage  somewhat  the  practice  of  usury, 
without  being  very  harsh.  But  in  other  States  the  penalty  is 
more  severe ;  as  twice  or  threefold  the  usury  reserved ;  or,  again, 
ten  per  cent,  on  the  amount  loaned.''     It  is  not  unusual  to  provide 

3.  1    Mod.    69' ;    Blvd.    Usury.    86.      14S;    Veazie  Bank  v.  Paulk.   40  Me. 
This  consequence  is  not  to  be  upheld       109. 

by  the  court  where  the  language  of  6.  See   Saltmarsh  v.   Planters',   &c. 

the  statute  leaves  a  reasonable  doubt.  Bank,  17  Ala.  761 :  Kessner  v.  Trigg, 

Bates  v.  Montgomery  Bank,  100  U.  S.  08  U.  S.  50 ;  Mapps  v.  Sharpe,  32  111. 

239.  13;    Fisher  v.   Bidwell,   27   Conn.   363 

4.  See    supra,    §    251:    Bouv.    Diet.  7.  See  Hart  v.  Goldsmith,  1  Allen, 
"Usury."  145;  Nat.  Bank  of  Auburn  v.  Lewis, 

5.  See  Smith  v.  Stoddard.  10  Mioh.  81  N.  Y.  15;   Howe  v.  Carpenter,  49 

Wis.  697. 
428 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    284 

that  the  penalty  thus  imposed  may  be  sued  and  recovered ;  and 
sometimes  the  State  shares  the  proceeds  with  the  prosecutor,  turn- 
ing, perhaps,  its  share  into  the  school  f  und.^ 

New  York  leads  the  small  remnant  of  States  where  usury  still 
makes  the  contract  void ;  but  in  its  courts  the  rigor  of  this  statute 
is  mitigated  to  some  extent ;  and  not  only  is  the  doctrine  of  a  bond 
fide  sale  of  negotiable  paper  strongly  upheld  in  that  State,  but  it  is 
a  well-settled  doctrine  that  the  debtor  need  not  avail  himself  of 
the  usury  laws.  And  where  one  assigns  or  appropriates  property 
in  trust  for  the  payment  of  usurious  debts,  the  trust  is  irrevocable.' 
There  is  much  belief  that  the  Negotiable  Instruments  Law  repeals 
by  implication  the  usury  law  making  instruments  void  for 
usury,  and  innocent  holders  have  often  been  permitted  to  sue 
"upon  them.^ 

§  284.     The  Same  Subject ;    Effect  of  Voluntary  Payment. 

It  is  a  well-established  principle  of  the  common  law  that  pay- 
ments voluntarily  made  by  a  party  having  knowledge  of  the  facts 
cannot  be  recovered  again.  This  principle  is  frequently  applied 
to  usurious  contracts;  and  if  a  party  voluntarily  pays  his  debt 
and  usurious  interest  upon  it,  he  cannot  maintain  an  action  to  get 
his  money  back  again.'^  To  completely  perform  a  usurious  con- 
tract under  such  circumstances  is  to  terminate  all  controversy  over 
it.  And  it  is  held,  still  further,  that  where  usury  has  been  volun- 
tarily paid,  and  applied  by  agreement  of  parties  as  extra  interest, 

8.  See  Bouv.  Diet.  "Interest,"  and  1.  Emanuel  v.  Misicki,  149  N.  Y. 
Statutes  of  Iowa.  &e..  cited;  supra,  Supp.  905;  Wirt  v.  Stubblefield,  17 
§  267.  A  mortgage  or  note  in  part  App.  D.  C.  283;  contra,  Penny  Sav- 
usurious  may  be  void  in  toto ;  but  a  ing&  Bank  v.  Fitzgerald,  167  Iowa, 
valid  debt  included  in  the  note  stands  446,  149  N.  W.  497;  Alexander  t. 
on  its  original  merits.  Marks  v.  Mc-  Hazelrigg.  123  Ky.  677,  97  S.  W. 
Gehee,  35  Ark.  217.  353. 

9.  Murray  v.  Judson,  5  Seld.  73.  2.  Tompkins  v.  Hill,  28  111.  .''.19: 
But  as  to  accommodation  paper  the  Smith  v.  Coopers,  3  Iowa.  376;  Coon 
judicial  rule  is  very  strict,  even  as  v.  Swan.  30  Vt.  6;  Smith  v.  Marvin, 
against  bona  fide  holders.     See  Claf-  27  N.  Y.   137. 

flin  V.  Boorum,  122  N.  Y.  385;  §  279'. 

429 


§  285  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

it  cannot  even  be  set  oif  against  the  principal  debt  afterwards.'' 
But  it  is  now  provided  bj  law  in  many  States  that  the  borrower 
may  sue  to  recover  the  excess  paid  beyond  the  principal  and  lawful 
interest  due,  notwithstanding  the  payment  was  voluntary  on  his 
part;  and  where  this  is  the  case,  and  usury  does  not  avoid  the 
principal  and  legal  interest,  the  disposition  is  to  avoid  multiplicity 
of  actions,  and  allow  the  borrower  the  right  to  treat  payments  of 
usurious  interest  made  by  him  as  payments  on  account  of  the 
principal  and  legal  interest  so  long  as  the  debt  remains  unsettled ; 
and  if  he  be  sued  on  his  debt,  he  is  likewise  permitted  to  make  the 
defence  of  usury  'pro  tanto,  and  have  the  penalty  set  off  against 
the  amount  payable."*  And  while  the  payment  of  usury  upon  a 
note  is  at  law  deemed  a  part  payment  of  the  note  when  the  note 
includes  both  the  money  loaned  and  the  usury,  yet  if  separate 
securities  are  given  for  the  usury,  and  the  usury  is  applied  to 
them,  the  debtor  is  at  liberty  to  treat  the  payment  as  having  no 
connection  with  the  legal  demand,  and  may  sue  for  its  recovery.^ 

§  285.     Rule  of  Equity  as  to  the  Consequences  of  Usury. 

Statutes  of  usury  are  usually  to  be  considered  as  binding  in  a 
court  of  chancery,  and  equity  will  follow  the  law  in  construing 
them.  But  when  any  borrower  comes  into  a  court  of  equity  to 
obtain  relief  against  a  usurious  contract  or  transaction,  he  is  com- 

3.  Graham  v.  Cooper,  17  Ohio,  65;  where  usurious  interest  was  reserved, 
100  N.  E.  1063,  257  111.  410.  see  Woolley  v.  Alexander,  99  111.  188; 

4.  See  Ellis  v.  Brannin,  1  Dudley,  Saunders  v.  Lambert,  7  Gray,  484. 
48 ;  Lockwood  v.  Mitchell,  7  Ohio  St.  A  third  party  cognizant  of  the  facts 
387;  Root  v.  Pinney,  11  Wis.  84;  of  usury,  such  as  the  assignee  of  a 
Wheatley  v.  Waldo,  36  Vt.  237 ;  mortgage  or  releasee,  takes  with  the 
Holmes  v.  Gerry,  55  Me.  299 ;  Cross  original  equities  in  favor  of  the  lender. 
V.  Mann,  53  Vt.  501;  Payne  v.  New-  Wells  v.  Robinson,  53  Vt.  202.  And 
comb,  100  111.  611.  And  see  Thomp-  see  supra,  §  278.  But  one  who  bor- 
son  V.  Prettyman,  231  Penn.  1,  79  rows  money  of  another  at  a  legal 
Atl.    874.  rate    of    interest    to    pay    a    usurious 

5.  Nichols  V.  Bellows,  22  Vt.  581.  debt  cannot  plead  usury  against  the 
As  to  judicial  application  of  pay-  new  creditor  by  showing  that  he  knew 
ments  made  by  the  debtor  without  the  old  debt  to  be  usurious.  Mason 
specifying  how  they  are  to  be  applied,  v.  Searles,  56  Iowa,  532. 

430 


CHAP.  XII.] 


INCOME,    INTEREST    AND    USURY. 


§    286 


pelled  to  pay  or  offer  to  pay  the  principal  sum  with  legal  interest ; 
this  on  the  ground  that  he  who  seeks  equity  must  do  equity.'^  This 
rule  is  quite  commonly  applied  in  proceedings  brought  to  foreclose 
a  mortgage.  And  yet  in  some  States  the  mortgagor,  in  a  fore- 
closure suit,  is  entitled  to  the  benefit  of  the  statute  penalty  for 
usury  in  reduction  of  the  sum  for  which  conditional  judgment  is 
entered.''  In  general,  equity  applies  usurious  part-pa_>inent3 
towards  the  discharge  of  principal  and  lawful  interest;  and  it 
favors  neither  borrower  nor  lender  especially,  but  seeks  to  do 
exact  justice  between  them;  relieving  the  one  from  the  harsh 
consequences  of  his  imprudent  bargain,  and  giving  back  to  the 
other  all  the  money  that  he  advanced  with  a  fair  rate  of  compen- 
cation  for  the  use  of  it.^ 

§  286.     Effect  of  Usury  as  Betw^een  Principal  Debt  and  Security. 

The  securities  which  follow  or  grow  out  of  a  usurious  transac- 
tion must  bear  the  consequences  of  the  usury ;    and  whether  these 


6.  See  Ware  v.  Thompson,  2  Beasl. 
66;  Ruddell  v.  Ambler,  18  Ark.  369; 
Conner  v.  Myers,  7  Blackf.  337;  Bal- 
linger  v.  Edwards,  4  Ired.  Eq.  44?; 
82  N.  C.  134. 

7.  See  Minot  v.  Sa\\'yer,  6  Allen, 
78;  Divoll  v.  Atwood,  41  N.  H.  446. 
And  see  Grow  v.  Albee,  19  Vt.  540. 
But  the  debtor  cannot  apply  the  pe- 
nal deduction  for  himself.  McNeal 
V.  Leonard,  1  Allen,  399. 

8.  See  Spain  v.  Hamilton,  1  Wall. 
604;  Smith  v.  Hollistor,  1  McCart. 
153;  McAllister  v.  Jcrman,  32  Miss. 
142;  Smith  v.  Robinson,  10  Allen, 
130;  Woolley  v.  Alexander,  99  111. 
188;  N.  E.  Mortgage  Co.  v.  Aughe, 
12  Neb.  504.  A  mortgagor  cannot  ob- 
tain an  injunction  against  a  foreclos- 
ure sale  on  the  ground  of  usury,  un- 
less he  tenders  the  sum  borrowed, 
wth    lawful    ittterest.       Anthony    v. 


Lawson,  34  Ark.  628.  And  see  Kohn 
V.  Kelley,  77  N.  J.  E.  273,  79  Atl. 
686;  Bettis  v.  Tampa  Ass'n,  62 
Fla.  435,  56  So.  499;  Van  Der  Velde 
V.  Wilson,  176  Mich.  185,  142  N.  W. 
553;  Title  Trust  Co.  v.  Wlioatficld, 
123  Md.  455,  91  Atl.  757;  Chase 
Co.  V.  Nat.  Trust  Co.  215  Fed.  633 
(111.  D.  C,  1914)  ;  McFadden  v. 
Palmer,  83  N.  J.  E.  621,  92  Atl.  396 
(fraud)  ;  Compton  v.  Collins,  190 
Ala.  499,  67  So.  395;  Schanz  v. 
Sotscheck,  86  Misc.  121,  149  N.  Y.  S. 
145  (mortgage  sold  at  a  discount)  ; 
Cuthbertson  v.  People's  Bank,  170 
N.  C.  531;  87  S.  E.  333;  Powdl  v. 
Petteway,  69  Fla.  12.  67  So.  230; 
Heitsch  v.  Minneapolis  Co.,  29  N.  D. 
124.  l.jO  X.  W.  457  (N.  D.  bond  fide 
purchaser  at  foreclosure  sale)  ;  Drake 
V.  Lux,  233  Hi.  522,  84  N.  E.  693 
(application  of  payment). 


431 


§  287  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  H. 

securities  be  real  or  personal,  thej  go  with  the  debt  to  which  they 
are  collateral.^  But  where  a  valid  claim  is  embraced  in  a  subse- 
quent security  which  is  void  for  usury,  the  effect  is  to  make  the 
latter  security  illegal  and  void,  and  leave  the  naked  claim  as  it 
stood  before;  for,  the  original  contract  being  lawful,  no  subse- 
quent taking  or  contracting  to  take  illegal  interest  will  render  it 
usurious.^  This  distinction  is,  of  course,  to  be  reasonably  applied ; 
and  a  mere  device,  such  as  taking  separate  notes  for  principal  and 
interest,  will  not  operate  so  as  to  relieve  a  contract  from  the  conse- 
quences of  usury,  if  the  fact  be  shown  that  the  promise  to  pay 
interest  constituted  a  part  of  one  entire  contract  for  the  loan  of 
principal  and  interest.^ 

§  287.     Usury  as  a  Criminal  or  Penal  Offence. 

Not  only  is  the  taking  of  unlawful  interest  visited  by  law  with 
the  consequences  already  enumerated,  but  in  some  States  it  is  even 
punishable  by  indictment  as  a  criminal  or  penal  offence.  But 
prosecutions,  under  such  rigorous  laws,  are  found  much  less  fre- 

9.  Hodkinson    v.    Wyatt,    4    Q.    B.  and  usurious  interest  is  held  conclu- 

74^;  Langton  v.  Haynes,  37  E.  L.  &  sive  in  Carlisle  v.  Bindley,  91  Penn. 

Eq.    590;    Price   v.    Lyons    Bank,    33  St.   229. 

N.    Y.    55;    Corcoran    v.    Powers,    6  2.  See  Gray  v.  Brown,  22  Ala.  262; 

Ohio  St.  19.  Goodrich    v.     Bussell,    40    Me.     500; 

1.  Cook  V.  Barnes,  36  N.  Y.  520;  Brown  v.  Nevitt,  27  Miss.  801. 
Blvd.  Usury,  97,  102;  Mitchell  v.  See  Holmes  v.  Schmeltz,  161  Mo. 
Doggett,  1  Fla.  356.  A.  advanced  App.  470,  143  S.  W.  539  (pledge  re- 
money  to  pay  a  mortgage,  taking  tained)  ;  Muller  v.  Philadelphia,  208 
another  mortgage  to  secure  the  ad-  N.  Y.  182,  101  N".  E.  762  (security 
vance.  The  second  mortgage  was  de-  for  usurious  loan)  ;  CaSner  v.  Hos- 
clared  void  for  usury.  Held,  that  kins,  64  Ore.  254,  128  Pac.  841 ;  Chase 
the  usury  did  not  affect  the  fir&t  v.  Nat.  Trust  Co.,  215  Fed.  633  (111. 
mortgage;  and  the  second  mortgage  D.  C,  1914)  ;  Everett  v.  Ingram, 
being  void,  the  first  mortgage  revived  142  Ga.  145,  82  S.  E.  562;  First  Nat. 
and  could  be  enforced  by  A.  Pat-  Bank  v.  Eambo,  143  Ga.  665,  85  S.  E. 
terson  V.  Birdsall,  64  N.  Y.  294.  And  840;  Thompson  v.  Prettyman,  231 
seePritchettv.  Mitchell,  17  Kan.  355;  Penn.  1,  79  Atl.  874  (taint  extended 
Kiehardson  v.  Baker,  52  VC.  617.  A  to  security)  ;  In  re  Baker,  77  Misc. 
ijudgment  obtained  on  a  mortgage  90,  137  N.  Y.  S.  530  (legacy  as  se- 
given  as  security  for  a  bond  which  curity)  ;  London  Realty  Co.  v.  Rior- 
is   claimed   to   have   included   a  debt  dan,  207  N.  Y.  264,  100  N.  E.  SOO. 

432 


CHAP.  XII.]  INCOME,    INTEREST    AND    USUIJY.  §    289 

quent  than  the  transgression ;  and  courts  seem  disposed  to  construe 
such  statutes  quite  strictly.^ 

§  288.     Conflict  of  Laws  Relating  to  Interest  and  Usury. 

Generally,  interest,  whether  due  by  express  contract,  or  given 
by  law  as  damages,  is  to  be  computed  according  to  the  legal  rate 
of  the  State  or  country  where  the  contract  is  made  or  performed, 
on  the  usual  principles  which  prevail  in  a  conflict  of  laws;  and 
in  the  absence  of  attempted  evasion  of  the  usury  laws,  parties  are 
free  to  choose  for  themselves  between  the  rate  of  the  "  place  of 
contract "  or  that  of  the  "  place  of  performance,"  and  contract 
accordingly."*  But  the  parties  who  mean  to  stipulate  according  to 
rates  other  than  those  prevailing  in  the  State  where  the  contract 
is  given  should  indicate  their  intention  clearly.^  Moreover,  a 
State  jurisdiction  where  the  remedies  of  enforcement  are  sought, 
as,  for  instance,  in  foreclosure  of  a  mortgage  given  as  security,  will 
sometimes  insist  upon  its  own  statute  policy.*^ 

§  289.     Constitutional    Questions;    Law    in    Force    at    Date    of 
Transaction. 

So,  too,  the  hiw  in  force  at  the  time  when  the  usurious  contract 

3.  See  State  v.  Tappan,  15  N.  H.  further,  as  to  law  of  place.  Kavanaujrh 
91;  Gillespie  V.  State,  6  Humph.  164;  v.  Day,  10  R.  1.  393;  Bowman  v. 
Block  V.  State,  14  Ind.  425;  Agnew  Miller,  25  Gratt.  331;  Lindsay  v. 
V.  McElhare,  18  Penn.  St.  484;  Em-  Hill,  66  Me.  212;  Wayne  Co.  Sav- 
pire  Trust  Co.  v.  Coleman,  85  Misc.  ings  Bank  v.  Low,  81  N.  Y.  566; 
312,  147  N.  Y.  S.  740;  German  Ass'n  Dickenson  v.  Edwards,  77  N.  Y.  573; 
V.  Leavens,  89  Wash.  78,  153  Pac.  Bowles  v.  Eddy.  33  Ark.  645;  Stoin- 
1092;  Cobb  V.  Hartenstein,  47  Utah,  man  v.  Midland  Loan  Co.,  78  Kan. 
174,  152  Pac.  424;  Vander  Velde  v.  479,  96  Pac.  800;  J.  L.  Cnso  Co.  v. 
Wilson,  176  Mich.  185,  142  N.  W.  Tomlin,  174  Mo.  App.  512.  161  S.  W. 
553;  Chas'.  S.  Riley  Co.  v.  W.  T.  Sears  286;  Granite  City  Bank  v.  Cross.  188 
Co.,   154  N.  C.   509,  70  S.   E.   997.  111.  App.  242 ;   Ringer  v.  Virgin  Tim- 

4.  See  Miller  v.  TiflFany,  1  Wall.  l>pr  Co.,  213  Fed.  1001;  Baxter  v. 
298;  Roberts  v.  McNeeley,  7  Jones,  Beckwith,  137  Par.  901.  25  Col.  App. 
506;    Butlers    v.    Olds,    11    Iowa,    1.  322.     And  see  next  chapter. 

And  see  next  chapter.  6.  Martin   v.  Johnson,   84   Ga.   481, 

5.  See  Ayer  V.  Tilden,  15  Gray,  178:       10  S.  E.  1092,  8  L.  R.  A.   170,  u. 
Chase   v.    Dow,   47   N.    H.    405.      See 

28  433 


§  290  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

is  made  will  usually  govern  with  regard  to  the  consequences  of 
usury;  and  this,  too,  though  the  statute  may  have  been  repealed 
before  suit  was  brought.''  But,  as  it  has  been  observed  in  a  Con- 
necticut case,  "  the  parties  to  usurious  contracts  hold  any  right 
they  can  be  presumed  to  hold  to  the  penalties  given  by  the  law, 
subject  to  a  modification  or  repeal  by  the  legislature  which  may 
destroy  them,  and  a  consequent  direct  or  indirect  validation  of 
their  contracts."  ^  The  obligations  of  existing  contracts  as  to 
interest  are  not  to  be  impaired  by  State  legislation.^ 

§  290.     Summary  of  Chapter;    Usufruct,  Income,  etc.,  of  Per- 
sonal Property, 

The  leading  results  of  our  present  brief  investigation  may  be 
thus  summed  up.  Concerning  most  species  of  property,  there 
passes  a  sort  of  usufruct  by  the  contract  of  hiring;  the  hirer 
acquiring  that  enjoyment  of  the  thing  with  which  the  owner  has 
parted  for  a  time.  Land  is  rented,  ships  are  chartered,  animals 
are  taken  for  use ;  capital  in  general  yields  its  income ;  and  all 
this  is  by  the  operation  of  universal  law.  The  value  of  the  thing 
hired  for  any  length  of  time  bears  a  certain  percentage  to  the  value 

7.  Simonton  v.  Vail,  11  Wis.  90;  A  legislature  has  power  to  enact 
Matthias  v.  Cook,  31  111.  83.  And  see,  laws  relating  to  interest  and  usury. 
as  to  a  substituted  transaction  after  State  v.  Sherman,  18  Wyo.  169,  105 
repeal  of  a  usury  act,  Kilgore  v.  Em-  Pac.  29'9 ;  State  v.  Griffith,  83  Conn, 
mitt,    33    Ohio    St.    410;    Kilgore    v.  1,  74  Atl.  1068. 

Dempsey,    25    Ohio    St.    413;    Taylor  9.  Hubbard   v.    Callahan,   42    Conn. 

V.    Thomas,    61    Ga.    472;    Bandel    v.  524;    Danville   v.    Pace,    25    Gratt.    1. 

Isaac,   13   Md.   202 ;   King  v.   State,  9  Negotiable    paper    given    after    the 

Ga.  App.  714,  72  S.  E.  176.  repeal  of  the  English  usury  laws,  in 

8.  See  Welch  v.  Wadsworth,  30  renewal  of  paper  previously  given  to 
Conn.  149;  also  Starke  v.  Inman,  1  secure  a  usurious  loan,  held  in  Eng- 
Cart.  124;  Smith  v.  Glanton,  39  Tex.  land  valid.  Flight  v.  Reed,  1  H.  &  C. 
365.     But  see  Mitchell  v.  Doggett,   1  703. 

Fla.   356,   as  to  contracts   void  when  As   to   the    effect   of   a    renewal    of 

made.     Concerning  constitutional  pro-  the  usury  laws  after  their  repeal,  see 

visions    as    affecting    previous    usury  Tribble  v.  Anderson,  63  Ga.  31.     And 

laws,    see    Bandel    v.    Isaac,    13    Md.  see  §  268. 
202.     And  see  Brunswick  Co.  v.  Uni< 
versity  Co.,  43  Utah,  75,  134  Pac.  608. 

434 


CHAP.  XII.]  INCOME,    INTEREST    AND    USURY.  §    290 

of  the  thing  itself;  and  this  percentage,  which  parties  may  gen- 
erally be  left  free  to  regulate  for  themselves,  fluctuates  consider- 
ably ;  the  risk  of  loss  or  deterioration  of  property  which  the  owner 
runs,  the  scarcity  of  the  thing,  and  the  amount  of  enjoyment  or 
profit  which  its  use  will  probably  bring,  entering  as  elements  into 
the  computation. 

So  is  it  with  money,  the  purchasing  agent  of  worldly  things  and 
general  representative  of-  wealth ;  nor  does  it  make  any  essential 
difference  that  when  this  species  of  property  is  loaned,  the  bor- 
rower is  to  replace  in  kind  rather  than  restore  the  identical  coin 
or  currency.  Money  finds  its  own  percentage  of  value,  when 
placed  out  by  parties  on  a  contract  of  hiring;  and  the  question  is 
whether  borrower  and  lender  may  safely  be  left  free  to  determine 
the  ratio  according  to  their  mutual  contemporaneous  convenience; 
whether  in  truth  the  capitalist  who  puts  out  money  at  interest  has 
really  more  temptation  and  opportunity  to  oppress  than  he  who 
lets  ships  and  merchandise  or  the  landlord  of  real  estate.  Where 
the  law  discountenances  and  forbids  the  receiving  of  recompense 
for  the  hire  of  money  altogether,  we  have  usury,  which  is  illegal, 
and  no  interest;  where  it  fixes  the  limit  of  recompense,  and  pro- 
hibits taking  more,  we  have  interest  up  to  that  limit,  which  is  legal, 
and  usury  beyond  it,  which  is  illegal ;  and  finally,  where  it  per- 
mits borrower  and  lender  to  determine  the  recompense  for  them- 
selves, and  set  the  percentage  for  themselves,  we  have  interest, 
which  is  legal,  and  no  usury.  For,  whatever  the  law  of  the  hind, 
men  may  as  well  attempt  to  drive  money  out  of  the  world  as  to 
prevent  its  loan  upon  a  recompense.  That  system  of  jurispru- 
dence which  allows  the  taking  of  recompense  up  to  a  certain  point, 
and  so  divides  interest  from  usury,  receives,  perhaps,  the  fullest 
assent  of  mankind ;  yet,  if  late  legislative  experiments  on  money 
lending  prove  successful,  "  usury  "  may  yet  some  day  be  stricken 
from  the  text-books,  and  "  interest  "  be  left  standing  by  itself. 


435 


CHAPTER  XIII 

CONFLICT    OF    LAWS    RELATING    TO    PERSONAL    PEOPEETY 

§  291.     Fundamental  Rule  as  to  Sovereignty. 

The  sovereignty  of  every  independent  State  is  an  admitted  fact 
in  all  systems  of  jurisprudence;  and  a  fundamental  principle 
essential  to  this  sovereignty  is,  that  no  municipal  law,  whatever 
be  its  nature  or  object,  can  of  itself  avail  beyond  the  territorial 
limits  of  the  State  or  government  imposing  it.^  So  zealous  were 
the  ancient  nations  to  maintain  their  own  legal  usages  to  the 
exclusion  of  all  outside  or  "  barbarian  "  interference,  that  disputes 
under  what  we  now  denominate  the  "  conflict  of  laws "  could 
hardly  have  arisen  in  their  day;  and  even  the  Roman  Empire, 
which  gave  heed  to  the  local  customs  of  its  conquered  and  depend' 
ent  subjects,  would  not  have  permitted  a  law  or  custom  to  be  set 
up  against  the  imperial  authority  of  its  own  code,  or  to  defeat  the 
proud  birthright  of  a  Roman  citizen.  During  the  period  of  the 
Middle  Ages  the  sword  was  high  arbiter  between  contending 
nations ;  and  international  jurisprudence  found  nothing  like  a 
solid  foundation  until  the  revival  of  trade  had  brought  England 
and  the  countries  of  Continental  Europe  into  a  closer  and  more 
essential  communion  than  ever  before.  But  while  a  contiguity  of 
boundaries  and  the  similarity  of  their  laws  drew  the  modem  Latin 
races,  so  called,  closely  together,  as  modern  civilization  advanced, 
England,  isolated  and  independent,  self-asserting,  and  proud  of 
her  common-law  system,  still  disdained  for  a  long  time  to  acknowl- 
edge interaational  obligations  or  allow  foreign  doctrines  to  impair 
the  force  of  her  own  settled  precedents. 

§  292.     Growth  of  International  Jurisprudence;    Works  of  Pub- 
licists, etc.,  on  This  Subject. 
While,  therefore,  Rodenburgh,  the  Voets,  Boullenois,  and  other 

1.  Burge  Col.  and  For.  Laws,  1-3;  Story  Confl.  Laws,  §  7. 

436 


CirAP.  XIII.]  CONFLICT    OF    LAWS.  §    292 

Continental  publicists,  were  early  in  developing  the  legal  philoso- 
phy of  a  conflict  of  laws,  and  discussed  this  important  subject  in 
a  comprehensive  and  enlightened  spirit,  the  international  jurists 
of  the  Anglo-Saxon  race  failed  to  appear  until  the  nineteenth 
century  had  well  advanced.  The  growth  of  the  American  colonies 
and  the  annexation  of  Scotland  had  given  an  increased  impulse, 
however,  in  Great  Britain  to  the  study  of  international  conflicts ; 
and  in  1837  Mr.  Burge  issued  his  learned  work  on  Colonial  and 
Foreign  Laws;  Judge  Story  of  our  own  country  having  just  pre- 
ceded him  with  a  treatise  which  has  since  become  the  standard 
authority  in  English  and  American  courts,  on  all  questions  in- 
volving the  conflict  of  laws ;  and  Chancellor  Kent  having  earlier 
than  either  outlined  the  topic  in  his  Commentaries.  Westlake's 
treatise  on  Private  International  Law  desen'es  honorable  men- 
tion; and  also  the  Commentaries  of  Sir  Robert  Phillimore,  both 
of  which  works  are  English.^  No  other  writers  of  prominence, 
English  or  American,  occupied  this  field  from  the  earliest  period 
of  the  common  law  to  the  year  1872. 

But  a  new  volume  has  later  been  published  on  the  same  subject 
of  the  conflict  of  laws  by  an  eminent  text-writer  of  America,  who 
tells  us  that  four  causes  have  recently  operated  to  revolutionize 
the  private  law  of  nations:  first,  the  adoption  of  naturalization 
treaties  by  leading  nations ;  second,  the  abolition  of  slavery  in  the 
United  States  and  Russia ;  third,  the  great  comparative  increase 
of  personal  wealth,  as  distinguished  from  real  property;  and 
fourth,  the  growing  sense,  on  the  part  of  Englniid  and  tlio  Fnitod 

2.   Westlake's    brief    treatise,    pre-  incidentally  considon-d.  and  that  with 

pared  with  principal  reference  to  Eng-  very  littlo  regard  to  American  intt-r- 

lish  practice,  has  been  lately  rewrit-  State  conllicts.  and  largely,  moreover, 

ten  and  republished  (1880).     Of  Phil-  by  way  of  comment  ui)on  tlio  standard 

limore's   Commentaries,   an   extensive  treatises  of   Story  and    Wharton,    in 

work  of  four  volumes  in   its  second  connection  with  those  of  Continental 

edition,  it  should  be  said  that  Inter-  publicists. 

national  Law  constitutes  the  ground-  Miner's  Conflict  of  Laws  is  a  mod 

work;  the  conflict  of  laws  being  only  ern  short  work  on  the  subject 

437 


§  293  THE  LAW  OF  PERSONAL  PROPERTY.        [pART  II. 

States,  of  the  duty  of  aiding  in  the  punishment  of  crimes  com- 
mitted beyond  the  territorial  jurisdiction.^ 

§  293.     The  Same  Subject. 

It  will  be  seen,  then,  that  American  jurists  have  done  more  thus 
far  than  those  of  England  to  bring  into  harmony  and  blend  to- 
gether the  jarring  systems  of  independent  nations,  by  unfolding 
principles  for  universal  recognition  as  the  groundwork  of  an  inter- 
national law,  upon  which  a  lasting  superstructure  may  be  raised. 
They  certainly  have  given  the  strongest  impress,  so  far  as  taking 
the  initiative  is  concerned.  Indeed,  the  nature  of  our  own  Amer- 
ican government,  with  its  union  of  States,  independent  of  one 
another  for  the  most  part,  so  far  as  concerns  the  ordinary  trans- 
actions of  life,  and  yet  acknowledging  a  common  federal  chief 
supreme  within  a  constitutional  sphere  of  action,  is  such  that 
questions  of  inter-State  conflict  must  frequently  come  before  the 
courts  for  adjudication,  to  say  nothing  of  conflicts  between  federal 
and  State  authority,  and  the  time-honored  international  disputes ; 
so  that  the  whole  subject  is  and  must  remain  one  of  far  more  vital 
importance  to  us  of  the  United  States  than  to  the  subjects  of 
Great  Britain,  where  conflicts  calling  for  judicial  intervention  are 
purely  international,  save  so  far  as  they  may  arise  between  the 
parent  government  and  its  colonial  offspring. 

And  this  consideration  may  furnish  us  with  a  reason  why  an 
extra-territorial  jurispnidence,  so  to  speak,  should,  on  the  whole, 
be  more  widely  favored  in  America  than  the  British  courts ;  since 
here  the  conflict  comes  so  frequently  between  jurisdictions  not 
foreign  to  one  another,  but  allied  by  blood,  language,  institutions, 
and  political  sentiment, —  in  one  aspect  distinct  sovereignties,  but 
in  another  a  single  people, —  the  people  of  the  United  States."^ 

3.  See  Wharton  Confl.  Laws,  c.  1;  also  been  the   standard   Anglo-Saxon 

Story  Confl.  Laws,  §  2,  1  Burge  Col.  writer  on  the  law  of  nations;  Philli- 

and  For.  Laws,  3;   2  Kent  Com.  107,  more,     however,     later     becoming     a 

122,  462,  &e.     The  second  edition  of  prominent  authority  on  the  same  sub- 

Wharton's    work    was    published    in  jest. 

1881.       Wheaton,    an   American,    has  4.  Mr.  Wharton  observes   (ISSl)  in 

438 


CHAP,  XIII.]  CONFLICT    OF    LAWS.  §    294 

§  294.  Conflict  of  Laws  as  Affecting  Property;  Laws  as  to 
Person  and  Property  Distinguished. 
Leaving  then  the  conflicts  of  law,  so  far  as  they  may  affect  the 
status  or  capacity  of  persons,  let  us  consider  those  conflicts  as  they 
determine  the  rules  of  property,  or  rather,  since  our  subject  is 
confined  within  still  narrower  limits,  as  they  may  affect  personal 
property  or  things  movable,  when  distinguished  from  real  estate 
or  things  immovable.  Here  we  find  some  difficulty  growing  out 
of  the  various  modes  of  classifying  property  adopted  among  dif- 
ferent nations  and  under  various  systems  of  jurisprudence,  and 
the  disposition  of  one  country  to  refer  to  the  law  of  contracts  what 
another  would  include  under  the  law  of  things, —  a  difficulty 
which  one  must  avoid  in  the  best  manner  possible.  It  may  bo  well 
to  state  at  the  outset  that  a  law  which  has  for  its  primary  and 
chief  object  the  status  of  persons,  while  its  effect  on  things  is 
secondary  and  incidental,  is  to  be  deemed  a  personal  law, —  that 
is,  relative  to  the  person;  but  that  a  law  which  primarily  and 
chiefly  concerns  things  movable  and  immovable,  its  effect  upon 
persons  being  only  secondary  and  incidental,  is  a  property  law, — 
that  is,  a  law  relative  to  things.  To  the  former  head  are  usually 
referred,  for  instance,  conflicting  laws  on  the  subject  of  citizen- 
ship,  marriage,^   and  divorce,^  or  the  parental   relation ;    to   the 

the   preface   to  the  socond   edition   of  Continent   of    Eiiro|>e;    addinp,    liow- 

his   work,   that   since   the   publication  ever,    that    as    to    Germany,    France, 

of    the    original    edition     (which,    we  Belgium  and  Ital}',  the  jurists  mould 

may    remark,    shortly    preceded    the  the  courts,  nor  the  courts  the  jurists, 

preparation    of    the    first    edition    of  In    this    preface    the    learned    author 

the    present    volume)     the    literature  enumerates  the  latest  general  works, 

on  this  topic  has  more  than  doubled,  many     in     number.     Euro]x«an     and 

and  that  in  the  United   Stat{\s  alone  American,  wliich  bear  upon  this  sub- 

we  have  as  many  rulings  bearing  on  ject.     Presumption   that   foreign    law 

international  law  since  1870  as  were  is   like  ours.    Book    17,   N.    Y.    Rpts  , 

reported    prior    to    that    period.       He  Bender  ed.,  note,  p.  344. 

observes    further,    that    not   only    the  5.  Validity  of  foreign  marriage  d«'- 

reports  of  our  own  courts  and  of  the  termined    by    law    where    solemnized, 

courts  of  England  require  an  author's  Book  3,  N.  Y.  Rpts.,  Bender  ed  .  note, 

consideration,  but  the  reports  of  the  p.  f)4. 

courts    of    the    leading   states    of   the  9.  Recognition    of    validity    of    di- 

439 


§  295  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  II. 

latter,  those  which  concern  the  general  title  to  personal  property, 
even  though  the  domicile  and  citizenship  of  the  owner  may  have 
an  important  bearing  upon  the  determination  of  the  issue  in 
dispute.'' 

§  295.     International    Distinctions    Between    Things    Real    and 
Personal. 

The  great  distinction  between  real  and  personal  property  which 
the  common-law  courts  have  maintained  from  the  earliest  known 
period,  so  far  as  legal  conflicts  are  concerned,  is  that  things  real 
are  governed  by  the  lex  rei  sitce,  while  things  personal  depend  upon 
the  law  of  the  ovnier's  domicile ;  in  other  words,  that  the  laws  of 
the  place  where  a  piece  of  real  estate  is  situated  determine  exclu- 
sively the  rights  of  parties,  and  the  methods  and  requisite  solemni- 
ties of  transfer;  but  that  the  rights  and  modes  of  disposition  as 
to  any  and  all  personal  property  are  governed  exclusively  by  the 
law  rather  which  prevails  at  the  domicile  or  fixed  abode  of  the 
ov^ner.^ 

The  civilians  generally  concur  in  the  foregoing  rule,  so  far  as 
concerns  its  application  to  real  property  or  immovables ;  but  by 
no  means  do  either  the  civil  or  the  common  law  writers  admit  the 
sweeping  force  of  such  a  distinction  as  applied  comprehensively  to 
movables  or  personal  property ;  so  that  while  we  have  a  simple  and 
precise  rule  for  the  one  species  of  property,  we  find  at  the  present 
day  a  doubtful  and  fluctuating  rule,  subject  to  many  exceptions, 
as  concerns  the  other;  and  the  tendency  is  now  to  bring  both 
systems,  so  far  as  may  be,  under  the  one  dominating  influence  of 
the  lex  rei  sitce;   though  in  this  direction  the  English  and  Amer- 

vorce    decrees'    in    one    State    by    an-  9 ;   Story  Confl.  Laws,  §  39 ;   analyti- 

other.     Book  18,  N.  Y.  Rpts.,  Bender  cal  index  to  Wharton  Confl.  Laws, 
ed.,   note,   p.    973.      Effect    of   foreign  8.  1    Burge,    28,    29;    Story    Confl. 

divorce.    Book  26,  N.  Y.  Rpts.,  Bender  LawS,  §§  380,  424-428 ;   Sill  v.  Wors- 

ed.,   note,   p.   420.      Foreign  divorces.  wick,   1   H.  Bl.   690;   Hofi'man  v.   Ca- 

Book  26,  N.  Y.  Rpts.,  Bender  ed,  note,  row,    22    Wend.    323 ;    Birtwhistle    v. 

p.  1103.  Vardill,  5  B.  &  C.  451;   2  CI.  4  Fin. 

7    See  1  Burge  Col.  and  For.  Laws,  571. 

440 


CHAP.  XIII.]  CONFLICT    OF    LAWS.  §    29G 

ican  courts  have  not  gone  so  fast  or  so  far  as  those  of  Continental 
Europe.^ 

§  296.     Fluctuations  of  the  Rule  as  Concerns  Personal  Property. 

Let  us  note  briefly  some  of  the  fluctuations  of  this  important 
rule  as  concerns  personal  property;  for  the  above  distinction  is  to 
be  taken  as  the  starting  point  of  any  extended  discussion  of  the 
conflict  of  laws.  Mr.  Justice  Story  asserted  quite  positively  that 
this  principle  that  things  personal  are  governed  by  the  owner's 
domicile  had  been  constantly  maintained  with  unbroken  confi- 
dence and  unanimity.  And  certainly  the  language  of  Lord 
Loughborough,  Lord  Tenterden,  and  other  judges  of  a  former 
generation,  is  strong  enough  to  justify  the  statement.'  To  use 
the  quaint  old  maxim,  ''  Movables  stick  to  a  man's  bones,"  — 
Mohilia  ossihus  inhoerent;  and  when  movables  consisted  chiefly  of 
garments,  jewels,  household  stuif,  and  cattle,  the  principle  was 
easy  enough  of  application.  "  Personal  property,"  says  Lord 
Loughborough,  "  has  no  locality.  The  meaning  of  that  is,  not 
that  personal  property  has  no  visible  locality,  but  that  it  is  subject 
to  that  law  which  governs  the  person  of  the  owner.  With  respect 
to  the  disposition  of  it,  with  respect  to  the  transmissiou  of  it, 
either  by  succession  or  the  act  of  the  party,  it  follows  the  law  of 
the  person."  ^  And  there  can  be  no  doubt  that  such  is  the  view 
that  prevailed,  not  only  in  England  and  America,  but  likewise  on 
the  Continent  of  Europe,  as  to  all  kinds  of  personal  property  or 
movables  until  somewhat  recently.  And  it  mattered  not  whether 
these  "  movables  "  were  ponderous  or  hard  to  carry  away,  so  long 
as  they  were  legally  "  movables  "  and  not  "  immovables."  ^ 

But  with  the  modem  growth  of  incorporeal  personal  property, — 
property  which,  in  fact,  as  we  have  shown,  and  primarily  at  least, 
has  only  a  mental  existence, —  new  reasons  have  dcveloptMl  for 

9.  See    P.    Voet,    Rodenburph,    and  2.  Sill  v.  WorBwick.  ib. 

Boullenois,    cited    by    2    Burge,    751 ;  3.    Ib.      And     BtH>    Wlinrton     Confl. 

Story  Confl.  Tvaws,  §  376.  Laws,    §    297;    Story   Confl.    Laws,   § 

1.  Sill  V.  Worswick,  and  Birtwhistle  §  :?62.  and  cases  cited ;   n  Burjje.  749- 

V.   Vardill,  supi-a.  7.')3 ;   Blake  v.  Williunis.  G  Pick.  286. 

441 


§  296  THE  LAW  OF  PERSONAL  PROPERTY.        [pART  II. 

making  tlie  maxim  Mohilia  ossihus  inhoerent  unsatisfactory  and 
comparatively  futile.  This,  we  apprehend,  is  in  a  considerable 
degree  owing  to  the  circumstance  that  our  modem  incorporeal 
property,  so  vast  in  value  and  volume,  consists  substantially  of 
debts  or  money  rights,  simple,  or  else  secured  by  lien,  pledge,  or 
mortgage;  of  a  debt  without  tangible  evidence  of  its  existence; 
or,  as  in  the  case  of  certificates  of  stock,  bills  and  notes,  and  nego- 
tiable instruments  generally,  of  a  debt  accompanied  by  some  writ- 
ing which  manifests  its  value,  and  passes  from  hand  to  hand  as 
though  it  were  the  corporeal  and  tangible  thing  itself,  instead  of 
its  representative ;  or  perhaps  of  debts  or  money  rights  with  some 
paper  muniment  of  title  such  as  a  written  assignment.  Now  debts 
or  obligations  and  contracts  are  akin ;  and,  as  we  approach  the 
subject  of  obligations,  we  enter  upon  the  terra  incognita  of  legal 
conflicts,  where  various  considerations  are  simultaneously  pre- 
sented and  no  one  is  all-controlling.  In  an  obligation  there  are 
two  parties :  the  obligee,  with  what  is  called  an  enlarged  liberty ; 
and  the  obligor,  with  his  liberty  restrained.  And  then,  besides 
the  question  of  domicile  of  either  party,  we  have  to  consider  the 
place  where  the  obligation  is  entered  into  and  the  place  where  the 
same  is  to  be  performed.  Our  leading  court  has  gone  so  far  as  to 
hold  promissory  notes,  made  by  a  non-resident  and  belonging  to 
another  non-resident,  taxable  in  the  State  where  they  are  kept  in  a 
safety  deposit  box.''  So  the  credits  of  a  foreign  corporation  aris- 
ing from  its  local  business  done  through  its  local  agent  may  be 
properly  taxed  by  the  State  where  the  business  is  done.^  And 
wherever  a  transfer  of  personal  property  is  to  be  accompanied  with 
formalities  greater  than  that  of  mere  manual  delivery,  we  find  the 
rules  applicable  to  contracts  coming  in  further  to  confuse  the 
principles  which  regulate  transmission  of  property.  A  corpora- 
tion does  business  and  registers  all  stockholders  at  one  place,  while 
some  individual  who  owns  specific  shares  of  its  stock  has  his  domi- 
cile at  another.     Furthermore,  a  strong  objection  which  is  brought 

4.  Wheeler   v.    Sohmer,    233    U.    S.  5.  State  v.  Tennessee  Coal,  Iron  4 

434,  34  Sup.  St.  607   (1914).  R.  Co.,  188  Ala.  514,  66  So.  178. 

442 


CHAP.  XIII.]  CONFLICT    OF    LAWS.  §    297 

against  the  test  of  an  owner's  domicile  under  any  circumstances 
is,  that  it  may  be  difficult  to  know  at  the  outset  who  is  the  owner; 
so  that  if  there  be  two  litigants  to  the  same  property,  having  dif- 
ferent domiciles,  the  suit  fails  at  the  start  for  inability  to  deter- 
mine who  is  the  owner  and  how  it  shall  be  tried.  A  similar 
objection  might  be  urged  in  case  possession  were  taken  as  the 
test.^  The  rule  of  lex  rei  sitce  is,  on  the  other  hand,  of  compara- 
tively simple  and  easy  application. 

§  297.  Distinction  Betvi^een  Real  and  Personal  Regards  Prop- 
erty in  Its  Legal  Character. 

The  fundamental  distinction  between  real  and  personal  prop- 
erty of  which  we  spoke  applies,  of  course,  only  to  property  con- 
sidered in  its  legal  character ;  and  where  a  movable  is  annexed  to 
the  freehold  so  as  to  become  incorporated  with  it,  it  follows  the 
law  of  situs,  because  it  then  takes  the  incidents  of  immovable 
property.^  And  ser\'itudes,  easements,  and  charges  on  land  gen- 
erally, or  such  incorporeal  rights  as  are  strictly  annexed  to  the 
realty,  are  governed  by  the  lex  rei  sitce ;  all  these  by  the  law  of 
England  being  deemed  to  be  real  and  not  personal  estate.^  But 
it  is  to  be  remembered  that  the  movables  and  immovables  of  the 
civil  law  do  not  precisely  correspond  to  our  legal  divisions  of  real 
and  personal,  though  the  two  grand  divisions  are  quite  similar  in 
both  civil  and  common  law  systems ;  and  here  the  principle  must 
be  that  every  nation  impresses  upon  property  within  its  own  ter- 
ritory such  character  as  it  shall  choose;  so  that  in  any  en>o,  as 
Judge  Story  has  observed,  the  question  is  not  so  much  what  ought 
or  ouffht  not  from  their  nature  to  be  considered  movables,  as  what 
are  deemed  so  by  the  law  of  the  place  where  they  are  situated.' 

Movables  or  things  personal  are  subject  to  transfer  and  aliona- 

6.  See  Savigny,  Wachter.  and  other  in  foroipn  state.  Book  2,  N.  Y.  Rpts., 
Continental  writers,  cited  in  Wliarton      Bender  od..  note,  p.  669. 

Confl.  Laws,  §§  298,  29^.  8.  Story  Confl.,  §  447. 

7.  Story  Confl.  Laws,  §  382,  citins:  9.  Story  Conll..  §  447:  Chapman  t. 
Pothier  and  others.  Supreme  Court  Rolx>rtson.  0  Paipe.  6:^7  And  soe  3 
may  compel   the   conveyance   of  land  Burgc,  752. 

443 


§  298  THE  LAW  OF  PEESONAL  PROPERTY.       [PAKT  II. 

tion  as  between  persons  living;  also  to  succession  post  mortem  or 
by  virtue  of  some  testamentary  disposition,  the  title  being  thus 
transferred  upon  the  owner's  death.  ^  And  a  corollary  of  our  lead- 
ing doctrine  would  be  that  in  either  case  the  validity  or  invalidity 
of  the  transfer  must  depend  upon  the  laws  of  the  owner's  domicile." 

§  298.     Modern  Dissatisfaction  v^^ith  the  Test  of  Owner's  Domi- 
cile. 

But  the  courts  have  not  remained  easy  under  such  an  application 
of  the  broad  doctrine  of  an  owner's  domicile  in  the  case  of  per- 
sonal property,  and  particularly  as  concerns  transactions  inter 
vivos.  And  here  we  find  the  exception  stated,  as  to  debts,^  that 
where  some  positive  regulation  exists  in  a  State  or  nation  con- 
cerning the  mode  of  transfer,  prescribing  some  particular  mode  by 
which  alone  the  debt  may  be  transferred,  no  legal  title  is  acquired 
unless  these  forms  are  observed.  And  hence,  property  in  the  pub- 
lic funds  and  shares  in  joint-stock  corporations,  which  the  law 
prescribes  shall  be  transferred  only  by  obserAang  certain  formal- 
ities, must  be  transferred  accordingly  in  order  to  be  effectual ;  the 
law  of  the  owner's  domicile  thus  yielding  to  the  law  of  local  situ- 
ation.** But  though  the  positive  or  customary  law  of  the  place 
' Vhere  the  corporation  ^   is   created  governs  the  transfer  of  its 

1.  What  law  governs  disposition  of  Book  20,  N.  Y.  Epts.,  Bender  ed.,  note, 
property  at  death.     Book   11,   N.   Y.      p.  74. 

Rpts.,  Bender  ed.,  note,  p.  449.  What  3.  Situs  of  debt.  Book  28,  N.  Y. 
law  determines  validity  of  wills.  Rpts.,  Bender  ed.,  note,  p.  564.  Laws 
Book  27,  N.  Y.  Rpts.,  Bender  ed.,  of  what  State  govern  note.  Book  37, 
note,  p.  122.  What  law  governs  the  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  479. 
testamentary  disposition  of  realty  or  4.  Moreton  v.  Milne,  supra;  Robin- 
personalty.  Book  28,  N.  Y.  Rpts.,  son  v.  Bland,  2  Burr.  1079;  3  Burge. 
Bender  ed.,  note,  p.  54.  751 ;    2   Kent  Com.    458,  n. :    Dow  v. 

2.  Story  Confl.,  §  383;  3  Burge,  Gould,  31  Cal.  630.  When  corpora- 
751;  Moreton  v.  Milne.  6  Binn.  364;  tion  is  doing  business  in  State  under 
Cobb  V.  Buswell,  37  Vt.  337.  Effect  statute.  Book  37,  N".  Y.  Rpts.,  Ben- 
of   assignment  for   creditors  on   for-  der  ed.,  note,  p.  481. 

eign  property.     Book  7,  N.  Y.  Rpts.,  5.  Local  courts'  jurisdiction  of  for- 

Bender  ed.,  note,  p.  1007.  Foreign  eign'  corporation  (private  interna- 
assignments  governing  local  property,      tional  law).     Book  21,  N.  Y.  Rpts., 

444 


CHAP.  XIII.]  CONFLICT    OF    LAWS.  §    299 

shares,  yet  if  there  be  no  positive  or  customary  law  to  the  contrary 
a  transfer  good  by  the  law  of  the  place  of  the  owner's  domicile  is 
valid  everywhere.^  And  the  equitable  title  will  pass  without  the 
observance  of  such  formalities,  if  the  transfer  be  in  good  faith, 
and  the  laws  of  the  country  permit  equitable  transfers.^  Another 
exception  to  the  broad  doctrine  is  that  local  prescription,  when  it 
attaches,  cannot  be  unseated  by  the  removal  of  the  movable  tu 
another  State.^  Again,  neither  justice  nor  comity  demands  tliat 
the  foreign  law  be  recognized  in  a  State  to  the  extent  of  divesting 
titles  of  its  own  citizens  fairly  acquired;  a  principle  assorted  in 
New  York  so  as  to  protect  the  bond  fide  holder  without  notice  of  a 
bond  and  mortgage,  notwithstanding  the  New  Jersey  law  made 
the  title  ineffectual,  under  the  circumstances,  as  against  New 
Jersey  creditors.^  The  necessities  of  the  case  and  the  purposes  of 
justice  may  interfere  with  the  operation  of  the  law  of  the  owner's 
domicile.  And  the  Supreme  Court  of  the  United  States,  in  a 
modem  case,  allowed  an  attachment  of  personal  property  to  prevail 
against  a  mortgage  which  was  valid  by  the  law  of  the  owner's 
domicile,  but  not  by  the  law  where  the  property  happened  to  be 
situated,  on  the  ground  that  the  principle  of  comity  yields  when 
the  laws  and  policy  of  the  State  where  the  property  is  located  have 
prescribed  a  different  rule  of  transfer  from  that  of  the  State 
where  the  owner  lives.  ^ 

§  299.     The    Subject    Concluded;     Whether    Lex    Situs    Shall 
PrevaiL 

It  is  thus  perceived  that  the  old  rule  of  the  owner's  domicile 

Bender   ed.,   note.    p.    271.      Riprht  of  See    Hardaway    v.    Seramos.    3R    Ala. 

forei^  corporation  to  take  under  lo-  657. 

cal  will    (private   international   law).  7.  lb.;    Ang.    A    Ames.    8tli    od..    $ 

Book    23,    N.    Y.    Kpts..    Bender    ed.,  586,   &   n.;    3    Bur-je,    T.-il.      But    ae.- 

note,    p.    487.      Taxation    of    foreign  Whart.  Confl.,  §  3G4. 

railroad   companies    (private   interna-  8.  See    Waters   v.    Barton.    1    Cold. 

tional    laAv).     Book   34.  N.   Y.   Rpts.,  43. 

Bender  ed.,  note,  p.  473.  9.  Hoyt    v.    Thompson,    10    X.    Y. 

6.  Black  V.  Zacharie,   3   How.   483.  207. 

1.  Green  v    Van   Buskirk.   7   Wall. 

445 


§  299  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  II. 

applied  to  legal  conflicts  concerning  personal  property  fails  in 
these  days  to  give  full  satisfaction.  Mr.  Wharton,  indeed,  after 
adducing  strong  arguments  in  favor  of  the  law  of  local  situation 
as  the  controlling  principle  both  with  reference  to  movables  and 
immovables,  states  the  present  rule  of  international  law  to  be  that 
"  movables,  when  not  massed  for  the  purposes  of  succession  or 
marriage  transfer,  and  when  not  in  transit  or  following  the  owner's 
person,  are  governed  by  the  lex  situs,  except  so  far  as  the  parties 
interested  may  select  some  other  law."  ^  So  where  the  question 
is  as  to  the  negotiability  of  an  instrument  some  courts  rule  that 
this  depends  on  the  law  of  the  place  where  the  transfer  takes 
place.^  For  example,  a  transfer  by  a  conditional  vendee  has  been 
recently  upheld,  where  such  transfer  to  a  purchaser  for  value  was 
good  in  the  State  where  made,  although  void  as  against  the  original 
vendor  both  in  the  State  where  the  contract  was  made  and  where 
suit  was  brought.'*  This  is,  so  far  as  English  and  American  prece- 
dents go,  rather  a  rule  of  promise  than  of  fulfilment,  for  our 
courts  are  far  from  accepting  it,  though  the  drift  is  apparently  in 
that  direction ;  and  even  the  principle  as  thus  stated  indicates 
that  the  law  of  local  situation  is  by  no  means  so  precise  in  its 
application  to  personal  as  to  real  property.  Whatever  exception 
may  have  been  made  in  particular  instances,  the  general  principle 
is  still  usually  stated,  in  the  language  of  Judge  Story,  that  per- 
sonal property  follows  the  law  of  the  owner's  domicile.  The  pres- 
ent uncertainty  of  the  whole  subject  will  appear  more  e\'ident  as 
one  proceeds  to  examine  the  leading  classes  of  personal  property 
at  the  common  law.^ 

13&.       See    Liverpool    Marine    Credit  held  to  be  bound  by  the  laws  of  that 

Co.  V.  Hunter,  L.  R.  4  Eq.  62;  Mum-  domicile."      Wharton,    ib. 

ford  V.  Canty,  50  111.  370.  3.  Baker   Co.   v.   Brown,   214   Mass. 

2.  Whart.  Confl.  Laws,  §  311.  196,  100  N.  E.  1025;  Alcock  v.  Smith, 

The  reservation  as  stated  in  the  sec-  (1892)    1  Ch.  238. 

ond  edition  of  this  work  (1881)   is  as  4.  Fuller  v.  Webster,  5  Boyce,  Del. 

follows:    "Though    in    some   jurisdic-  538,  95  Atl.  335. 

tions   an  exception   may  be  made   in  5.  A  decision  in  the  House  of  Lords 

cases    where    all    the    parties,    being  in   1870   tends   to  regard   the   Jex  rei 

subject    to    a    comm,on   domicile,    are  sitw  as  to  personal  property  with  fa- 

446 


CHAP.  XIII.] 


CONFLICT    OF    LAWS. 


§  299a 


§  299a.     Contracts  Concerning  Personal  Property. 

The  law  of  the  place  where  a  contract  is  made  concerning  per- 


vor.  The  point  decided,  however,  is 
that,  when  a  thing  is  situated  within 
the  jurisdiction  of  the  court,  proceed- 
ings in  rem  give  a  title  to  it  against 
all  the  world ;  and  not  otherwise. 
Castrique  v.  Imrie,  L.  R.  4  H.  L. 
(1870),  414.  See  Whart.  Confl.,  §§ 
828,  829;  Liverpool  Marine  Credit 
Co.  V.  Hunter  L.  R.  3  Ch.  479' ;  Simp- 
son V.  Fogo,  1  H.  &  M.  195. 

The  later  American  cases  are  by 
no  means  satisfactory  as  to  the  dis- 
position of  personal  property.  The 
old  rule  that  the  owner's  domicile 
governs  is  still  constantly  asserted, 
though  often  by  way  of  mere  dictum. 
See  Wharton  Confl.,  §  353,  2d  ed.  and 
cases  cited.  See  also  the  note  of  Pro- 
fessor Bigelow  to  Story  Confl.,  8th 
ed.    (1883),  §  383. 

Clearly,  however,  the  old  fiction 
of  law  that  personal  property  follows 
the  domicile  of  the  owner  will  be 
forced  to  yield,  at  the  present  day, 
wlicncver  the  purposes  of  justice  re- 
quire it;  and,  furthermire,  we  shall 
find  that  each  independent  State  or 
nation  seeks  in  a  matter  of  doubtful 
controversy  to  apply  any  and  all 
property  under  its  control  for  the 
primary  benefit  of  its  own  citizens, 
as  against  foreigners ;  though  where 
all  are  citizens  or  all  foreigners  the 
rule  becomes  fluctuating  and  ca- 
pricious. What  the  Supreme  Court 
of  the  United  States,  as  umpire  be- 
tween equal  and  contending  States, 
would  decide,  is  not  conclusive  as  to 
what  the  courts  of  a  sovereign  nation 
might  decide,  were  the  controversy 
between  itself  and  another  sovereign 
nation.      Self-interest  will    sway   the 


policy  of  independent  governments, 
so  long  OS  no  common  arbiter  of 
peace  is  found  to  adjust  their  quar- 
rels. We  have,  in  fine,  hardly 
progressed  with  the  long-drawn  con- 
troversy further  than  to  enable  the 
reader  to  observe,  in  the  language  of 
Mr.  Justice  Davis,  in  a  very  import- 
ant case,  that  how  far  the  transfer 
of  personal  property,  lawful  in  the 
owner's  domicile,  will  be  respected 
in  the  courts  of  the  country  where  the 
property  is  located  and  a  different 
rule  prevails,  is  "  a  vexed  question, 
on  which  learned  courts  have  dif- 
fered." See  Green  v.  Van  Buskirk,  7 
Wall.  139 ;  Bentley  v.  Whittemore,  19 
N.  J.  Eq.  462;  Paine  v.  Lester,  44 
Conn.  196;  Pritchard  v.  Norton,  106 
U.  S.  124. 

Tlie  Supreme  Court  of  the  United 
States,  in  reaflirmance  of  Green  v. 
Van  Buskirk,  siijyra.  has  di-cided  that 
I)ersonal  property,  subject  to  a  lien 
claim  under  the  statute  of  one  Stat« 
is,  when  sent  into  another  State  and 
received  bj'  a  broker  who  has  no 
knowledge  of  such  lien,  subordinate 
to  the  laws  of  the  latter  State  wliere 
the  property  is  now  situated.  Wal- 
worth V.  Harris.  129  U.  S.  355.  Cf. 
147  U.  S.  476;  In  re  Schow.  213  Fed. 
514  (Conn.  D.  C.  WIA)  ;  In  re  Nuck- 
ols,  201  Fed.  437  (Tenn.  0,  C.  1912). 
As  to  stock,  the  rights  of  the  stock- 
holder or  beneficiary,  whatever  his 
domicile,  must  depend  upon  the  law 
of  the  State  which  created  the  com- 
pany, and  in  reference  to  whosi'  laws 
the  contract  of  subscriber  was  made. 
Glenn  v.  Liggett,  135  U.  S.  533. 
See  also  as  to  stockholders'  liability. 


447 


§  200a 


THE  LAW  OF  PERSONAL  PEOPEnTY. 


[PAET  n. 


sonal  property  usually  prevails.^  But  mutual  intention  here  con- 
trols ;  and,  since  the  place  of  performance  is  also  to  be  considered, 
the  law  of  that  State  or  country  may  determine  instead ;  while  as 
to  a  contract  both  made  and  to  be  performed  in  another  jurisdic- 
tion comity  vipholds  it  locally,  both  in  legal  effect  and  interpreta- 
tion/ But  a  State  or  country  will  not  uphold  a  contract  made 
elsewhere  which  is  in  clear  conflict  with  its  own  public  policy, 
however  it  may  have  been  where  it  was  made  or  to  be  performed.* 


Nesom  v.  City  Nat.  Bank,  174  S.  W. 
715  (Tex.  Civ.  App.  1915)  ;  South- 
worth  V.  Morgan,  205  N.  Y.  293,  98 
N.  E.  490;  Rogers  v.  Mining  Co., 
185  Mo.  App.  659,  171  S.  W.  676. 
In  corporation  cases  of  this  sort,  the 
law  of  contract  as  entered  into,  or  of 
the  place  where  the  contract  was'  to 
be  performed,  becomes  an  ingredient 
of  the  comity  and  increases  the  con- 
fusion, where  one  wishes  to  regard 
the  personal  property  as  such.  See 
128  U.  S.  195.  The  latest  English 
inclination  appears  to  be,  in  ques- 
tions of  a  purchaser's  title  or  o\vner- 
ship  generally  of  a  bill  or  note  or  of 
a  certificate  of  stock,  to  prefer  apply- 
ing English  to  foreign  law.  Williams 
V.  Colonial  Bank,  15  App.  Cas.  267; 
Alcock  V.  Smith,  (1892)  1  Ch.  238. 
Cf.  (1892)  1  Ch.  219,  226,  which  (in 
a  case  of  debentures)  explains  Simp- 
son V.  Fogo,  supra. 

6.  Rock  Island  Plow  Co.  v.  Master- 
son.  96  Ark.  446,  132  S.  W.  216; 
Reid  &  Murdock  v.  Northern  Lumber 
Co.,  146  111.  App.  371;  Stein-Gray 
Drug  Co.  V.  Miehelsen,  116  N.  Y.  S. 
789  (Mun.  Court,  1909)  ;  In  re  Hart- 
dagen,  189  Fed.  546  (Pa.  D.  C.  1912)  ; 
Acme  Food  Co.  v.  Kirsch,  166  Mich. 
433,  131  N.  W.  112,  38  L.  R.  A.  N.  s. 
474,  n.  3;  D.  Canale  v.  Pauly  Co., 
155  Wis.  541,  145  N.  W.  372. 


7.  Sirch  Laboratories  v.  Garbutt, 
13  Cal.  App.  435,  110  Pac.  140;  Bene- 
dict V.  Dakin,  243  111.  384,  90  N.  E. 
712 ;  New  Haven  Trust  Co.  v.  Camp, 
81  Conn.  539,  71  Atl.  788  (presumed 
intention)  ;  Title  Guarantee  Co.  v. 
Witmire,  195  Fed.  41,  115  C.  C.  A.  43; 
Elswick  V.  Ramey,  157  Ky.  639,  163 
S.  W.  751 ;  State  Bank  of  Chicago  v. 
King,  244  Pa.  29,  90  Atl.  453 ;  Inter- 
national Harvester  Co.  v.  McAdam, 
142  Wis.  114,  124  N.  W.  1042,  24 
L.  R.  A.  N.  s.  774,  n. ;  Old  Dominion 
Co.  V.  Bigelow,  203  Mass.  159,  89 
N.  E.  193,  40  L.  R.  A.  N.  S.  314; 
Kavanaugh  v.  Royal  League,  158  Mo. 
App.  234,  138  S.  W.  359;  Zenatello 
v.  Hammerstein,  231  Pa.  56,  79  Atl. 
922;  Cockburn  v.  Kingsley,  25  Colo. 
App.   89,  135  Pac.   1112. 

8.  Lovell  V.  Boston  &  Me.  R.  R.,  75 
N.  H.  568,  78  Atl.  621,  34  L.  R.  A. 
N.  s.  67,  n. ;  Standard  Fashion  Co.  v. 
Grant,  165  N.  C.  453,  81  S.  E.  606; 
Nonotuck  Co.  v.  Adams,  Ex.  Co.,  256 
111.  66,  99  N.  E.  893;  Fish  v.  Dela- 
ware Ry.  Co.,  79'  Misc.  63,  141  N.  Y. 
S.  245;  M.  Stone  v.  Postal  Co.,  35 
R.  I.  498,  87  At!.  319,  46  L.  R.  A. 
N.  s.  180. 

See  Heath  v.  Cable  Co.,  87  S.  C. 
219,  69  S.  E.  283  (telegraph  mes- 
sage) ;  Western  L'nion  Co.  v.  Youn^ 
133  S.  W.  512  (Tex.  Civ.  App.  1911) ; 


448 


PART  III 

LEADING   CLASSES   OF  PERSONAL  PROPERTY 


CHAPTER    I 


SHIPS    AND    VESSELS 


§  300.  Chattels  Corporeal  First  to  be  Considered;  Ships  or 
Vessels  and  Money. 
Personal  things  of  a  corporeal  nature,  for  the  most  part,  such 
as  com,  jewels,  furniture,  carriages,  and  merchandise,  need  not 
claim  special  consideration  in  this  treatise.  Of  animals  we  have 
spoken  in  another  connection.^  But  there  are  two  classes  of  cor- 
poreal chattels  which  should  here  be  noticed  at  some  length.  One 
of  these  consists  of  ships  or  vessels,  the  other  of  money. 

§  301.     Ships  or  Vessels;    History  of  the  Law  of  Shipping. 

Ships,  as  the  reader  has  already  seen,  are  chattels,  though  made 
to  plough  the  waters  and  rarely  taken  for  transportation  from 
place  to  place  like  land  movables.  And  such  peculiar  solemnities 
attending  their  transfer  are  to  be  found  under  the  registry  laws 
that  some  have  even  inclined  to  the  belief  that  they  are  not  chat- 
tels at  all ;  it  being  undoubtedly  true  that  the  law  of  shipping  is 
older  than  the  law  of  freeholds  and  chattels;    older  than  Bracton 

Pennington  Bank  v.  Bauman,  85  Neb.  Young  v.  Telegraph  Co.,  168  N.  C.  36, 

226,    122'  N.    W.    848    (chattel    mort-  84  S.  E.  45   (telephone  message), 

gage   registry)  ;    Hayward   v.   Sencen-  No   local  equity  jurisdiction   as   to 

baugh,   141   111.   App.   395    (stockhold-  foreign       corporations.         Kelly       v. 

ers'     liability)  ;     National     Excliange  Thomas,  234  Pa.  419,  83  Atl.  307. 

Bank  v.  Rook  Granite  Co.,  155  N.  C.  1.  i^upra,   §§   48-51.     See  also  Vol- 

43,    70    S.    E.    1002 ;    Southworth    v.  ume  II.  as  to  Eetrays,  4c. 
Morgan,  205  N.  Y.  293,  98  N.  E.  490; 

29  449 


§  302         THE  LAW  OF  PERSONAL  PKOPEETY.      [pART  III. 

and  Fleta;  older  in  some  respects  than  the  civil  law  of  Rome 
itself,  as  prevalent  in  the  times  of  Justinian.  For  the  famous 
imperial  Digest  pays  tribute  to  the  maritime  laws  of  Rhodes, 
where  commerce  flourished  at  least  a  thousand  years  before  the 
Christian  era.  Yet  the  Roman  civil  law,  the  Consolato  del  Mare, 
the  Laws  of  Oleron,  the  Laws  of  Wisbuy,  Le  Guidon,  the  Marine 
Ordonnance  of  Louis  XIV.,  the  Commentaries  of  Valin,  and  the 
treaties  of  distinguished  writers  of  Continental  Europe,  among 
whom  Pothier  is  conspicuous,  shaped  and  directed  the  growth  of 
our  commercial  system.  The  usage  of  merchants,  or  rather  com- 
mercial usage  thus  borrowed  from  abroad,  reinforced  the  scanty 
store  of  old  common-law  precedents,  and  in  time  enabled  our  later 
jurists,  such  as  Mansfield  of  England  and  Story  of  the  United 
States,  to  announce  those  legal  principles  which  are  now  recognized 
as  constituting  the  Anglo-Saxon  law  of  shipping,  and  which  must 
continue  to  develop  with  the  rapid  growth  and  increasing  wants 
of  modern  commence.^ 

§  302.     The  Ship  a  Peculiar  Chattel. 

We  say,  then,  that  a  ship  is  a  chattel ;  or,  better  still,  that  it  is 
personal  property,  a  movable  and  not  real  property.  But  it  is  a 
very  peculiar  kind  of  property,  in  law  and  in  fact ;  and  so  it  has 
been  treated  from  the  time  when  insignificant  craft  carried  mer- 
chandise between  neighboring  ports  on  the  Mediterranean  Sea,  to 
this  day,  when  we  see  large  vessels  built,  equipped,  and  freighted 
to  circumnavigate  the  globe.^  We  use  here  the  word  "  ship,"  too, 
in  its  general  sense,  as  denoting  any  vessel  employed  in  naviga- 
tion, whether  a  ship  of  war  or  a  merchant  ship,  whether  a  steam- 
ship or  a  sailing  vessel,  whether  a  brig,  a  schooner,  a  sloop,  or  a 
three-masted  vessel.'*  The  ship's  element  is  not  the  land,  nor  can 
vessels  of  the  larger  sort  attend,  literally,  the  person  of  the  o^vner ; 

2.  See  1  Pars.  Shipping,  c.  1 ;  Abb.  usages  of  that  country.  The  Scotland, 
Shipping,    preface.      Maritime   law   is       105  U.  S.  24. 

only  so  far  operative  in  any  country  3.  See  Jacobsen's  Sea  Laws,  21;   1 

aa    it   is    adopted    by    the   laws    and      Pars.  Shipping,  c.  2. 

4.  See  Bouv.  Diet.  "  Ship." 
450 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    304 

but  when  we  transport  a  small  boat  over  land  the  chattel  character 
of  all  such  property  becomes  obvious.  "A  ship  is  bom  when  she 
is  launched  and  lives  so  long  as  her  identity  is  preserved.  Prior  to 
her  launching  she  is  a  mere  congeries  o£  wood  and  iron  —  an 
ordinary  piece  of  personal  property  —  as  distinctly  a  land  struc- 
ture as  a  house,  and  subject  only  to  mechanics'  liens  created  by 
State  law  and  enforceable  in  the  State  courts.  In  the  baptism  of 
launching  she  receives  her  name,  and  from  the  moment  her  keel 
touches  the  water  she  is  transformed,  and  becomes  a  subject  of 
admiralty  jurisdiction.  She  acquires  a  personality  of  her  own; 
becomes  competent  to  contract,  and  is  individually  liable  for  her 
obligations,  upon  which  she  may  sue  in  the  name  of  her  owner  and 
be  sued  in  her  own  name."  ^ 

§  303.     Division  of  the  Present  Chapter. 

Our  brief  examination  of  the  law  relating  to  ships,  in  the 
present  chapter,  will  lead  us  to  consider  (1)  the  title  to  a  ship 
and  modes  of  transfer;  (2)  the  persons  employed  in  and  about 
a  ship;  (3)  the  manner  of  the  ship's  employment;  (4)  marine 
torts,  and  perils  peculiar  to  navigation;  and  (5)  the  jurisdiction 
of  courts  of  admiralty. 

§  304.     Title  to  a  Ship,  and  Modes  of  Transfer. 

First,  concerning  the  title  to  a  ship  and  modes  of  transfer.  Of 
part-owners  we  have  spoken  elsewhere;  ^  and  it  remains  to  notice 
how  one  or  more  persons  may  acquire  their  interests  in  a  ship. 
This  is  usually  by  building  or  purchase ;  while  at  the  same  time, 
by  the  death  of  an  owner,  his  interest  will  devolve  upon  his  execu- 
tors or  administrators,  as  in  the  case  of  other  personal  chattels. 
The  common  law  makes  a  conveyance  necessary  to  the  sale  of  real 
estate,  while  mere  delivery  without  any  writing  suffices  to  pass 
any  corporeal  or  tangible  chattel.     And  hence  a  ship,  by  some 

5.  Per    Brown,    J.,     in     Tucker    v.  6.  Supra,   §§   205-214. 

Alexandroff,    183   U.    S.   424,   438,   22 
Sup.  Ct.  195,  46  L.  ed.  264. 

451 


§  305         THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

method  of  symbolical  delivery,  might  be  transferred  from  one 
owner  to  another,  though  no  formal  written  instrument  accom- 
panied the  act  of  delivery.  Such,  at  least,  is  the  logic  of  the  rule ; 
but  government  long  ago  interposed  with  its  registration  and  navi- 
gation policy,  and  so  universal  has  become  the  custom  of  giving 
bills  of  sale  of  a  peculiar  sort,  that  no  one  in  our  day  would  care 
to  risk  his  title  to  a  vessel  of  considerable  size  and  value  on  a  mere 
parol  transfer  and  delivery/ 

§  305.     The  Same  Subject;   Registration,  Bill  of  Sale,  etc. 

The  registration  and  navigation  acts  are  said  to  have  originated 
in  their  present  form  more  than  two  and  a  half  centuries  ago, 
through  the  desire  of  Spain  to  preserve  the  commerce  of  her 
American  colonies ;  in  England  the  policy  dates  from  the  time  of 
Charles  II. ;  and  in  this  country  a  national  registration  system 
was  established  soon  after  the  adoption  of  our  present  constitution, 
with  the  act  of  December  31,  1792,  modified  since  by  various  stat- 
utes, among  which  the  act  of  1850  is  conspicuous.^  Certain  priv- 
ileges attach  to  a  ship  which  has  been  duly  registered,  and  thereby 
acquires  a  national  character;  and  in  England  an  exact  and  rigid 
system  of  registration  was  continued  in  force  until  the  middle  of 
the  nineteenth  century,  so  as  to  secure  a  rich  monopoly  of  the 
carrying  trade  to  vessels  of  that  country;  the  requirement  being 
that  every  alteration  in  the  property  of  a  ship  or  vessel  should  be 
indorsed  on  the  certificate  of  registry  before  witnesses,  and  should 
itself  be  registered,  while  every  bill  of  sale  thereof  was  made  ''  null 
and  void  "  unless  it  contained  a  recital  of  the  registry  certificate 
at  length.^     The  United  States  statutes,  on  the  other  hand,  did 

7.  See  Abb.  Shipping,  23;  The  Sis-  502.  The  English  act  of  1854  (17 
ters,  5  Rob.  Ad.  155;  1  Pars.  Ship-  Vict.,  c.  5)  admitted  foreign  ships  to 
ping,  55-58.  the  coasting  trade.     In  1854,  too  (17 

8.  Reeves,  Law  of  Shipping,  35;  1  &  18  Vict.,  cs.  104,  120),  a  new  stat- 
Pars.  Shipping,  25-27;  Abb.  Shipping,  ute  amended  and  consolidated  the  pre- 
part  1,  c.  2.  See  U.  S.  Comp.  St.  vious  laws  relating  to  merchant  ship- 
1916,  §  7707  et  seq.  ping.     Various  other  enactments  from 

9.  See  1  Pars.  50;  Weston  v.  Pen-  1854  to  1880,  relative  to  this  subject, 
Himan,  1  Mas.  317;  2  De  G.  F.  &  J. 

452 


eHAP.  I.] 


SHIPS    AND    VESSELS. 


§  305 


not  declare  any  informal  transfer  null  and  void,  at  least  down  to 
a  recent  period;  they  simply  denied  to  ships  transferred  without 
the  formality  of  a  written  instrument,  which  recited  at  length  the 
certificate  of  registry,  the  privileges  of  ships  of  the  United  States.^ 
But  in  1850  —  or  at  about  the  same  time  that  Great  Britain  re- 
laxed her  old  policy  so  as  to  somewhat  favor  foreign-built  vessels 
and  "  free  trade "  —  the  registry  system  of  the  United  States 
tightened  its  grasp  upon  American  vessels  by  declaring  that  no  bill 
of  sale,  mortgage,  hypothecation,  or  conveyance  of  a  vessel  of  the 
United  States,  in  whole  or  in  part,  should  be  valid  against  any 
other  than  the  grantor  or  mortgagor,  his  heirs  and  devisees,  and 
persons  having  actual  notice,  unless  the  instrument  was  recorded 
at  the  office  of  the  collector  of  customs.^     This  accords  with  the 


are  to  be  found  in  Vol.  TT.,  Maude 
and  Pollock  Shipping,  4th  od.  (1881). 
The  transfer  of  a  British  ship  is 
governed  by  the  express  provisions  of 
the  Merchant  Shipping  Acts  (1854 
and  acts  subsequent ) ,  which  make  a 
clear  distinction  between  the  legal 
estate  and  mere  beneficial  interests 
therein.  Chasteauneuf  v.  Caperyon, 
7  App.  Cas.  127.  See  Act  12  &  13 
Vict,  c.  29  (1850).  A  written 
agreement  for  sale  need  not  be  regis- 
tered under  the  English  Act  of  1854; 
nor  need  the  special  description  of 
the  ship  be  inserted  therein.  Bat- 
thyany  v.  Bouch,  29  W.  R.  665.  New 
provisions  in  favor  of  equitable  mort- 
gages not  registered  are  found  in  sub- 
sequent English  acts.  17  &  18  Vict., 
c.  104 ;  25  &  26  Vict.,  c.  63. 

1.  1  Pars.  50;  Abb.  Shipping,  58- 
96;   Hozey  v.  Buchanan,  16  Pet.  215. 

2.  9  U.  S.  Stats.  440,  c.  27 ;  Brightly 
Fed.  Dig.  780.  For  the  latest  phrase- 
ology of  the  United  States  registry 
acts,  see  U.  S.  Rev.  Stats.,  §§  4131- 
4196;  U.  S.  Comp.  St.  1916,  §  7707 
et  eeq.     Barges,  &c.,  are  not  subject 


to  registration  in»  certain  cases.  21 
Stat.  Large,  44  (Act  June  30,  1879"). 
A  mortgage  of  a  vessel  of  the  United 
States  is  not,  as  against  the  parties 
and  such  persons  as  have  actual 
notice  thereof,  rendered  invalid  by 
the  failure  to  record  it  under  U.  S. 
Rev.  St.,  §§  4192,  4193.  Moore  v. 
Simonds,  100  U.  S.  Supr.  145.  For 
late  decisions  on  various  points  con- 
nected with  our  registry  acts,  see  5 
Sawyer  C.  C.  83;  The  Kate  Heron,  6 
Sawyer  C.  C.  106;  James  E.  Thurber 
V.  Sloop  Fannie,  8  Ben.  429".  Follow- 
ing the  usual  rule  of  chattel  mort- 
gages, the  mortgagee's  claim  upon  the 
vessel  may  be  subordinated  to  liens 
in  rem  necessarily  created  for  repairs 
and  supplie.s.  Rumbell,  The,  148  U.  S. 
1.     See  c.  4,  post. 

Registration  is  not  necessary  to 
make  the  sale  of  a  steamboat  in  Ten- 
nessee valid.  Karr  v.  Schade,  7  Lea, 
294.  License  to  engage  in  the  coast- 
ing trade  is  not  to  be  construed  as 
impairing  the  State  powers.  Hatch 
V.  Wallanub  Co..  7  Sawyer  C.  C.  127. 
By  act  July  5,  1884,  c.  221,  a  bureau 


453 


§  305  THE  LAW  OF  PERSONAL  PROPEETY.      [pART  III. 

long-settled  registry  policy  of  our  several  States  in  sales  and  mort- 
gages of  real  estate,  and  whenever,  in  fact,  written  instruments  of 
title  must  be  relied  upon,  rather  than  a  visible  possession,  to  estab- 
lish ownership  or  security. 

A  bill  of  sale  becomes,  then,  customary,  if  not  indispensable, 
for  transferring  the  ship  absolutely  from  one  owner  to  another. 
In  England  the  first  bill  of  sale,  by  which  the  property  passes  from 
the  builder  to  the  first  purchaser  or  owner,  is  distinguished  from 
bills  making  subsequent  transfers  as  the  "  grand  bill  of  sale." 
We  have  no  such  distinction  in  this  country.^  In  questions  of 
registry  and  of  actual  and  constructive  notice,  the  same  principles 
probably  would  apply  in  the  case  of  a  bill  of  sale  or  mortgage  of  a 
vessel,  as  under  the  long-established  registry  acts  of  our  States 
relating  to  real  estate;  while  it  may  be  readily  supposed  that  the 
United  States  statute  of  1850  controls  the  State  statutes  relating 
to  mortgages  of  personal  property,  so  far  as  to  make  compliance 
with  its  own  formalities  of  registry  essential.'*  Hence,  the  record- 
ing of  a  mortgage  in  the  office  of  the  collector  of  the  home  port  of 
a  vessel  will  suffice  to  give  this  mortgage  priority  over  subsequent 
purchasers  or  mortgagees,  irrespective  of  formalities  which  may  be 
required  by  State  laws.^  Nor  can  the  mortgage  of  a  vessel,  duly 
recorded,  be  defeated  by  a  subsequent  attachment  under  a  State 
law.^  But  it  is  held  that  the  statute  of  1850  applies  only  to  ves- 
sels which  are  registered,  licensed,  or  enrolled,  and  that  a  mort- 
gage of  vessels  not  answering  to  this  description  follows  the 
registry  acts  of  the  State,  and  need  not  be  recorded  at  the  custom- 

of  navigation  is  established  under  the  5.  White's  Bank  v.   Smith,  7  Wall, 

immediate  charge  of  a  commissioner.  646.     A  chattel  mortgage  on  a  vessel, 

See    also    more    recent    acts    of    Con-  if   recorded    pursuant   to   the   United 

gress  (1917).  States  registry  acts,  is  valid,  although 

3.  Abb.  Shipping,  3 ;  Gordon  v.  East  the  State  law  of  registry  be  not  com- 
India  Co.,  7  T.  R.  228,  234 ;  3  Kent  plied  with.  Folger  v.  Weber,  16  Hun, 
Com.     133;     1     Pars.     Shipping,    60;  512. 

Wheeler  v.   Sumner,  4  Mas.  183.  6.  Aldrich    v.    .SItna    Co.,    8    Wall. 

4.  1  Pars.  ib.  and  cases  cited;  Hor-      491. 
ton  v.  Davis.  26  N".  Y.  495. 

454 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    306 

house.^     Nor  does  the  act  itself  apply  to  charter-parties;    nor  to 
the  lien  of  material-men  for  supplies.^ 

§  306.  The  Same  Subject;  Policy  of  Registration,  License,  and 
Enrolment. 
As  to  registration,  license,  and  enrolment,  it  may  be  said  that 
the  policy  of  the  United  States,  following  the  example  of  Great 
Britain,  is  both  to  confer  peculiar  privileges  upon  vessels  bearing 
the  national  flag,  and  to  exercise  likewise  a  judicious  control  of 
the  merchant  service.^  Various  classes  of  vessels  are  enumerated 
by  the  act  of  1792  and  subsequent  statutes  as  entitled  to  registry, 
including  those  built  within  or  without  the  United  States,  which 
belong  to  citizens  thereof;  and  likewise  any  vessel  that  has  been 
enrolled,  on  the  enrolment  and  license  being  given  up  for  the 
purpose  of  obtaining  the  registry.  Before  the  certificate  of  reg- 
istry is  given,  the  vessel  must  be  surveyed  by  a  customs  officer,  and 
security  given  for  a  proper  use  of  the  certificate.  The  name  of 
a  registered  vessel  cannot  be  changed  except  in  special  cases. 
Vessels  enrolled  and  licensed,  or  licensed  only,  if  under  twenty 
tons,  are  entitled  to  the  privileges  of  vessels  employed  in  the  coast- 
ing trade  or  fisheries ;  and  the  same  general  qualifications  are 
required  as  in  case  of  registered  vessels.  Such  being  the  system 
of  registration,  license,  and  enrolment,  all  other  vessels  are  sub- 
jected by  statute  to  large  tonnage  duties,  in  addition  to  the  tax  on 
imported  articles.  These  must  be  paid  at  the  time  of  making 
entry,  and  before  permit  can  be  granted  for  unlading  the  goods. 
Discriminating  tonnage  duties  are  not  exacted  from  the  vessels  of 
such  nations  as  abolish  similar  duties  in  favor  of  the  United  States ; 

7.  Voazie  v.  Somorby.  5  Allen.  280.  assort      that      nationality      wherever 

8.  1  Pars.  Shipping,  62;  Mott  v.  found.  The  purpose  of  an  enrolment 
Ruckman,  3  Bl.  C.  C.  71.  is  to  evidence  the  national  character 

9.  American  vessels  are  of  two  of  a  vessel  engaged  in  the  coasting 
classes,  those  registered  and  those  en-  trade  or  home  traffic,  and  to  enable 
rolled  and  licensed.  The  purpose  of  such  vessel  to  procure  a  coasting 
a  register  is  to  declare  the  national-  license.  Per  Hughes,  J.,  in  Anderson 
ity  of  a  vessel  engaged  in  trade  with  v.  Pacific  Coast  S.  S.  Co.,  225  U.  S. 
foreign  nations  and  to  enable  her  to  187,  33  Sup.  Ct.  626,  56  L.  ed.  1047. 

455 


§    307  I'il^    J^-^W    OF    PERSONAL    PItOPERTY.  [PART  III. 

and  the  rate  of  the  tax  has  varied  since  the  adoptioii  of  the  Con- 
stitution, being  considerably  increased  during  the  years  1861-65.* 
The  certificate  of  registration  of  a  vessel  and  proof  as  to  the 
flag  carried  by  her  are  competent  and  convenient  evidence,  to 
whatever  distant  point  the  vessel  may  go,  for  showing  her  nation- 
ality and  ownership.^ 

§  307.     The  Same  Subject;    Sale  and  Transfer  of  Title. 

When  a  ship  is  built,  the  builder  is  deemed  the  first  owner,  and 
to  the  first  purchaser  he  transfers  by  a  bill  of  sale, —  or,  as  the 
English  writers  state  it,  "  the  grand  bill  of  sale,"  —  taking  care 
to  give  his  certificate  to  the  owner,  that  the  formalities  of  regis- 
tration may  be  complied  with.''  One  might  suppose  that  parties 
would  sometimes  wish  to  contract  with  a  person  to  build  the  ship 
for  them,  he  doing  the  work  and  they  being  owners  from  the  out- 
set ;  but  such  is  not  the  practice,  though  a  conveyance  of  the  keel 
after  it  has  been  laid  vests  the  property  thereof  in  the  vendee,  and 
draws  after  it  all  subsequent  additions.'*  There  is  much  confusion 
in  the  authorities  concerning  the  legal  title  to  the  vessel  and  its 
transfer,  where  the  purchase-money  is  paid  in  instalments  during 
the  progress  of  the  work;  but  the  question  would  seem  to  be  one 
of  intent  to  be  gathered  from  all  the  circumstances.'*     Whether 

1.  See  Brightly  U.   S.  Dig.  "  Sliips  ute   provides,    is   American    property, 

and    Shipping;  "      1    Pars.    Shipping,  with  all  the  general  incidents  of  any 

25-49,  and  cases  cited.  property   of   an   American ;    although 

"  The   purpose   of   a   register   is   to  it  has  been   stated   that  such   vessels 

declare    the    nationality    of    a    vessel  are  "of  no  more  value,  as  American 

engaged  in  trade  with  foreign  nations,  vessels,  than   the  wood  and   iron  out 

and    to    enable    her    to    assert    that  of     which     they     are     constructed." 

nationality  wherever  found.    The  pur-  White's  Bank  v.  Smith,  7  Wall.  655, 

pose  of   an   enrolment   is   to  evidence  656.     The  statute  provisions  for  en- 

the    national    character    of    a    vessel  rolment  are  similar  to  those  for  regis- 

cngaged    in    the    coasting    trade,    or  tering,  but  not  identical  with  them, 

home  traffic,  and  to  enable  such  ves-  2.  St.   Clair   v.   United   States.    154 

sel    to    procure    a    coasting    license."  U.  S.  134. 

Mr.  Justice  Miller,  in  Mohawk,  The,  3  3.  1    Pars.    Shipping,    63-67 :    Abb. 

Wall.   566,   571,     A  vessel   owned  by  Shipping,  3-7. 

a   citizen   of   the  United   States,   and  4.  lb.;    Woods   v.    Russell,    5    B.   & 

not  registered  or  enrolled  as  the  stat-  Aid.   942 ;    Moody  v.  Brown,   34   Me. 

456 


CHAP.  I.] 


SHIPS    AND    VESSELS. 


§  307 


paid  for  in  this  manner  or  not,  and  notwithstanding  the  property 
in  the  ship  may  have  passed  before  it  was  completed,  the  builder 
has  a  common-law  lien,  and  may  hold  possession  until  he  has 
finished  it  and  earned  his  full  price.^  Again,  the  ship  is  fre^ 
quently  sold  by  the  master  in  a  case  of  imminent  and  imperious 
necessity;  by  which  is  meant  something  more  than  mere  expedi- 
ency and  convenience;  for,  to  justify  a  sale  of  this  sort,  there 
must  have  been  circumstances  strong  enough  to  control  the  duty 
of  sailing  the  ship  home  again,  and  such  as  would  leave  a  prudent 
man  no  option  but  to  sell  at  once.^  Wherever  the  master  may  be, 
he  ought  to  get  instructions  from  the  owners  before  concluding 
to  sell,  if  he  can ;  and  with  the  increased  facilities  now  afforded  by 
the  extension  of  the  electric  telegraph,  this  becomes  comparatively 
easy ;  yet  if  the  peril  be  such  as  not  to  admit  of  this  delay,  he  may 


107;  Andrews  v.  Durant,  1  Kern.  36; 
Wood  V.  Bell,  6  Ell.  &  B.  355;  Haney 
V.  Schooner  Rosabelle,  20  Wis.  247; 
Scudder  v.  Calais  Steamboat  Co.,  1 
Cliff.  370 ;  Sandford  v.  Wiggins  Ferry 
Co.,  27  Ind.  522;  Butterwor'th  v. 
McKinly,  11  Humph.  206.  The  doc- 
trine in  Woods  v.  Russell,  supra,  is 
understood  to  be  that  the  title  to  the 
unfinished  ship  vests  usually  in  the 
builder  as  the  work  progresses.  Big- 
elow,  C.  J.,  in  Williams  v.  Jackman, 
16  Gray,  514,  observes,  however,  that 
under  a  contract  for  supplying  labor 
and  materials  and  making  a  chattel, 
no  property  passes  to  the  vendee  till 
the  chattel  is  completed  and  deliv- 
ered or  ready  to  be  delivered,  in  the 
absence  of  stipulations,  express  or 
implied,  to  the  contrary.  And  see 
Andrews  v.  Durant,  11  N.  Y.  35 ;  El- 
liott V.  Edward!?,  35  N.  J.  L.  265; 
36  ib.  449.  The  Supreme  Court  of 
the  United  States  has  expressed  its 
f({>proval  of  the  principle  that  there 
is  no  arbitrary  rule  in  such  case,  but 


that  in  each  transaction  the  circum- 
stances are  decisive  of  the  ques- 
tion. Clarkson  v.  Stevens,  106  U.  S. 
505,  per  Mr.  Justice  Matthews.  See 
further  Vol.  II.,  §§  266-268. 

5.  Woods  v.  Russell,  5  B.  &  Aid. 
942.  Contracts  for  building  vessels, 
or  for  labor  done  or  materials  fur- 
nished in  their  construction,  are  not 
maritime  contracts.  The  Tattle  v. 
Buck,  23  Ohio  St.  565;  Thorsen  v. 
Martin,  26  Wis.  488;  Edwards  v. 
Elliott,  36  N.  J.  449;  s.  c.  21  Wall. 
532;  Foster  v.  Busteed,  100  Masi*. 
409;  Sheppard  v.  Steele,  43  N.  Y.  52. 
Liens  are  enforceable  in  a  State  court 
accordingly.  Ib. ;  and  see  Dorr  v. 
Waldron,  62  III.  21. 

6.  1  Pars.  Shipping,  68-74;  Abb. 
Shipping,  17;  Somes  v.  Sugrue,  4  C. 
&  P.  276;  New  England  Ins.  Co.  v. 
Brig  Sarah  Ann,  13  Pet.  387;  The 
Amelie,  6  Wall.  18;  Peirce  v.  Ocean 
Ins.  Co.,  18  Pick.  83;  Butler  v.  Mur- 
ray, 30  N.  Y.  88. 


457 


I    308  THE    LAW    OF    PERSONAL    PROPERTY.  [pART  III. 

act  promptly  for  the  good  of  all  concerned.^  The  ship  being  law- 
fully and  justifiably  sold,  the  purchaser  will  take  an  absolute  title 
divested  of  all  liens.^  So,  too,  courts  of  admiralty  assert  an 
authority  which  they  seldom,  if  ever,  exercise,  that  of  ordering 
the  sale  of  a  vessel  because  unseaworthy  or  unfit  for  service ;  and 
they  condemn  ships  as  prize  or  for  forfeiture  as  contraband,  or 
for  smuggling,  or  to  pay  salvage,  and  to  satisfy  bottomry  bonds 
and  maritime  liens  generally;  the  decree  under  which  the  sale  is 
made  being,  apparently,  good  and  binding  the  world  over,  unless 
vitiated  by  fraud.^  But  the  admiralty  court  must  be  a  regular  one 
in  order  that  foreign  nations  recognize  its  jurisdiction.' 

§  308.     The  Same  Subject;    What  Appurtenances  Pass  Under 
Instruments  of  Transfer. 

What  are  the  appurtenances  of  a  ship,  how  much  passes  by  the 
word  "  ship,"  or  the  phrase  "  ship  and  its  appurtenances  "  or 
"  apparel "  or  "  furniture,"  in  instruments  of  transfer,  is  not 
clearly  established  by  the  authorities.  Usage  aids  in  determining 
the  question, —  as,  for  instance,  under  a  policy  of  insurance ;  but 
mere  connection  with  the  ship  is  not  sufficient  unless  the  thing  be 
appropriate  for  use  with  the  ship ;  and,  as  in  the  case  of  fixtures, 
there  may  be  a  constructive  annexation  to  the  ship  without  an 
actual  attacTiment,  the  use  or  destination  being  mainly  regarded. 
Cargoes  do  not  pass  as  appurtenances ;   nor  would  ballast  usually ; 

7.  Pike  V.  Baleh,  38  Me.  302;  New  1911),  (notice  of  maritime  claim  to 
England  Ins.  Co.  v.  Brig  Sarah  Ann,      purchaser). 

13  Pet.  387.  9.  Reid    v.    Darby,    10    East,    143; 

8.  The  Amelie,  6  Wall.  18.  But  as  The  Tilton,  5  Mass.  4&5;  1  Pars, 
to  other  special  liens  of  necessity,  cf.  Shipping,  74-77;  Abb.  Shipping,  19 
Rumbell,  The,  148  U.  S.  1.  et  seq. 

See  Gonzales  v.  Terry,  102  S.  C.  86,  As    to    government    or    owner    pro 

86  S.  E.  207,  as  to  sale  and  delivery  hao  vice,  see  American   S.   S.   Co.  v. 

of    a    steamship;    The    Orlando,    214  United    States,    239    U.    S.    202,    36 

Fed.   271    (N.   J.   D.   C,    1914),    (bill  Sup.   Ct.   76    (military  service). 

of    sale,    etc.,    not    essential);     The  1.  lb.;     The    Flad     Oyen,     1     Rob. 

Dana,    190    Fed.    650    (N.    Y.   D.    C,  Adm.  135.     See  Grant  v.  McLachlin, 

4  Johns.  34. 

458 


CHAP.  I.]  SHIPS    AND    V^ESSELS.  §    309 

nor  a  chronometer  in  all  cases ;  and  as  to  the  ship's  boat,  there  is 
some  uncertainty;  but  sails,  rigging,  and  rudder  are  among  a 
ship's  appurtenances ;  and,  in  general,  whatever  is  on  board  the 
ship  for  the  objects  of  the  voyage  and  adventure  on  which  it  is 
engaged.^  A  ship  is  always  the  same,  though  all  the  materials 
which  at  first  gave  it  existence  had  successively  disappeared ;  and 
if  taken  to  pieces  for  the  purpose  of  reconstruction,  the  ship  pre- 
serves its  identity;  though  not,  it  is  said,  if  taken  to  pieces  with 
no  such  intent  and  afterwards  reconstructed  in  part.^ 

§  309.  The  Same  Subject;  Taking  Possession  Under  a  Trans- 
fer; Rule  of  Caveat  Emptor,  etc. 
As  a  ship  may  be  sold  at  one  port  while  lying  at  another,  or 
upon  the  high  seas,  it  is  evident  that  immediate  delivery  of  posses- 
sion is  often  impossible,  while  for  the  most  part  possession  must 
be  rather  symbolical  than  actual.  So  far  does  the  rule  that  the 
sale  of  a  chattel  without  accompanying  possession  is  a  badge  of 
fraud  become  inapplicable  to  property  of  this  description  that  we 
find  bond  fide  transfers  of  a  ship  on  good  consideration  sufficient 
to  vest  a  title  in  the  purchaser,  provided  only  that  he  takes  posses- 
sion as  soon  as  may  be.  The  period  usually  recognized  in  Eng- 
land and  the  United  States,  within  which  the  vendee  or  mortgagee 
should  take  possession,  is  a  reasonable  time  after  the  ship's  arrival 
in  port;  though  further  precautions  may  be  desirable,  for  the 
purpose  of  compliance  with  the  registry  statutes,  and  to  give  due 
notice  to  the  public.'^  The  transfer,  then,  unaccompanied  by  pos- 
session, does  not  give  an  inchoate  right,  but  a  complete  right, 
subject,  however,  to  be  defeated  by  unreasonable  delay  in  taking 
actual  possession.^  The  usual  rules  as  to  evidence,  warranty,  and 
agency  apply  to  the  sale  of  ships  as  to  the  sale  of  personal  property 

2.  See    1    Pars.    78,   n.,   and    cases  3.  Molloy,  book  2,  c.  1,  §  G;  1  Pars, 

cited;    Abb.    Shipping,    5,    6;    Bouv.      Shipping,  82. 

Diet.    "Ships."        So,    too,    under    a  4.  Voazio  v.  Romerby,  5  Allen,  280; 

mortgage,  necessary  articles  subsc-  1  Pars.  Shipping,  82  et  seq.;  Bright, 
quently  substituted.    25  Q.  B.  D.  328.  5.  lb. 

Fed.  Dig.  780;  Abb.  Shipping,  28. 

459 


§  311  THE  LAW  OF  PEKSONAL,  PROPERTY.      [PART  III. 

generally;  but  as  the  mutual  stipulations  appear  in  a  written 
instrument,  there  is  comparatively  little  latitude  for  discussion 
as  to  what  might  have  been  said  or  intended  when  the  parties  made 
their  bargain.^ 

There  is  an  implied  warranty  that  the  ship  shall  be  fit  for  the 
purpose  for  which  it  was  built/  And  the  much  criticised  doctrine 
of  caveat  emptor  likewise  prevails,  subject  to  the  usual  qualifica- 
tion that  the  seller  shall  not  actively  deceive  the  purchaser  as  to 
defects  in  the  property.^ 

§  310.  Concerning  the  Persons  Employed  in  and  about  a  Ship. 
Second,  concerning  the  persons  employed  in  and  about  a  ship. 
These  are,  chiefly  (leaving  out  of  view  the  ship's  husband  or  man- 
aging owner,  of  whom  we  have  spoken  elsewhere  ^ ) ,  the  master  of 
the  ship  and  the  seamen. 

§  311.     The  Same  Subject;    Master's  Rights  and  Duties. 

The  master  (sometimes  known  as  the  captain  or  the  ship's  hus- 
band) is  the  person  entrusted  with  the  care  and  management  of 
the  ship  on  its  usual  employment.  His  position  is  one  of  peculiar 
responsibility;  and  great  care  is  necessary  in  selecting  a  man 
honest  and  competent  for  encountering  the  perils  of  the  deep  and 
conducting  the  ship  and  cargo  safely  to  port ;  besides  super^dsing 
the  loading  and  unloading  of  the  goods.  The  ancient  sea-laws  and 
ordinances  seem  to  show  that  the  master  was  almost  invariably  a 
part-owner  in  those  days ;  but  the  rule  is  now  otherwise,  the 
master  having  ordinarily  no  property  in  the  ship.  And  while  in 
some  countries  a  previous  examination  is  required,  in  order  to  test 
his  nautical  skill,  the  master  of  a  merchant  vessel  in  England  and 
the  United  States  may  be  selected  by  the  owners  at  their  discre- 
tion.^    The  rights  and  duties  of  the  master  on  ordinary  occasions 

6.  See  1  Pars.  Shipping,  86-89;  154;  Taylor  v.  Bullen,  5  Ex.  779; 
Bright.  Fed.  Dig.  780.  Dyer  v.  Lewis,  7  Mass.  284.    Se    Vol. 

7.  See   Shepherd  v.   Pybus,   3   Man.  II.,  a&  to  Sales. 
t,    G.    868;    Cunningham    v.    Hall,    4  9.  §  214. 

Allen,  268.  1.  Abb.  Shipping,  118,  119;  2  Pars. 

8.  Baglehole  v.  Walters,  3  Campb.      Shipping,  3  et  seq.     See  §  214,  supra. 

460 


CHAP.  I.]  SHIPS    AND    V^ESSELS.  §    311 

are  regulated  for  the  most  part  by  custom.  As  between  himself 
and  the  owners  he  is  bound  to  exercise  such  skill  and  diligence  as 
the  duties  of  his  position  demand.  As  to  all  with  whom  he  deals, 
reasonable  care,  prudence,  and  fidelity  are  expected  of  him ;  and 
he  may  be  sued  if  mischief  results  from  the  want  of  them,  whether 
the  error  be  that  of  the  head  or  the  heart  only.^  Usage  gives  him 
a  certain  percentage  on  the  freight,  over  and  above  his  wages, 
which  is  knovm  as  primage,  and  some  privilege  in  carrying  goods 
for  himself  or  others.^  His  wages  are  due  him  even  though  the 
ship  be  captured  or  wrecked. 

As  to  his  powers,  they  are  those  of  an  agent  with  a  scope  ade- 
quate for  the  purpose  of  his  momentous  employment;  and  when 
abroad,  without  ready  opportunity  of  consulting  the  owners,  his 
authority  to  act  on  their  behalf  in  the  exercise  of  discretion  be- 
comes greatly  enlarged.  It  is  said  that  the  master  is  "  the  confi- 
dential servant  or  agent "  of  the  owners  at  large.''  He  is  not 
ordinarily  presumed  to  have  a  right  in  the  home  port  to  make  a 
charter-party,  nor  to  order  repairs,  nor  to  raise  money  on  bot- 
tomry ;  but  all  these  things  he  may  do  abroad :  for  the  rule  is 
that  he  may  bind  by  lawful  contracts  which  relate  to  the  usual 
employment  of  the  ship  and  are  within  the  reasonable  scope  of  his 
ordinary  powers.^  By  the  general  rule  of  the  maritime  law  he 
may  hire  the  seamen,  and  the  contract  he  makes  with  them  will 
¥ind  the  owners.^     The  master  is,  in  most  cases  where  he  makes 

2.  Bright.  Fed.  Dig.  "Shipping,"  Shipping,  8-10;  Abb.  Shipping.  126, 
786:  Piirviance  v.  Angus,  1  Dull.  184.       127. 

See  Perkins'  n.,  correcting  Abb.  Ship-  6.  2    Pars.    Shipping,    11.      Ciistor* 

fing,  119.     Evidence  as  to  duties  of  may,  if  general  and  well  known,  au- 

officers  of  vessels,   see   Chamberlayne  thorize  the  master  to  insure  a  vessel 

Ivid.,  §  2300.  for  the  benefit  of  the  owners  without 

3.  2  Pars.  Shipping,  4,  5;  Pawson  their  express  direction.  Adams  v. 
y.  Donnell,  1  Gill  &  J.  1;  Scott  v.  Pittsburgh  Ins.  Co..  95  Penn.  St.  348. 
Miller,  5  Scott,  13,  1.5;   §  214,  supra,  But  as  to  a   master's   implied    power 

4.  See  Abb.  Shipping,  124.  to  bind  the  OA\Tiers  by  a  penal  bond. 

5.  Provost  V.  Patchin,  5  Seld.  235;  see  Mitchell  v.  Chambers,  43  Mich. 
Jordan  v.  Young,  37  Me.  276;  The  150;  Gager  v.  Babcock,  48  N.  Y.  154. 
Tribune,    3     Sumner,    144;    2    Pars.  A  master's   contract  for  fittiug  out, 

461 


§  311         THE  LAW  OF  PERSONAL  PROPERTY.      [pART  III. 

a  contract  for  his  ship,  largely  responsible.  And  if  goods  on  board 
are  injured  bj  his  unskilfulness  or  misconduct,  or  if  they  are 
stolen  or  lost  so  as  to  make  the  owners  responsible,  the  master  would 
generally  be  responsible  likewise.  The  owners  are  not  only  liable 
to  third  persons  for  the  contract  of  the  master,  but  also  for  his 
wrongful  acts  when  done  within  the  scope  of  his  employment. 
But  for  his  wilful  and  malicious  acts  beyond  such  a  scope  they  are 
not  liable;  as  where  he  wantonly  runs  another  vessel  down,  or 
without  the  knowledge  and  authority  of  the  owners  turns  pirate ; 
though  the  limit  to  the  owners'  liability  is  not  easily  defined,  espe- 
cially where  they  have  incurred  the  risks  and  responsibilities  of 
common  carriers.^  Where  the  owners  are  obliged  to  pay  damages 
for  the  master's  wrong-doings,  they  may  sue  him  in  their  turn; 
and  he  is  responsible  to  them  if  he  violates  to  their  injury  any 
material  instructions  under  which  he  sailed.^ 

The  relation  of  the  master  to  the  cargo  is  somewhat  different 
from  that  which  he  bears  to  the  ship;  and  this  relation  changes 
during  the  period  which  elapses  from  the  date  of  lading  to  that  of 
unlading.  He  is  generally  bound  to  receive  the  cargo  and  stow 
it  properly.  But  while  on  the  voyage  he  is  regarded  in  respect 
to  the  cargo  as  master  of  the  ship  only.  When  at  length  the  goods 
have  reached  their  destination,  he  drops  the  character  of  master, 
and  deals  with  the  cargo,  in  unlading  it,  as  a  supercargo  or  con- 
signee. Sometimes,  however,  the  functions  of  master  and  super- 
cargo or  consignee  are  combined  at  one  and  the  same  time.^ 

victualling,  and  repairing,  and  which  See    as    to    "  common    carriage "    lia- 

binds  him  personally,  binds  the  owner  bility,    Schoul.    Bailm.,    §§    476,    573. 

also,  unless  it  is  clearly  shown  that  For  exemption  of  owners  from  liabil- 

credit  was  given   to  one  exclusive  of  ity  to  a  seaman  for  the  master's  acts 

the   other.     Williams  v.   Windley,   86  on   the  ground  of   "  common   employ- 

N.   C.    107.     And   see   supra,   §§    206,  ment,"   see   Hedley   v.    Steamship    Co. 

214.  (1894),  App.   C.   222. 

7.  Abb.  Shipping,  131,  Perkins'  n. ;  8.  lb.;    Brown   v.    Smith,    12   Cush. 

Purviance    v.    Angus,    1    Dall.     180;  366. 

Bright.   Fed.   Dig.   785,   786;    2   Pars.  9.  2    Pars.    Shipping,    20-22;    Cook 

Shipping,    26-31;    The    Druid.    1    W.  Com.  Ins.  Co.,  11  Johns.  40;  Day  v. 

Rob.  391.     Owners  of  a  privateer  are  Noble,  2  Pick.  615.     See  Mephams  v. 

held  liable  for  the  torts  of  the  master.  Biessel,  9  Wall.  370. 

462 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    312 

§  312.     The  Same  Subject;    Master's  Powers  in  an  Emergency. 

But  the  master  of  a  ship  has  an  enhirged  authority  in  cases  of 
emergency,  which  is  usually  denominated  his  ^'  power  from  neces- 
sity." This  it  is  that  justifies  him  in  ordering  repairs  and  sup- 
plies in  a  foreign  port,  borrowing  money  on  the  security  of  the 
ship,  or  even  selling  the  ship  as  a  last  resort;  by  any  or  all  of 
which  acts  the  owners  become  bound  as  much  as  though  the  trans- 
action were  their  own  in  person.  But  the  necessity  must  be  real 
and  positive,  in  order  that  the  master  may  assume  such  vast 
authority  over  property  belonging  to  his  employers ;  and  the  neces- 
sity which  justified  him  in  ordering  a  sale  must  be  far  more 
stringent  than  that  which  authorizes  the  borrowing  on  the  ship's 
security;  while  that  which  authorizes  the  borrowing  is  usually 
considered  more  urgent  than  that  which  makes  the  owners  respon- 
sible for  repairs.^  "  Whatever  is  fit  and  proper  for  the  service  on 
which  a  vessel  is  engaged,"  said  Chief  Justice  Abbott,  "  whatever 
the  owner  of  that  vessel,  as  a  prudent  man,  would  have  ordered,  if 
present  at  the  time,  comes  within  the  meaning  of  the  term  '  neces- 
sary,' as  applied  to  those  repairs  done  or  things  provided  for  the 
ship  by  order  of  the  master,  for  which  the  owners  are  liable."  ^ 

Hence,  to  enforce  a  lien  for  repairs  and  supplies,  whether 
express  or  implied,  the  rule  is  well  established  in  this  country  that 
the  creditor  must  prove  that  the  repairs  or  supplies  were  necessary, 
or  believed,  upon  due  inquiry  and  credible  representation,  to  be 
necessary  in  the  particular  foreign  port.  And  it  is  further  ruled 
that  where  proof  is  made  of  necessity  for  the  repairs  or  supplies, 
or  for  funds  raised  to  pay  for  them  by  the  master,  and  of  credit 
given  to  the  ship,  a  presumption  will  arise,  conclusive,  in  the 
absence  of  evidence  to  the  contrary,  of  necessity  for  credit.  The 
ordering  by  the  master  of  supplies  or  repairs  upon  the  ship's 
credit  is  sufficient  proof  of  such  necessity  to  support  an  implied 
hypothecation  in  favor  of  the  material-man,  or  of  the  ordinary 
lender  of  money,  acting  in  good  faith,  to  meet  the  wants  of  the 

1.  Abb.  Shipping,  150,  160;  2  Pars.  2.  Webster  v.  Seekamp,  4  B.  &  Aid. 

Shipping,   13-18.  352. 

463 


§  313         THE  LAW  OF  PERSONAL  PROPERTY.      [pART  UI. 

ship.  And  to  support  hypothecation  by  bottomry,  evidence  of 
actual  necessity  for  repairs  and  supplies  is  required;  and,  if  th« 
fact  of  necessity  be  left  unproved,  evidence  is  also  required  of  due 
inquiry,  and  of  reasonable  grounds  of  belief  that  the  necessity  was 
real  and  exigent.^  Such,  in  substance,  is  the  exposition  of  the  law 
by  the  Supreme  Court  of  the  United  States,  which  is  rather  more 
liberal  to  the  lender  of  money  upon  credit  than  formerly."^  While, 
however,  in  this  country,  the  master  may  borrow  money  not  only 
for  the  purpose  of  buying  necessaries  for  the  ship,  but  to  pay  for 
necessaries  already  furnished,  the  English  cases  seem  to  discounte- 
nance borrowing  after  the  work  is  done  to  pay  the  debts  incurred.^ 

§  313.     The  Same  Subject. 

Even  over  the  cargo  the  master  acquires  extraordinary  power 
under  extraordinary  circumstances.  Where  he  has  neither  money 
nor  credit,  and  cannot  communicate  with  his  owners,  he  may  sell 
part  of  his  cargo,  if  he  cannot  make  necessary  repairs  and  prose- 
cute his  voyage  except  by  so  doing.^  He  may  sell  the  whole  cargo, 
if  he  can  neither  take  it  on  nor  place  it  on  another  ship,  when  made 
up  of  perishable  goods  whose  value  would  be  greatly  diminished 
or  utterly  destroyed  before  instructions  could  be  obtained  from  the 
owner.''  Yet  whatever  he  does  with  the  cargo  for  the  purpose  of 
raising  funds  for  the  voyage  is  upon  the  supposition  that  other 
means  of  obtaining  necessary  supplies,  such  as  drawing  bills  on 
the  owners,  hypothecating  the  ship,  and  using  the  owners'  credit, 
have  been  exhausted.  And  we  need  hardly  add  that  the  case 
must  be  one  of  actual  and  urgent  necessity,  and  of  prudent  conduct 
under  the  stress  of  such  necessity.^     For  the  cargo,  unless,  indeed, 

3.  The  Grapeshot,  9  Wall.  129;  Ex.  886;  Robinson  v.  Lyall,  7  Price, 
The  Lulu,   10  Wall.    192;    modifying      592. 

Pratt   V.    Reed,    19    How.    359.  6.  The  Star  of  Hope,  9  Wall.  203; 

4.  lb.      See  also  Bliss  v.   Ropes,  9  2  Pers.  Shipping,  23. 
Allen,  341.  7.  2  Pars.  Shipping,  23 

5.  2  Pars.  Shippnig,  16;  Brightly  8.  Owners  held  not  hound  by  the 
Fed.  Dig.  786,  787;  The  Grapeshot,  acts  of  the  master  where  the  latter 
9  Wall.   129;   Belden  t.   Campbell,  6  made  expensive  repairs   most  impm- 

464 


CHAP.  I.] 


SHIPS  AND  VESSELS. 


§  313 


it  belongs  to  the  owners,  is  one  thing,  and  the  ship  quite  another, 
so  far  as  the  master's  authority  is  concerned.'^  Yet  he  has  duties 
connected  therewith,  even  where  no  great  exigency  has  arisen; 
for  he  should  stow  away  properly,  ventilate,  unpack  and  dry,  and 
otherwise  seek  to  preserve  goods  on  board  the  vessel  peculiarly 
subject  to  damage,  in  the  exercise  of  good  judgment;  though  he 
need  neither  repair,  nor  delay  his  voyage  for  the  sake  of  his  cargo.  ^ 
In  case  of  capture  the  master  should  do  all  in  his  power,  con- 
sistent with  honor  and  a  reasonable  diligence,  to  get  the  cargo 
restored.^  And  in  the  emergency  of  stranding  and  other  sea 
perils,  we  shall  see  presently  that  both  ship  and  cargo  contribute 
for  acts  of  the  master  done  for  the  common  benefit  of  the  property 
exposed  to  danger.  All  such  special  emergencies  extending  the 
scope  of  the  master's  powers  over  ship  or  cargo  presuppose  that  he 
is  not  within  communicating  distance  as  to  owners,  and  must  act 
upon  his  own  responsibility.^ 


dently.       Stirling    v.    Phosphate    Co., 
35  Md.   128. 

The  master  cannot  be  required  by 
a  charterer  to  prejudice  the  interest 
of  the  owners  whom  he  represents. 
Hinckley  v.  Wilson  Co.,  205  Fed.  974 
(Me.  D.  C,  1913).  Vessel  liable  to 
penalties'  although  the  master  was  at 
fault.  The  Confidence,  201  Fed.  340, 
119  C.  C.  A.  578.  And  .see  The 
Bethulia,  200  Fed.  876  (Mass.  D.  C, 
1912),  (no  lien  for  wages  against 
owner)  ;  The  Loch  Rannoch,  192  Fed. 
219  (Me.  D.  C,  ig'll),  (duty  to 
sign  bill  of  lading)  ;  The  Jason,  225 
U.  S.  32,  32  S.  Ct.  560  (negligent 
stranding)  ;  Symons  v.  10,466  Barrels 
of  Cement,  195  Fed.  1017  (Wash.  D. 
C.  191),  (expense  in  emergency); 
Jenkins  S.  S.  Co.  v.  Preston,  186  Fed. 
609,  108  C.  C.  A.  473;  The  H.  A. 
Baxter,  173  Fed.  260  (Conn.  D.  C, 
lOiOg") ,  (repairs  abroad  needful) .     See 


also    sec.    214,   supra,   as    to    "  ship's 
husband." 

9.  The  Collenberg,  1  Black,  170: 
Chouteaux  v.  Leech,  18  Penn.  St.  224; 
Bird  V.  Cromwell,  1  Mo.  81. 

1.  The  Star  of  Hope,  9  Wall.  203. 

2.  Hannay  v.  Eve,  3  Cr.  242. 

3.  See  Gager  v.  Babcock,  48  N.  Y. 
154.  When  the  master  of  a  foreign 
vessel  has  authority  to  contract  upon 
the  credit  of  his  vessel  for  necessary 
repairs,  the  credit  of  the  vessel  is  pre- 
sumed to  be  an  element  in  any  con- 
tract he  may  make  for  such  repairs. 
The  Plymouth  Rock.  9  Ben.  79. 

As  to  acts  of  the  master  terminat- 
ing his  employment  as  such  at  the 
election  of  the  owners,  see  Budge  v. 
Mott,  47  Wis.  611. 

The  owners  of  a  vessel,  as  well  .i-* 
the  master,  are  liable  for  injuries 
caused  by  the  negligence  or  unskilful- 
ness  of  the  master,  provided  the  act 


30 


465 


§    315  THE    LAW    OF    PERSONAL    PROPEKTY.  [pAKT  IIL 

§  314.     The  Same  Subject;    Master,  When  Specially  Employed. 

Finally,  it  may  be  observed  of  the  master  that  he  may  have  been 
employed,  not  by  the  owners,  but  by  those  who  have  chartered  the 
vessel  for  a  particular  voyage,  in  which  case  he  may  bind  the 
charterers,  and  of  course  the  ship ;  but  probably  not  the  owners 
personally,  without  some  special  authority.'*  Owners  may  other- 
wise confer  a  special  agency.^  And  sometimes  a  master  is  ap- 
pointed abroad  by  a  consul,  or  any  official  person,  agreeably  to  the 
usage  of  merchants,  and  usually  in  an  extreme  emergency,  in  which 
case  he  exercises  the  powers  of  an  ordinary  master  under  like 
circumstances.^ 

§  315.     Rights  and  Duties  of  Seamen. 

Seamen,  under  the  master's  direction,  and  that  of  his  subordi- 
nate officers,  attend  to  the  details  of  navigation ;  and  their  services 
are  indispensable  to  the  proper  emplo_\Tnent  of  the  ship.  This 
class  of  persons,  whose  generosity  and  improvidence  are  proverbial 
the  world  over,  has  become  an  object  of  peculiar  solicitude  to  the 
courts;  and  there  are  numerous  statutes  enacted  in  England  and 
this  country,  which  aim  to  protect  humanely  those  who  navigate 
the  deep,  as  men  unable  to  protect  themselves.  Seamen  cannot  be 
shipped  for  a  voyage  unless  the  master  procures  fairly  their  signa- 

be  done  within  the  scope  of  his  au-  an  error  of  judgment  under  circum- 
thority  as  such.  Thompson  v.  Her-  stances  of  great  difficulty  and  danger, 
mann,  47  Wis.  602.  But  where  the  his  certificate  may  be  suspended,  un- 
master  uses  the  vessel  on  the  service  der  the  English  Shipping  Act  of  1854. 
of  a  third  party,  such  party  knowing  See  4S  L.  T.  ?f.  s.  28.  Owners  have 
that  the  employment  is  wholly  un-  a  right  to  dismiss  an  officer  who  pro- 
authorized,  the  owners  of  the  vessel  motes  insubordination ;  and  the  latter 
cannot  be  held  liable  for  damages  may  forfeit  his  right  to  subsequent 
sustained  by  such  third  party  dur-  wages.  29  W.  R.  508.  And  see  5 
ing    such    unauthorized    employment.  P.  D.  254. 

The  Steam  Tug  R.  F.  Cahill,  9  Ben.  4.  2  Pars.  Shipping,  18.  19. 

352.     A  master  cannot,  by  selling  out  5.  The     Steamboat     Metropolis,     9 

his  interest  as  an  owner,  confer  any  Ben.  83. 

right  to  command.     Williams  v.   Ire-  6.  lb.      See  the   Cynthia.   20   E.   L. 

land,  11  Phila.  273.     For  a  master's  &    Eq.    623;    The    Jacmel    Packet,    2 

wrongful  act  or  default,  through  not  for  Ben.  107. 

466 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    315 

tures  to  shipping  articles  which  must  declare  the  voyage  and 
length  of  time  for  which  each  shall  be  shipped,  and  be  in  all 
respects  reasonable  and  precise.^  Provisions  of  due  quality  and 
quantity  must  be  furnished ;  the  ship  must  be  seaworthy ;  and  by 
the  general  commercial  law,  seamen  who  become  sick,  wounded, 
or  maimed  in  the  discharge  of  duty  must  be  cared  for  and  sup- 
plied with  medicines ;  not  to  speak  of  statutes  which  require  ves- 
sels when  bound  on  distant  voyages  to  be  provided  with  a  suitable 
medicine  chest.^ 

There  are  various  ways  in  which  seamen  may  be  shipped,  so  far 
as  concerns  their  compensation.  Sometimes  (though  rarely  in  this 
country)  they  are  employed  to  receive  a  certain  proportion  of  the 
freight  earned ;  sometimes  for  a  certain  voyage,  to  be  paid  a  round 
sum  at  the  close;  sometimes  on  shares,  as  in  the  case  of  whaling 
and  fishing  ventures ;  but  most  commonly  on  monthly  wages  for  a 
certain  voyage  or  during  a  definite  period.^  If  a  seaman  is  dis- 
missed without  cause  before  the  voyage  begins,  he  is  entitled  to 
wages  for  the  time  he  serves,  besides  a  reasonable  compensation  for 
special  damages.^  Where  the  voyage  is  broken  up  by  misfortune, 
or  the  seaman  becomes  disabled  by  sickness  not  caused  by  his  own 
fault,  the  wages  are  still  due.^     And  if  the  seaman  is  compelled  to 

7.  2  Pars.  Shipping,  34-47;  1  Stats.  aster  to  the  vesset.  renderin":  the  dis- 
at  Large,  131;  The  Juliana,  2  Dods.  charge  necessary;  and  to  send  home 
504;  Harden  v.  Gordon,  2  Mas.  541;  seamen  in  other  ships,  if  need  be. 
Bright.  Fed.  Dig.  "Seamen,"  755-757;  And  heavy  penalties  are  visited  upon 
Abb.  Shipping,  607.  See  Sweeney  v.  the  master  who  discharges  a  seaman 
Cloutman,  2  Cliff.  85.  in  a  foreign  port  against  his  consent, 

8.  2  Pars.  Shipping,  75,  78,  80;  1  and  without  good  cause,  while  the 
Stats,  at  Large.  131,  132,  134;  Bright.  seaman  may  recover  full  indemnity 
Fed.  Dig.  755,  757,  771 ;  Abb.  Ship-  for  loss  of  time,  and  expenses  besides, 
ping,   615.     Marine  hospitals  are   es-  2  Pars.  Shipping.  84-88. 

tablished  for  the  comfort  of  old  and  9.  Abb.     Shipping,     606;     2     Pars. 

disabled   sailors,  and  supported  by  a  Shipping,  47  et  seq. :  Taylor  v.  Laird, 

sort    of    levy    upon    those    who    earn  1  H.  &  N.  266;  Bright.  Fed.  Dig.  764, 

wages;    and    whenever    a    sailor    has  765. 

been  discharged  in  a  foreign  port,  it  1.  Parry   v.   The   Peggy,   2   Browne 

is   the  duty  of   the   American   consul  Civ.  and  Adm.  Law,  533. 

to  see  that  he  is   paid  three  months'  2.  Increased  danger  of  tlie  .service, 

extra  wages,  except  in  case  of  a  dis-  as  where  war  is  declared  by  the  em- 

4G7 


§  315         THE  LAW  OF  PERSONAL  PROPERTY.      [PART  lU. 

desert  by  the  cruelty  of  the  master  or  other  officers,  he  may  claim 
wages  in  full."'  Disobedience,  desertion  without  cause,  and  gen- 
eral misconduct  on  the  part  of  seamen,  are  severely  punishable,  in 
order  that  discipline  may  be  enforced  at  sea ;  yet  the  law  feels  the 
refining  influences  of  a  civilized  age ;  for  while,  in  extreme  cases, 
like  mutiny,  the  officer  in  command  of  a  ship  might  resort  to 
extreme  measures,  even  to  shooting  a  ringleader,  he  is  not  now 
permitted  by  our  statute  to  apply  deliberate  flogging,  as  formerly, 
by  way  of  punishment. 

Public  sentiment  sets  strongly  against  those  cruel  and  violent 
methods  of  discipline  which  petty  despots  at  sea  once  deemed  so 
essential  to  maintaining  their  own  dignity;  and  in  general  the 
only  remedies  available  to  enforce  discipline  and  good  behavior 
are  forfeiture  of  wages,  in  whole  or  in  part,  extra  labor,  irons,  and 
confinement  or  imprisonment."*  Even  in  the  matter  of  forfeiting 
wages,  the  courts  by  no  means  favor  the  master.  For  while  a 
justifiable  discharge  of  a  seaman  for  bad  conduct  will  work  a  for- 
feiture of  wages  previously  earned,  the  maritime  law  does  not 
allow  a  total  forfeiture  for  a  trivial  irregularity,  nor  for  a  single 
act  of  disobedience,  even  if  a  violation  of  the  shipping  articles.^ 
And  where  acts  of  insubordination  have  been  adequately  punished, 
a  subsequent  forfeiture  of  wages  will  not  be  allowed.^ 

ploying  government,  may  justify  the  and  absence  without  leave.     Habitual 

seaman     in    abandoning.       CNeil     v.  drunkenness  of  a  master  may  forfeit 

Armstrong  (1895),  2  Q.  B.  418.  his  right  to  wages.     The  Maeleod,   5 

3.  See  2  Pars.  Shipping,  52,  53,  and  P.  D.  254. 

cases  cited;  Bush  v.  Sehooner  Alonzo,  For    the    payment    of    their    wages 

2  Cliff.  548 ;  Barker  v.  Baltimore,  &c.,  seamen  may  sue  in  personam  at  com- 

R.,  23  Ohio  St.  45 ;  Bright.  Fed.  Dig.  mon  law  with  the  process  of  seques- 

772.    See  Act  June  7,  1872,  c.  322.  tration.     Leon  v.  Galceran,   11  Wall. 

4.  Bright.  Fed.  Dig.  "Admiralty,"  185.  And  they  have  also  a  lien, 
26;  2  Pars.  Shipping,  88-105;  Act  of  which  attaches  to  the  ship  and  the 
1850,  c.  80,  9  Stats,  at  Large,  515.  freight,  and  all  the  proceeds  thereof, 

5.  See  Bright.  Fed.  Dig.  Suppl.  167,  and  follows  them  into  whose  hands 
"Seamen."  soever  they  may  go;  and  this  lien  is 

6.  lb.  See  English  Stat.  43  &  44  not  avoided  by  a  sale  of  the  ship; 
Vict.,  c.  16  (1880),  as  to  payment  of  nor  can  it  be  subordinated  to  claims 
wages,    seamen's   lodgings,   desertion,  under   a  bottomry  or  hypothecation, 

468 


CHAP.  I.] 


SHIPS    AXD    VESSELS. 


§  316 


§  316.     Rights  and  Duties  of  Pilots. 

Pilots  have  important  duties  in  connection  with  the  steering  of 
the  ship  through  dangerons  places ;  and  while  on  board  they  have 
a  control  and  responsibility  second  only  to  that  of  the  master,  and 
in  some  respects  even  greater.  The  word  "  pilot "  had  formerly 
two  meanings :  one  was  the  pilot  for  the  whole  voyage,  or  the  sea 
pilot,  the  other  was  the  pilot  who  carried  the  ship  through  the 
harbor  to  which  he  belonged.  In  the  latter  sense  the  word  is  now 
generally  used  with  us,  and  numerous  statutes  have  been  enacted 
in  the  several  States,  regulating  the  whole  subject  of  a  pilot's 
employment.'^ 


thoujrb  perhaps  it  is  postponed  to  a 
collision  lien ;  nor  does  the  mere  loss 
of  possession  affect  this  privileged 
lien  of  seamen,  so  long  as  there  is  not 
delay  amounting  to  a  waiver  or  negli- 
gence. Brown  v.  Lull,  2  Sumner, 
443;  Sheppard  v.  Taylor,  5  Pet.  675; 
2  Pars.  Shipping,  59-62;  Bright.  Fed. 
Dig.  767:  The  Great  Eastern,  L.  E. 
1  Ad.  &  Ecc.  384.  See  alSo,  as  to 
action  at  common  law,  Wilson  v. 
Borstel,  73  Me.  273.  Expenses  in- 
curred for  seamen's  wages  and  sub- 
sistence are  items  of  charge  proper 
to  be  included  in  the  adjustment  of 
general  average.  Barker  v.  Baltimore, 
&c.,  R.,  22  Ohio  St.  45.  Seamen  held 
entitled  to  priority  of  payment  out  of 
proceeds  of  the  sale  of  the  ship  in 
court,  over  material-men  who  fur- 
nished supplies  to  the  vessel  during 
their  employment.  The  Mary  A. 
Rich,  9  Ben.  187.  And  see  The  Coun- 
tess of  Dufferin,  10  Ben.  155;  The 
Uncle  Tom,  10  Ben.  234 ;  Gallagher  v. 
Murray.  10  Ben.  290;  The  Bark 
Whiton,  10  Ben.  369;  The  Bark 
Vigus,  10  Ben.  385.  In  the  absence 
of  any  evidence  as  to  the  law  of  the 
place  where  the  contract  of  shipment 


is  made  and  is  to  be  substantially 
performed,  the  law  maritime  will  be 
presumed  to  control  the  contract. 
The  Countess  of  Dufferin,  10  Ben.  155. 

Under  the  English  Merchant  Ship- 
ping Act  (1854)  and  subsequent  acts 
a  seaman  is  no  longer  liable  to  im- 
prisonment for  neglecting  to  join  his 
ship,  but  other  remedies  are  substi- 
tuted. See  Great  Northern  Steam- 
ship Co.,  11  Q.  B.  D.  225. 

7.  Bright.  Fed.  Dig.  "Navigation," 
588;  Abb.  Shipping,  195  et  seq.;  2 
Pars.  Shipping,  106-119',  and  cases 
cited.  See  Steamship  Co.  v.  Joliffe, 
3  Wall.  450;  The  Tx'vi,  L.  R.  2  Ad. 
&  Ecc.  102;  Ex  parte  McNiel.  13 
Wall.  236;  15  Fed.  Rep.  495;  Cook 
v.  Curtis,  58  N.  H.  507.  Pilotage  is 
made  compulsory  by  shipping  acts, 
under  various  prudential  circum- 
fetanoes.  See  The  Vesta,  7  P.  D.  240; 
(1895)  1  Q.  B.  566.  The  owner  of  a 
ship  is  not  necessarily  exempt  from 
liability  for  damages  occurring  while 
a  pilot  is  on  Iward ;  though  much  de- 
pends upon  the  statute  responsibility 
conferred  on  a  pilot  while  employed 
necessarily.  The  Guy  Mannering.  7 
P.  D.  132 ;  The  Clan  Gorden,  7  P.  D. 


469 


§  319         THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

§  317.     Rights,  etc.,  of  "  Material-men." 

One  often  hears  of  "  material-men,"  and  their  liens  as  concerns 
a  ship.  The  name  '^  material-men  "  commonly  applies  to  those 
who  are  employed  to  build,  repair,  or  equip  a  ship,  and  who  in 
general  furnish  work  or  necessary  supplies  for  the  vessel.  These 
persons  have  not  only  a  common-law  lien  for  their  work  and 
material  and  supplies,  but  more  ample  liens  conferred  and  enforced 
by  local  statutes.^ 

§  318.     Methods    of    Employing    a    Ship;      General    Ship    and 
Charter-Party. 

Third,  as  to  the  manner  of  the  ship's  employment.  There  are 
two  ways  in  which  a  merchant  ship  may  be  employed  for  the  pur- 
pose of  venture  and  profit.  One  is  by  the  owners  themselves,  who 
send  the  ship  on  some  particular  voyage,  and  agree  with  various 
parties  to  transport  their  merchandise  to  the  place  of  destination;, 
the  ship  thus  employed  being  often  styled  a  general  ship.  The 
other  way  is  for  an  entire  ship,  or  at  least  the  main  portion  of  it, 
to  be  let  for  a  determined  voyage  to  parties  desiring  it  by  a  written 
instrument  familiarly  known  as  a  charter-party.^  The  case  is 
analogous  to  that  of  a  m.an  owning  a  warehouse,  who  may  either 
occupy  it  for  himself  and  sub-let  as  he  pleases,  or  may  lease  the 
whole  building  to  others  at  a  specified  rate  of  compensation  and 
permit  them  to  sub-let  at  their  own  risk  and  advantage. 

§319.     The  Same  Subject;    General  Ship;    Contract  of  Freight. 

Where  the  owners  use  their  own  ship,  they  may,  to  be  sure, 
carry  their  own  merchandise  exclusively;  but  in  general  they 
take  that  of  others  besides  at  a  sum  agreed  upon,  which  sum  is 
usually  known  as  "  freight ;  "   this  word  being  also  applied,  more 

190.     For  learned  discussion  of  pilot-  799';    The    General    Smith.    4    \M]eat. 

aare    laws,    see    Anderson    v.    Pacific  438 ;    Abb.    Shipping,    142 ;    The   Nep- 

Coast   S.   S.    Co.,   225   U.    S.    187,   32  tune,  3  Hagg.  Adm.   129. 

Sup.  Ct.  626,  56  L.  ed.  1047.  9.  Abb.     Shipping,     123 ;     1     Pars. 

8.  3   Pars.    Shipping.    141-145,    and  Shipping,  170,  171. 
cases   cited;    Bright.    Fed.    Dig.    797- 

470 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    319 

loosely,  to  the  goods  themselves  which  are  taken  for  hire.^  The 
contract  for  carriage  of  goods  on  freight  is  usually  considered  as 
made  by  or  on  behalf  of  the  owners.  The  ship-owTiers  undertake 
and  promise  to  carry  safely  in  their  ship  the  goods  of  the  shipper 
to  the  destined  port,  in  the  usual  way,  without  unnecessary  delay 
or  deviation ;  and,  on  the  other  hand,  the  shipper  is  bound,  if  the 
goods  are  so  carried,  to  pa}--  to  the  owners  of  the  ship  the  freight 
earned  by  the  carriage.  The  ship  and  the  cargo  have  correspond- 
ing rights  and  also  corresponding  liens  for  the  enforcement  of 
those  rights.^  If  the  goods  are  once  laden  on  board,  the  right  of 
the  ship-owners  to  carry  them  the  whole  distance,  and  to  claim  full 
freight,  is  complete,  unless  they  choose  to  permit  the  shipper  to 
take  the  goods  out  again.  But  if  the  ship-owners  fail  to  act  up  to 
their  own  stipulations;  if  the  ship  is  unseaworthy,  or  badly 
manned ;  or  if  it  be  unnecessarily  delayed  in  completing  the  voy- 
age, the  ship  becomes  subjected  to  the  shipper's  lien  for  indemnity 
against  the  loss  or  diminution  in  value  of  his  goods,  and  the  owners 
are  responsible  for  the  consequences.^  In  its  nature  the  contract 
for  the  conveyance  of  merchandise  for  a  round  sum  is  an  entire 
contract;  and  unless  it  be  completely  performed  by  the  delivery 
of  all  the  goods  at  the  place  of  destination,  the  owners  will,  in 
general,  derive  no  benefit  from  the  time  and  labor  expended  on  a 
partial  performance ;  while  if  the  owner  of  the  cargo  be  the  cause 
of  its  not  being  transported  to  the  port  of  destination,  full  freight 
may  be  recovered."*  The  contract  for  freight  is  not  only,  generally 
speaking,  an  entire  contract,  in  that  no  freight  is  payable  unless 
the  whole  voyage  is  performed,  but  also  as  to  the  quantity  of  the 
goods,  no  freight  being  payable  unless  all  are  delivered.^ 

1.  Bright.    Fed.    Dig.    791,    79'2 ;     1  3.  Bright.    Fed.    Dig.    791.    795;     1 
Par.s.   Shipping,   171;    Abb.    Shipping,      Pars.  Shipping,  17.5-180. 

319,  405;  Robinson  v.  Manufacturers'  4.  Caze  v.  Baltimore  Insurance  Co., 

Ins.  Co.,  1  Met.  143.  7  Cr.  358;  Hart  v.  Shaw,  1  Cliff.  358; 

2.  lb.;   Flint  v.   Flemyling,  1   B.  &  The    Nathaniel     Hooper,    3     Sumner, 
Ad.  45;   The  Seh.  Sarah,  2  Sprague,  542. 

31.  5.  lb.     See   1    Pars.   Shipping.   204- 

210;  Schouler  Bailments,  §  529. 

471 


§    320  THE    LAW    OF    PERSONAL    PEOPERTY.  [PAET  IIL 

Sometimes  the  freight  money  is  paid  in  advance,  in  whole  or 
in  part ;  in  which  case,  if  the  goods -are  not  delivered  or  the  voyage 
not  performed,  questions  somewhat  perplexing  may  arise,  which, 
however,  are  rather  of  fact  than  of  law.^  The  voyage  never  hav- 
ing been  begun,  no  freight  money  can  be  claimed  by  the  owners; 
but,  since  acts  of  God  or  a  public  enemy,  and  the  risks  of  sea 
perils  generally,  are  not  ordinarily  assumed  by  those  who  carry 
merchandise  in  ships,  any  interruption  which  occurs  after  the 
voyage  is  begun,  whatever  be  the  delay  it  causes,  if  it  occur  from 
a  peril  of  the  seas  and  without  the  master's  fault,  as  by  capture 
and  recapture,  embargo,  and  the  like,  will  not  prevent  the  owners 
from  claiming  the  whole  freight,  provided  the  vessel  finally  arrives 
without  avoidable  delay,  bringing  the  cargo  to  the  port  of  final 
destination/ 

§  320.     The  Same  Subject. 

The  contract  of  freight,  like  any  other  contract,  may  contain 
special  stipulations,  to  which  owners  and  shippers  must  conform ; 
and  illegal  contracts  of  this  nature  are,  of  course,  void;  as,  for 
smuggling  against  the  laws  of  the  country  to  which  the  ship  be- 
longs, or  sailing  under  the  license  of  an  enemy.^  So  the  shipper 
may  accept  his  goods  at  an  intermediate  port,  and  thus  make  him- 
self liable  for  freight  pro  rata,  at  least,  and  even  for  the  entire 
freight  if  the  carrier  was  disposed  to  complete  the  transit.^     And 

6.  Manfield  V.  Maitland,  4  B.  &  Aid.  Taylor,  4  Ell.  &  B.  219:  Curling  v. 
582;  1  Pars.  Shipping,  211.  The  Long,  1  B.  &  P.  634;  1  Pars.  Ship- 
English  rule,  which  is  admitted  to  be  ping,  220;  M'Bride  v.  Mar.  Ins.  Co., 
harsh,  and  unlike  that  of  other  eoun-  5  Johns.  299. 

tries,  is  that  payments  made   in   ad-  8.  See  Wilson  x.  London,  &c.,  Navi- 

vance  on  account  of  freight  cannot  be  gation    Co.,   L.   R.    1    C.    P.    61 ;    The 

recovered,   though  the  vessel  be  lost.  Aurora,  8  Cr.  203:   1  Pars.  Shipping, 

Byrne   v.   Schiller,   L.   R.   6   Ex.    319.  213,  214. 

As    to   enforcing   a    contract   for   ad-  9.  Caze  v.  Baltimore  Insurance  Co., 

vance   freight  after   the  ship   is   lost,  7    Cr.    358;    Bright.    Fed.    Dig.    792; 

see  Smith,  Hill  &  Co.  v.  Pyman.  Bell  Cook  v.  Jennings,  7  T.  R.  381 ;  1  Pars. 

&  Co.    (1891),  1  Q.  B.  742.  Shipping,  239-244. 

7.  Bright.  Fed.  Dig.  792 ;  Tindal  v. 

472 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    320 

in  order  that  the  ship-owners  may  earn  and  receive  their  freight, 
the  law  permits  the  master,  if  unavoidably  delayed  from  damage 
to  the  ship  or  other  like  cause,  to  send  his  cargo  forward  in  another 
vessel,  or  even  by  land  conveyance,  to  its  place  of  destination,  and 
then  claim  full  freight ;  and  there  are  circumstances  under  which 
it  would  be  clearly  his  duty  to  do  so,  for  the  benefit  both  of  the 
shipper  and  the  ship-owners.  He  may  in  an  exigency  charge  the 
excess  of  the  cost  of  transshipment  over  his  freight  to  the  owTier 
of  the  goods.  ^  But  under  ordinary  circumstances  ships  are 
treated  as  "  common  carriers,"  ^  the  carriage  of  goods  being,  how- 
ever, regulated  considerably  by  the  express  terms  of  the  bill  of 
lading;  and  the  merchandise  must  be  delivered  at  the  port  of 
destination  and  to  the  proper  parties,  without  unreasonable  delay 
or  damage  from  the  ship-owners'  fault.  There  can  be  no  right  to 
claim  freight,  ordinarily,  unless  delivery  is  made,  or  is  prevented 
from  being  made  by  the  act  or  fault  of  the  shipper,  or  of  the  per- 
son to  whom  the  goods  were  consigned.^  Usage  regulates  the  mode 
of  delivery,  which  should  be  reasonable  in  time,  place,  and  circum- 
stance; and  the  general  rule  is,  that  a  delivery  on  the  wharf  with 
notice  to  the  consignee  is  both  proper  and  sufficient.  The  wharf 
must  be  suitable  for  the  cargo ;  and  the  master's  duty,  as  to  goods 
which  are  unclaimed  or  which  the  consignee  chooses  to  accept,  is 
to  store  them  at  the  expense  and  for  the  benefit  of  all  interested.'* 

1.  Rosetto  V.  Gurney,  11  C.  B.  176;  v.  Manning,  3  Wils.  429;  Cope  v. 
Saltus  V.  Ocean  Ins.  Co.,  12  Johns.  Cordova,  1  Rawle,  203;  Gronstadt  v. 
107;  Hugg  V.  Augusta  Ins.  Co.,  7  Witthoff,  15  Fed.  Rep.  265;  Hod.iJtdon 
How.  595;  1  Pars.  Shipping,  231-238.  v.  Xew  York  R.,  46  Conn.  277.  In 
See  Thwing  v.  Washington  Ins.  Co.,  Sa^ouler  Bailments,  part  vi.,  this  sub- 
10  Gray,  443 ;  Lemont  v.  Lord,  52  Me.  ject  is  considered  at  length.  And  see 
365.  Ideal   Leather  Goods   Co.   v.   Eastern 

2.  See  Schoul.  Bailments,  part  vi.,  S.  S.  Co.,  220  Mass.  133,  107  K  E. 
at  length,  as  to  common  carriers.  525. 

3.  Bright.  Fed.  Dig.  791 ;  Clark  v.  For  provisions  in  bill  of  lading,  etc., 
Barnwell,  12  How.  272;  Gibson  v.  limiting  liability,  see  Lines  v.  Atlan- 
Sturge,  10  Ex.  622;  1  Pars.  Shipping,  tic  Transport  Co.,  223  Fed.  624.  139 
220,  245.  C.  C.  A.  170  (a  void  provision)  ;  Fur- 

4.  Brittan  v.  Barnaby,  21  How.  527;  ness  v.  Randall,  124  Md.  101,  91  Atl. 
2    Pars.    Shipping,    222-229;    Golden  797    ("perils   by   the   sea"   excuse); 

473 


§321  THE    LAW    OF    PERSONAL    PEOPEKTY.  [PAET  IIL 

§  321.     General  Ship;    the  Subject  Continued;    Bills  of  Lading. 

The  mutual  intent  of  parties  concerned  in  the  carriage  of  goods 
for  freight  is  expressed  by  that  document  of  general  use  among 
commercial  nations  from  earlj  times,  which  is  known  as  a  bill  of 
lading.^  The  bill  of  lading  is  generally  signed  by  the  master,  but 
is  sometimes  signed  and  delivered  in  the  counting-room  of  the  ship- 
owners by  their  clerk.  This  document  is  in  substance  a  written 
acknowledgment  by  the  master  that  he  has  received  the  goods 
therein  described  for  the  voyage  stated,  to  be  carried  on  the  terms 
stated,  and  delivered  to  the  persons  specified  in  the  bill.  The  bill 
of  lading  is  a  very  important  instrument,  being  a  receipt  for  the 
goods  as  well  as  a  contract  which  expresses  in  writing  the  terms 
of  transportation  and  delivery ;  and  in  order  that  no  rights  be  lost 
to  either  the  shipper  or  the  owners  of  the  vessel,  it  should  never  be 
signed  and  delivered  until  the  cargo  is  fairly  loaded  on  the  vessel, 
and  it  should  never  be  expressed  in  doubtful  or  ambiguous  lan- 
guage.^ A  bill  of  lading  is  prima  facie  evidence  as  between  the 
parties  that  the  goods  were,  at  the  time  of  their  receipt  by  the 
master,  in  the  condition  in  which  they  are  described  as  being; 
and  so  fartas  it  is  a  contract,  parol  evidence  cannot  be  allowed  to 
control  its  terms,  although  it  may  explain  an  ambiguity;  but  in 
the  character  of  a  receipt  it  is  so  far  open  to  explanation  between 
the  master  and  the  shipper  of  goods.'' 

The   Lockport,    197   Fed.    213    (N.   J.  ern    Coal    Co.,    195    Fed.    483     (Mass. 

D.     C.     1913)      (express    warranty);  C.  C.  19'12). 

The  Eugene  F.  Moran,   170  Fed.   929  5.  Wills  v.  Sears,  1  Bl.  108;   Shep- 

(N".  Y.  C.  C.  1909)    (deviation).  herd  v.  Harrison,  L.  R.  5  H.  L.  116; 

For  U.  S.  act  limiting  liability  on  Abb.      Shipping,     321-323;      1     Pars, 

various    conditions,    see   The   Titanic,  Shipping,  184  et  seq. 

233  U.  S.  718,  34  Sup.  Ct.  754,  58  L.  6.  See  The  Keokuk,  9  Wall.  517. 

ed.  171;  Baltimore  Ry.  Co.  v.  Hudg-  7.  Bradley  v.  Duniface,  1   H.  &  C. 

ins,  116  Va.  27,  81  S.  E.  48   ("Harter  521;   Sears  v.  Wingate,  3  Allen,  103; 

act")  ;    United    States    v.    Hamburg-  May  v.  Babcock,  4  Ohio,  334;  1  Pars. 

Amerikan   Co.,    212    Fed.    40     (N.    Y.  Shipping,  188,  191;   Nelson  v.  Wood- 

C.   C.   1914)  ;   The  Florida,   212   Fed.  ruff,    1     Bl.     153.       Whether    accept- 

334    (N.   Y.   D.   C.    1910)  ;    The   Sun-  ance  of  goods  under  a  bill  of  lading 

beam,    195    Fed.    468     (N.    Y.    C.    C.  implies  a  promise  to  pay  freight,  see 

1912)  ;  Baltimore  Barge  Co.  v.  East-  Elwell  v.  Skiddy,  77  N.  Y.  282. 

474 


CHAP.  I.]  SHIPS  AND  VESSELS.  §  321 

The  bill  of  lading  may  contain,  besides  the  usual  contract  to 
transport  the  goods,  special  stipulations  regarding  the  discharge 
of  the  goods,  and  in  general  as  to  the  disposal  of  them  or  their 
proceeds;  and  such  stipulations,  if  sufficiently  intelligible  to  indi- 
cate an  agreement  that  the  law-merchant  is  not  to  prevail  in  the 
respects  specified,  and  if  transcending  no  rule  of  public  policy,  will 
control  the  rights  and  liabilities  of  the  parties  accordingly.  A  bill 
of  lading  usually  excepts,  in  so  many  words  on  behalf  of  the  ship's 
owners,  losses  arising  from  the  act  of  God,  or  of  public  enemies, 
and  the  perils  or  dangers  of  the  seas ;  and  other  clauses  are  found 
inserted,  such  as  "  loss  by  breakage  or  leakage  excepted ;  "  all  of 
which  call  for  judicial  construction  in  a  variety  of  instances.^ 

The  party  who  ships  the  goods  is  called  the  consignor,  and  the 
person  to  wtom  the  goods  are  to  be  delivered  by  the  terms  of  the 
bill  is  the  consignee.  Sometimes  the  shipper  is  both  consignor  and 
consignee ;  that  is  to  say,  the  goods  are  deliverable  to  him  or  to  his 
assigns ;  and  it  may  be  that  the  intended  consignee  is  simply  the 
consignor's  own  agent.  If  no  person  is  named  as  consignee,  usage 
will  supply  the  name  of  the  consignor  and  give  to  the  bill  a  cor- 
responding effect.^  Bills  of  lading  were  formerly  signed  in  sets 
of  three ;  one  of  which  was  held  by  the  master,  one  retained  by 
the  consignor  of  the  goods,  and  the  third  sent,  either  with  or  apart 
from  the  goods,  to  the  consignee.  The  consignor  may,  if  he  choose, 
send  his  copy  of  the  bill  by  some  other  conveyance  to  the  con- 
signee ;  and  the  rule  is  that  the  consignee's  title  is  complete  if  the 
bill  contains  his  name  and  is  sent  to  him ;    the  goods  are  his  with 

8.  Grill  V.  Iron  Screw,  &c.,  Co.,  L.  tion   of  goods   through   alleged    perils 

R.   3  C.  P.  476 ;   Brittan  v.  Barnaby,  or  dangers  of  navigation ;    and  proxi- 

21  How.  527;   1  Pars.  Shipping,  203,  mate  or  remote  cause  of  a  disaster  is 

253-259;     Abb.    Shipping,    322.      For  carefully   considered   as   in    all    other 

distinction    between    "  act    of    God "  cases  of  carriage  or  bailment  gener- 

and    "perils    of    the    sea,"    see    Me-  ally.     lb.;  also  Bright.  Fed.  Dig.  10?, 

Arthur  v.  Sears,  21  Wend.  190,  198.  110;   Schoul.  Bailments,  part  vi. 

The    element    of    negligence    or    fault  9.  Chandler  v.  Sprague.  5  Met.  306; 

on  the  part  of  the  master  enters  very  1  Pars.  Shipping,  192.     See  Shepherd 

closely  into  the  determination  of  the  v.  Harrison,  L.  R.  5  H.  L,  116. 
ship's  responsibility  for  the  destruc- 

475 


§    r>21  THE    I.AW    OF    PERSONAL,    PROPERTY.  [pA.RT  III. 

•all  the  expense  and  risk,  subject  only  to  the  consignor's  right  to 
stop  the  goods  for  breach  of  the  conditions  of  sale  before  they 
actually  arrive  into  the  consignee's  possession.  If  the  consignor 
be  himself  consignee,  and  sends  the  bill  to  a  third  party  who  has 
ordered  the  goods  or  is  to  receive  them,  either  indorsed  to  him  or 
indorsed  in  blank,  the  effect  is  the  same  as  if  such  person  were 
named  in  the  bill  as  consignee.^  But  if  the  consignor,  who  is  at 
the  same  time  consignee,  sends  the  bill  of  lading  without  an 
indorsement,  notice  that  the  goods  are  shipped  and  on  their  way 
is  thereby  given  to  the  party  receiving  the  bill  while  the  latter 
acquires  no  rights;  and  this  has  been  frequently  done  by  mer- 
chants, the  consignor  sending  afterwards  a  bill  indorsed  to  his 
foreign  agent  or  to  the  party  ordering  the  goods,  or  in  blank,  with 
proper  directions  concerning  its  delivery  upon  payment  of  the  price 
and  full  performance  of  the  conditions  of  the  sale.^  For  here  we 
may  observe  that  the  obligation  of  the  master  to  deliver  the  goods 
according  to  the  bill  of  lading,  and  not  otherwise,  is  so  strong  as 
to  render  the  possession  of  the  bill  with  a  suitable  indorsement 
almost  conclusive  evidence  of  ownership  in  the  goods,  as  against 
the  ship-owners ;  for  which  reason  the  consignor,  who  ships  goods 
to  a  party  abroad  and  names  him  consignee,  is  likely  to  lose  his 
goods,  or  the  price  for  them,  if  the  consignee  indorses  the  bill  to 
a  third  person  for  value  while  they  are  on  the  way,  thereby  defeat- 
ing the  consignor's  right  of  stoppage  ^?^  transitu? 

1.  Walley  v.  Montgomery,  3  East,  Lords.  It  was  held  that  a  hona  fide 
585;  Chandler  v.  Sprague,  supra;  1  delivery  of  the  goods  upon  presenta- 
Pars.  Shipping,  195,  196.  tion  of  the  second  bill  of  lading  must 

2.  Abb.  Shipping,  529,  538 ;  1  Pars.  prevail,  notwithstanding  a  pledge  of 
Shipping,  196,  19'7.  the  goods  on  the  first  bill  of  lading. 

3.  lb.;  Brandt  v.  Bowlby,  2  B.  &  The  inference  must  be  that  the 
Ad.  932.  See  Lewis  v.  McKee,  L.  R.  2  pledgee,  under  one  bill  of  lading,  is 
Ex.  37 ;  Tlie  Freedom,  L.  R.  3  P.  C.  bound  to  exercise  some  care  to  pre- 
594.  vent  a  fraudulent  disposition   of  the 

The  danger  of  issuing  bills  of  lad-  duplicates;     and   the   old   practice   of 

ing  in  three  parts,  as  affecting  a  title,  issuing     triplicate     bills     of     lading 

is  shown  in  an  English  case   (1882),  should   be  discontinued.      Glyn   Mills 

decided  on  appeal  in  the  House  of  v.  East  India  Dock  Co.,  7  App.  Cas. 

476 


CHAP.  I.] 


SHIPS    AND    VESSELS. 


§  322 


§  322.     Transportation  of  Passengers  by  Water. 

Ships  are  often  used  to  carry  passengers  as  well  as  goods ;  and 
the  rule  as  to  a  passenger's  baggage  is  much  the  same,  so  far  as 
concerns  the  ship-owners'  liabilities,  as  in  the  case  of  merchandise. 
The  rights  and  responsibilities  of  passengers  who  travel  on  railways 
receive  constant  attention  in  the  courts ;  not  so  much,  however, 
those  who  are  transported  in  ships.  Yet  statutes  are  passed  from 
time  to  time  to  regulate  this  latter  subject;  and  an  act  of  Con- 
gress, passed  in  1871,  to  provide  for  better  security  of  life  on 
board  steam-vessels,  details  fully  what  precautions  should  be  used 
against  fire,  and  other  casualties,  and  makes  the  master  and  own- 
ers liable  to  passengers  for  damages,  where  explosion,  fire,  or 
collision  is  occasioned  through  negligence  on  the  part  of  the  ship's 
ofiicers.'*     The  difference  in  the  responsibilities  of  a  carrier  of 


591.  affirming  6  Q.  B.  D.  475;  cf. 
Barber  v.  Meyerstein,  L.  R.  4  H.  L. 
317.  Shipping  usage  may  differ  from 
that  of  inland  carriers,  as  to  bills  of 
lading. 

Sometimes  a  ship  is  transferred 
from  one  set  of  owners  to  another 
while  on  the  voyage  and  before  its 
return;  while  consignors  of  goods  go 
on  making  their  shipments  through 
the  master.  The  English  rule,  as  de- 
clared applicable  to  such  cases,  is 
that  the  master,  until  he  receives  no- 
tice of  the  change  of  ownership,  re- 
tains the  powers  which  were  conferred 
upon  him  by  the  original  owners,  so 
far  as  to  bind  the  new  owners  by  such 
contracts  for  the  carriage  of  goods  as 
he  may  enter  into  pursuant  to  his 
original  instructions.  And  accord- 
ingly a  privilege  allowed  to  some 
consignor  to  take  a  bill  of  lading 
"  free  of  freight,"  may,  under  such 
circumstances,  continue  beyond  the 
actual  change  of  the  owners  who  per- 
mitted the  master  to  give  such  bills. 


See  Mercantile,  &c..  Bank  v.  Glad- 
stone, L.  R.  3  Ex.  233. 

While  the  master  has  no  authority 
to  sign  bills  of  lading  for  a  greater 
quantity  of  goods  than  is  actually 
put  on  board,  yet  his  signature  to  the 
bills  is  sufficient  evidence  of  the  truth 
of  their  contents  to  throw  upon  the 
ship-owners  the  onus  of  falsifying 
them;  but  this  prima  facie  evidence 
against  the  ship-owners  may  be  re- 
butted, and  a  less  quantity  than  that 
specified  may  be  shown  by  them  to 
have  been  actually  received.  See 
McLean  v.  Fleming,  L.  R.  2  H.  L. 
Sc.  128;  Nelson  v.  WoodrufT,  1  Bl. 
156. 

As  to  bills  of  lading,  see  further, 
c.  8,  post;  also  vol.  ii.  in  connection 
with  sales,  and  Schoul.  Bailments, 
part  vi.,  as  to  common  carriers. 

4.  Act  Feb.  28,  1871,  440-459.  And 
see  1  Pars.  Shipping,  611-636;  Abb. 
Shipping,  211-227;  Act  March  2, 
1819,  c.  170. 


477 


§  323  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

passengers  for  hire,  whether  by  sea  or  land,  is  less  a  difference  of 
principle  than  of  the  state  of  facts  to  which  that  principle  applies.^ 

§  323.     Letting  of  Vessel  on  Charter-Party. 

But,  instead  of  using  their  ship  to  carry  goods  on  freight  or  for 
passengers,  the  owners  may,  and  frequently  do,  let  out  the  vessel 
to  others,  for  their  use.  This  is  commonly  done  by  a  charter- 
party,  an  instrument  well  known  to  merchants ;  being  a  sort  of 
maritime  indenture,  executed  formerly  under  seal,  but  at  the 
present  day  with  the  seal  usually  omitted.  The  usual  rules  apply 
to  the  construction  of  a  charter-party  and  its  stipulations  as  to 
contracts  in  general,  with,  however,  much  latitude.^  There  are 
two  leading  modes  of  chartering  a  vessel:  the  one,  where  the 
owner  lets  and  the  charterer  hires  the  whole  capacity  and  burden 
of  the  vessel,  except  so  much  as  may  be  necessary  for  accommodat- 
ing its  officers  and  crew,  and  for  storing  its  provisions,  and  for 
usual  equipments ;  the  other,  where  the  whole  vessel  is  surrendered 
to  the  charterer,  who  takes  the  ship  empty  and  provides  the  officers, 

5.  lb.;    Cuddy    v.    Horn,    46    Mich.  carrier  may  refuse  to  receive  an  ob- 

59&.  jectionable  passenger,  and  may  make 

The  captain  may  and  should  main-  other   reasonable   regulations   for   the 

tain    a    proper    police   of    his    vessel.  general     convenience    and    protection 

Johns  V.   Brinker,   30  La.   Ann.   241;  of   those   on   board,  yet  unreasonable 

Smallman    v.    Whilter,    87    111.    545.  regulations   cannot   be   enforced;    nor 

But  subject  and  conformably  to  this  may   the   carrier,   having   received   an 

doctrine,  passengers  are  to  be  secure  objectionable    person,    take    exception 

from    injury   through    the    negligence  to   his    character   or    to   his   peculiar 

or    mi&conduct    of   officers    and    crew.  position    unless    he    misbehave    him- 

88  111.  608.  self.     Pearson  v.  Duane,  4  Wall.  605. 

If    ship-owners    issue    a    ticket    ac-  See    also    Angell    and    other    general 

knowledging  the  receipt  of  money  for  writers    on     Carriers;     Schoul.    Bail- 

a  passage  in  a  particular  vessel,   an  ments,  part  vii. 

engagement  is  imported  on  their  part  See,    as    to    conditions    on    a    pass 

to    furnish    the    conveyance,    and    on  absolving    from    injury,    Freeman    v. 

failure   to   do   so   the   money   may   be  United  Fruit  Co.,  223  Mass.  300,  111 

recovered  by  the  person  who  paid  it.  N.  E.  789. 

See    Bright.    Fed.    Dig.    "  Oarriers,"  6.  Abb.  Shipping,  223,  241 ;  Bright. 

113,  114.     But  see  Gillan  v.  Simpkin,  Fed.  Dig.  788-791;   1  Pars.  Shipping, 

4  Campb.  241.    And  while  a  common  274  et  seq. 

478 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    323 

and  puts  on  board  all  supplies  for  himself.  In  the  former  case, 
which  is  of  common  occurrence,  the  arrangement  is  substantially 
that  the  owners  agree  to  carry  a  cargo  which  the  charterer  agrees 
to  furnish;  and  here  the  rights  and  liabilities  growing  out  of 
possession  of  the  ship  may  appear  somewhat  confused.^  But,  to 
detennine  such  questions,  the  language  of  the  charter-party  in  the 
particular  case  must  be  considered ;  though  it  seems  that  in  gen- 
eral the  party  that  mans  the  vessel  is  to  be  considered  as  in  posses- 
sion, unless  the  weight  of  evidence  proves  decidedly  to  the 
contrary.^ 

If  the  general  owners  retain  the  possession,  command,  and 
navigation  of  the  vessel,  and  contract  to  carry  a  cargo,  on  freight, 
any  charter-party  would,  of  course,  be  a  mere  affreightment,  and 
the  freighter  would  not  be  clothed  with  the  character  or  legal 
responsibility  of  ownership.^  And  in  a  more  doubtful  case,  the 
fact  that  the  charter-party  put  the  ship's  navigation  at  the  ship- 
owners' expense,  might  be  conclusive  as  against  making  the  chart- 
erer an  owner  pro  hac  vice,  especially  if  the  ship's  whole  tonnage 
be  not  let  to  hire.^  Indeed,  in  the  absence  of  any  clear  and  deter- 
minate transfer  of  the  rights  and  authority  of  the  general  owners 
of  a  vessel  chartered  for  a  voyage,  such  rights  and  authority  con- 
tinue.^ But  if  the  charterer  is  charged  with  the  navigation  of 
the  ship,  and  agrees  to  victual  and  man,  and  to  supply  all  requisite 
stores  for  the  term  specified,  he  has  the  rights  and  responsibilities 
of  owner  for  the  time  being,  and  the  ship-owners  are  not  respon- 
sible for  the  supplies  nor  for  any  loss  of  goods;  nor  can  they  col- 
lect freight  from  the  shipper  of  goods."'     Sometimes  one  of  the 

7.  See  1  Pars.  Shipping,  278.  1.  lb. ;    Hooe  v.   Grovcrman,    1   Cr. 

8.  Bright.    Fed.    Dig.    "Shipping,"  214 ;  1  Pars.  Shipping,  279-281. 
789,    790;     1     Pars.    Shipping.    279;  2.  Hagar  v.  Clark.  78  N.  Y.  45. 
Storj-,    J.,    in   Logs    of    Mahogany,    2  3.  Bright.   Fed.   Dig.   789;    Mott   v. 
Sumner,  589;  Abb.  Shipping,  42.  Ruckman.   3   Bl.   C.   C.   71.     See  also 

9.  Marcardier  v.  Chesapeake  Ins.  McGilvery  v.  Capen,  7  Gray,  523; 
Co.,  8  Cr.  39;  The  Nathanial  Hooper,  Newberry  v.  Colvin,  7  Bing.  190; 
3  Sumner.  544 ;  Donahoe  v.  Kettell,  1  3.  c.  1  CI.  &  F.  283 ;  The  Great  East- 
Cliff.  135;   Sandeman  v.  Scurr,  L.  R.  em,  L.  R.  2  Ad.  &  Ecc.  88. 

2  Q.  B.  86. 

479 


§    324  THE    LAW    OF    PEIlSOiXAL    PEOPEKTY.  [PART  III. 

general  owners  sails  a  vessel  on  shares,  under  an  arrangement 
between  himself  and  the  other  owners,  whereby  he  in  effect 
becomes  the  charterer.'* 

§  324.     The  Same  Subject. 

The  ship  may  be  chartered  for  one  or  more  voyages,  or  for  any 
time  certain.  It  may  also  be  chartered  without  any  definite  term 
expressed  in  the  contract ;  in  which  case  the  law  implies  a  reason- 
able term,  compelling  the  parties  to  regard  the  charter  as  in  force 
during  the  whole  of  any  voyage,  once  undertaken  by  the  charterer 
before  reasonable  notice  of  intention  to  terminate  the  charter  is 
given ;  since  otherwise  the  bargain  would  be  a  perilous  one  for  the 
charterer,  from  a  pecuniary  point  of  view.  Subject  to  this  quali- 
fication a  charter-party  for  no  definite  term  is  determinable  by 
either  party  at  pleasure.^  The  burden  and  nationality  of  the  ship 
are  usually  expressed  in  the  charter-party;  and  for  a  fraudulent 
misrepresentation  in  either  respect  to  the  charterer's  disadvantage, 
the  owners  must  suffer.^ 

So,  too,  it  is  common  for  the  charter-party  to  provide  for  the 
state  of  the  ship  and  for  repairs;  the  usual  way  being  for  the 
owner  to  stipulate  that  the  ship  is  sound,  stanch,  and  altogether 
seaworthy;  and,  further,  that  he  will  keep  the  ship  in  repair, 
perils  of  the  sea  and  unavoidable  accident  excepted.  Even  if  the 
contract  were  silent  as  to  such  stipulations,  the  law  would  probably 
supply  them ;  and  for  detriment  sustained  by  the  charterer  through 
unseaworthiness  of  the  vessel,  such  as  he  had  not  foreseen,  there  is 
little  doubt  that  he  can  get  indemnity  from  the  ship-owners,  by 
holding  back  a  suitable  portion  of  the  sum  he  agreed  to  pay  as 
charter-money,  or  otherwise.^     But  the  charterer,  in  absence  of 

4.  Thorp  V.  Hammond,  12  Wall.  408.  Bright,  Fed.  Dig.  788.     See  Richard- 

5.  1  Pars.  Shipping,  282,  283;  son  v.  United  States,  2  N.  &  H.  483. 
Haveloek  v.  Geddes,  10  East,  555;  Wfien  the  owner  of  a  vessel  charters 
McGilvery  v.  Capen,  7  Gray,  525.  her,  there  is,  in  the  absence  of  any- 

6.  Ashburner  v.  Balchen,  3  Seld.  thing  expressed  to  the  contrary,  an 
262 ;  Hunter  v.  Fry,  2  B.  &  Aid.  421.  implied  contract  that  she  is  seaworthy 

7.  1      Pars.      Shippirig,      283-285;  and  suitable  for  the  service  in  which 


CHAP.  I.] 


SHIPS    AXD    VESSELS. 


§  324 


any  agreement  to  the  contrary,  should  victual  and  man  the  vessel ; 
though  in  this  and  in  other  respects  the  parties  to  the  charter-party 
may  make  different  stipulations,  if  they  see  fit.^  It  is  usual  for 
the  master  to  sign  and  give  bills  of  lading  in  the  same  manner  as 
if  there  were  no  charter-party ;  yet,  so  far  as  the  charterer  and  his 
goods  are  concerned,  this  amounts  to  little  more  than  evidence  of 
the  delivery  and  receipt  and  shipping  of  the  merchandise ;  for  the 
charter-party  controls  the  bill  of  lading  with  regard  to  the  terms 
and  provisions  which  the  two  instruments  have  in  common.^ 

By  delivery  of  the  vessel  to  the  hirer,  and  its  acceptance,  the 
charter-party  is  confirmed  and  adopted ;  and  any  wrongful  act  or 
breach  of  engagement  by  the  one  party  to  such  a  bailment,  fur- 
nishes a  basis  of  legal  redress  to  the  other.  ^  On  the  other  hand, 
a  re-delivery  of  the  vessel  and  its  acceptance  by  the  o^vner  justifies 
the  presumption  that  the  term  of  hire  is  ended.^ 


she  is  to  be  employed.  The  owner 
is  obliged  to  keep  her  in  proper  re- 
pair, unless  prevented  by  the  perils 
of  the  sea  or  unavoidable  accident. 
He  is  not  excused  for  any  defect, 
known  or  unknown;  and  a  defect 
which  is  developed  without  any  ap- 
parent cause  is  presumed  to  have 
existed  when  the  service  began. 
Where,  however,  a  hirer  uses  a  ves- 
sel which  afterwards  proves  defec- 
tive, he  must  pay  for  the  use  to  the 
extent  of  the  use.  Work  v.  Leathers, 
97  U.  S.  379. 

8.  Goodridge  v.  Lord,  10  Mass.  483, 
486;  1  Pars.  Shipping,  285.  See  Reed 
V.  United  States,  11  Wall.  5?1. 

9.  Lamb  v.  Parkman,  1  Spr.  343 ; 
1  Pars.  Shipping,  286-288. 

Any  discrepancy  as  to  terms  of 
freight  between  the  bill  of  lading  and 
charter-party  would  be  rectified  by 
reference  to  the  latter,  whether  the 
owners   had    a   controversy   with    the 


charterer  himself  or  with  any  person 
shipping  goods  with  knowledge  of  the 
charter-party.  1  Pars.  Shipping,  287; 
Faith  v.  East  India  Co.,  4  B.  &  Aid. 
630.  But  if  the  bill  of  lading  were 
indorsed  for  value  to  one  having  no 
notice  or  knowledge  of  the  terms  of 
the  charter-party,  it  is  held  that  the 
indorsee  may  insist  upon  the  terms 
Stated  in  the  bill  of  lading;  and  so, 
too,  it  would  be  with  sub-freighters 
of  the  ship  who  knew  nothing  about 
the  charter-party.  See  Foster  v. 
Colby,  3  H.  &  N.  705:  Fry  v.  Bank  of 
India,  L.  R.  1  C.  P.  689;  Faith  v.  East 
India  Co.,  4  B.  &  Aid.  630.  There 
should  be  no  duress  as  to  such  con- 
tracts. McPherson  v.  Cox,  86  N.  Y. 
472. 

1.  Compania-Bilbania  v.  Spanish- 
American  Co.,  146  U.  S.  483;  Meiss- 
ner  v.  Brun,  128  U.  S.  474. 

2.  Compania-Bilbania  v.  Spanieh- 
American  Co.,  146  U.  S.  483. 


31 


481 


§  325         THE  LAW  OF  PERSONAL  PROPERTY,      [PART  III. 

§  325.     The  Same  Subject;    Time  as  an  Essential;    Demurrage. 

Time  being  an  element  of  much  importance  in  all  business 
transactions,  and  in  commercial  affairs  especially,  the  parties  to 
a  charter-party  are  held  to  the  rule  of  punctuality  in  their  mutual 
engagements;  hence,  if  the  ship  be  not  ready  at  the  proper  time 
and  a  material  delay  is  probable,  the  charterer  is  at  liberty  to  seek 
another  ship ;  while,  if  the  cargo  be  not  ready,  the  owners  may 
seek  another  cargo. ^  If  the  ship-owners  retain  control  of  the 
vessel,  the  voyage  must  be  performed  in  as  short  a  time  as  is  con- 
sistent with  safety,  and  for  any  culpable  negligence  by  which  the 
voyage  is  protracted,  they  must  suffer  the  consequences."^  And  it 
is  said  that  the  charterer  must  load  and  unload  with  all  reasonable 
despatch ;  that  the  owners  must  give  him  all  reasonable  facilities ; 
and  that  for  non-performance  of  these  obligations,  on  either  side, 
the  injured  party  may  have  his  remedy,  without  any  express  stipu- 
lations.^ The  question  what"  is  a  reasonable  time,  under  such 
circumstances,  is  one  of  fact  for  a  jury  to  determine,  unless  the 
parties  have  specified  the  period  for  themselves.^ 

But  obligations  of  this  sort  are  usually  provided  for  as  demur- 
rage, a  term  which  signifies  the  delay  of  a  vessel  by  the  charterer 
beyond  the  time  allowed  for  loading,  unloading,  or  sailing;  also 
the  payment  for  such  delay.  For  it  is  almost  always  provided 
that  the  charterer  may  have  so  many  days  for  loading  and  unload- 
ing the  ship,  and  that  he  may  detain  the  ship  longer,  if  he  will  pay 
so  much  for  the  detention.  The  object  of  this  provision  was 
doubtless  to  make  the  charterer  save  time  as  much  as  possible,  and 
to  give  the  owners  compensation  for  such  time  as  he  might  have 

3.  Seeger  v.  Duthie,  8  C.  B.  n.  s.  5.  1  Pars.  Shipping,  311.  If  the 
45;  Weisser  v.  Maitland,  3  Sandf.  charterer  is  the  cause  of  a  failure  to 
318 ;  1  Pars.  Shipping,  310.  Aliter  deliver  the  cargo  according  to  the 
where  the  charter-party  makes  no  charter-party,  the  ship  is  entitled  to 
stipulation  as  to  the  time  of  loading.  the  stipulated  freight.  Gage  v.  Mary- 
Culliford  V.  Vinet,  128  U.  S.  135.  land  Coal  Co.,  124  Mass.  442. 

4.  Sieveking  v.  Maas,  6  Ell.  &  B.  6.  See  Cross  v.  Beard,  26  N.  Y.  85. 
674;    The   Barque   Gentleman,    1    Bl. 

C.  C.  196. 

482 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    325 

saved  and  did  net;  its  practical  application  is  to  charters  for  a 
specified  voyage,  rather  than  for  those  on  time.  If,  then,  a  ship 
be  chartered  for  a  specified  voyage,  there  are  days  which  belong 
to  the  charterer  and  for  which  he  does  not  pay;  and  these  are 
called  "  lay  days,"  —  or  ''  working  days,"  with  reference  to  the 
labor  of  loading  and  unloading.^  Lay  days  do  not  usually  com- 
mence until  the  ship  has  arrived  at  the  place  for  loading  or  unload- 
ing, though  this  rule  may  be  affected  by  usage  or  the  stipulation 
of  the  parties.^  The  parties  may  stipulate  that  the  charterer  shall 
be  liable  for  no  delay  of  the  vessel  which  is  not  caused  by  his  own 
fault;  but,  unless  this  is  done,  some  have  thought  that  for  such 
special  delays  as  occur  by  capture,  embargo,  or  through  stress  of 
weather,  the  owners  of  the  ship  may  claim  demurrage  compensa- 
tion, the  fault  not  being  their  own,^  Perhaps,  however,  if  the 
voyage  were  broken  up  altogether,  as  in  case  of  condemnation  as 
prize,  it  would  be  held  that  the  charter-party  came  to  an  end,  and 
the  charterer's  liabilities  along  with  it.^  And  while  it  is  generally 
admitted  that  the  fact  of  the  delay  being  caused  by  the  act  of  God, 
or  other  vis  major,  does  not  relieve  the  charterer  or  freighter  from 
liability,  where  he  has  entered  into  a  positive  undertaking  to  load 
or  discharge  a  cargo  in  a  given  number  of  days,  yet  the  English 
courts  refuse  to  extend  such  a  liability  to  an  implied  contract  for 
reasonable  diligence  only.^  Demurrage,  so  called,  can  be  recov- 
ered only  where  it  is  reserved  by  the  charter-party  or  bill  of  lad- 

7.  See  1  Pars.  Shipping,  310-318;  party.  See,  for  a  liberal  allowance  of 
Brooks  V.  Minturn.  1  Cal.  481;  Coch-  demurrage  on  two  voyages  made,  not- 
ran  v.  Rotbcrg,  3  Esp.  121 ;  Bouv.  withstanding  a  tliird  was  abandoned, 
Diet.  "Demurrage;"  Abb.  Shipping,  Elwell  v.  Skiddy,  77  N".  Y.  282.  But 
303  et  seq.  See  Gray  v.  Carr,  L.  R.  a8  restricting  the  right  to  demurrage, 
6  Q.  B.  522;  Southern  R.  Co.  v.  see  Hodgdon  v.  New  York,  &c.,  R.,  46 
Lewis,  165  Ala.  451,  51  So.  863.  Conn.   277;    Whitehouse   v.   Halstead, 

8.  Lacombe  v.  Wain,  4  Binn.   299;  90  111.  95. 

Pyman  v.  Dreyfus.  24  Q.  B.  D.  152.  2.  Ford  v.  Cotcsworth,  L.  R.  5  Q.  B. 

&.  See    1    Pars.    Shipping,    314-316,  544.     London   dock   strike  necessitat- 

and  n.;  Towle  v.  Kettell,  5  Cush.  18.  ing  delay  held  no  subject  for  demur- 

1.  1  Pars.  Shipping,  318.     And  see  rage   against   the   consignee.      (1893) 

ib.  328-337,  as  to  acts  of  government  App.  C.  22. 
in  war  which  go  to  dissolve  a  charter- 

483 


§  326 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  IIK 


ing;  and  where  no  such  express  reservation  exists,  the  remedy 
appears  to  be  by  action  on  the  case  in  nature  of  demurrage,  for 
damages  for  the  detention.^ 

§  326.     Charter-Parties,  How  Modified;    How  Construed. 

Modifications  of  a  charter-party  may  be  constituted,  as  between 
charterer  and  owners,  by  letter  or  otherwise,  like  any  other  written 
contract.'*  And  the  cases  are  numerous  which  turn  upon  the  con- 
struction of  particular  clauses  contained  in  a  charter-party.^  In 
general,  a  charter-party  is  viewed  like  any  contract  and  requires 
mutual  assent ;   and  where  there  is  any  material  part  of  the  instni- 


3.  Gage  v.  Morse,  12  Allen,  410; 
Young  V.  Moeller,  5  Ell.  &  B.  755. 
The  government  sometime?  charters 
a  merchant  vessel  for  its  own  pur- 
poses; as,  for  instance,  where  some 
public  exigency  has  occurred,  and 
soldiers  and  army  supplies  are  to  be 
transported  from  place  to  place.  But 
the  terms  of  the  contract  must  be 
studied,  in  order  to  ascertain  the 
mutual  liabilities  in  any  such  case. 
For  where  the  United  States  author- 
ities ordered  owners  of  a  vessel,  dur- 
ing the  civil  conflict  of  1861-65,  to 
get  her  ready,  under  pain  of  impress- 
ment, to  transport  a  cargo  to  a  jmr- 
ticular  place  and  back  (which  order 
was  obeyed,  though  under  protest), 
the  effect  was  to  leave  the  possession 
with  the  general  owners  under  a  con- 
tract with  government  for  a  per  diem 
compensation  from  the  commence- 
ment of  the  voyage  until  the  same 
was  broken  up,  with  the  further  ad- 
dition of  so  many  days  as  would 
have  been  spent,  if  no  disaster  had 
occurred  in  completing  the  return 
trip.  Reed  v.  United  States,  11  Wall. 
391.  And  the  ship  having  been  blown 
aground,  and  destroyed  months  after 
by  an  ice  freshet,  the  voyage  was  held 


to  be  completely  broken  up.  lb.  But 
where  the  government  contract  for 
the  vessel  was  one  of  hiring  and  the 
government  had  exclusive  possession 
and  management,  rent  or  hire  money 
for  the  ship  was  due,  whether  the 
vessel  was  in  continuous  service  or 
not.  United  States  v.  Shea,  152  U.  S. 
178. 

4.  Boyd  V.  Moses,  7  Wall.  316. 

5.  Thus,  a  stipulation  to  take  a 
cargo  of  "  lawful  merchandise "  is 
held  to  imply  that  the  articles  which 
compose  the  cargo  shall  be  in  such 
condition,  and  be  put  up  in  such  form, 
that  they  can  be  stowed  and  carried 
without  one  part  damaging  another. 
lb.  And  a  memorandum  in  the  bill 
of  lading  "  not  accountable  for  leak- 
age "  has  been  considered  broad 
enough  to  cover  not  only  ordinary 
leakage,  but  all  leakage  which  was 
not  negligently  occasioned.  Ohrloff  v. 
Briscall,  L.  R.  1  P.  0.  231.  The 
custom  of  the  loading  port  may  ex- 
plain the  meaning  of  such  expressions 
as  "  a  full  and  complete  cargo."  See 
Duckett  v.  Satterfield,  L.  R.  3  C.  P. 
227  :  Southampton.  &c.,  Co.  v.  Clarke. 
L.  R.  4  Ex.  73.  And,  indeed,  mercan- 
tile usage  is  greatly  regarded,  in  cass 


484 


CHAP.  I.] 


SHIPS    AND    VESSELS. 


§  328 


ment  to  which  both  parties  have  not  agreed,  the  entire  instrument 
is  vitiated.^ 

§  327.     Marine  Torts  and  Perils, 

Fourth,  as  to  marine  torts  and  perils  peculiar  to  navigation. 
This  will  lead  us  to  consider  particularly  the  subjects  of  collision, 
salvage,  and  general  average. 

§  328.     The  Same  Subject;    Collision. 

Where  two  vessels  strike  one  another,  causing  damage  to  one  or 
both,  the  disaster  is  that  of  collision.  Such  accidents  are  of  com- 
mon occurrence  in  our  crowded  harbors,  and  not  unfrequently  at 
eea,  or  along  the  coast.  To  avoid  them  as  far  as  possible,  and  in 
order  that  the  blame  where  a  collision  occurs  shall  be  laid  where 


of  doubtful  construction ;  though 
usage  can  never  be  suflfered  to  con- 
trol express  declarations.  Whether 
certain  covenants  contained  in  a 
(Jharter-party      are      independent      or 


Tr.  Co.  V.  Boston  Ins.  Co.,  223  Fed. 
716,  139  C.  C.  A.  246  (negligence  in 
carrying  or  loading  or  unloading)  ; 
The  Jeannie,  225  Fed.  178  (Wash. 
D.    C.    1915):     Ulster    Brick    Co.    v. 


mutual ;  what  are  the  stipulations  Murtha  Co.,  169  App.  Div.  151,  154 
concerning  the  "sailing"  or  "depart-  N.  Y.  S.  834  (liability  for  demurrage 
ure  "  of  a  vessel  from  a  particular  continuous)  ;  Ideal  Goods  Co.  v.  East- 
jiort, —  all  such  questions  and  nu-  ern  9.  S.  Corp.,  220  Mass.  133,  107 
raerous  others  are  to  be  referred  to  N.  E.  525  (duty  of  water  carrier  as 
the  usual  principles  of  contracts;  with  to  cargo)  ;  The  Banes,  221  Fed.  416, 
l)erhaps  this  qualification,  that  the  77  C.  C.  A.  420  (damage  by  sub-char- 
eourts  of  admiralty  strive,  so  far  as  terer)  ;  Central  American  Co.  v.  Pa- 
is consistent  with  right,  to  interpret  cific  Mail  Co.,  209  Fed.  Ill  (negli- 
maritime  contracts  according  to  the  gence  of  carrier's  sen-ants)  ;    Benner 


mutual  intention  of  the  parties,  how- 
ever careless  the  latter  may  have 
been  in  the  choice  of  language.  See 
1  Par?*.  Shipping,  318-364:  Lovell  v. 
Davis,  101  U.  S.  541. 

6.  Compania-Bilbaina  v.  Spanish- 
American  Co.,  146  U.  S.  483,  13  Sup. 
Ct.  142. 

Among     latest    cases     relating    to 


Line  v.  Pendleton,  210  Fed.  67  (N.  Y. 
D.  C.  1913)  (seawortliiness  essen- 
tial) :  Granger  v.  Stewart.  208-  Fed. 
410.  125  O.  C.  A.  622  (demurrage)  ; 
Pool  Shipping  Co.  v.  Samuel,  200 
Fed.  3G,  lis  C.  C.  A.  264:  lb..  192 
Fed.  57  (public  officer's  order)  ; 
Steamship  Wellesley  v.  C.  A.  Hooper. 
185  Fed.  733,  108  C.  C.  A.  71:   Hol- 


oharter-party,  etc.,  see  Jebson  v.  Cargo  man  v.  Ganz  S.  S.  Line,  186  Fed.  96, 

of  Hemp,  228  Fed.  143    (Mass.  D.  C.  108  C.  C.  A.  208   (expense  of  loading 

1915)     (lien    on    cargo    for    hire    as  and  unloading), 
against    a    sub-charterer)  ;    Gilchrist 

485 


I    328  THE    LAW    OF    PERSONAL    PKOPERTY.  [pAET  III. 

it  belongs,  suitable  regulations  for  navigation  are  established, 
either  by  statute  or  general  usage.  It  is  the  duty  of  all  masters 
and  crews  to  observe  these  rules  carefully ;  and  if  a  collision  takes 
place  for  failure  to  do  so,  the  vessel  in  fault  is  usually  compelled 
to  pay  all  the  damages  resulting ;  while  if  both  vessels  are  in  fault 
the  loss  will  be  divided/  Perhaps  if  the  fault  were  vastly  greater 
on  one  side  than  the  other,  though  both  vessels  were  somewhat  to 
blame,  there  might  be  an  equitable  apportionment  of  the  damages ; 
but  such  is  not  the  prevailing  practice.^  If  neither  vessel  be  in 
fault,  the  loss  rests  where  it  falls.^  The  ship  that  is  not  disabled 
is  bound  to  render  all  possible  assistance  to  the  other,  particularly 
so  as  to  save  human  lives,  though  the  latter  may  be  alone  in  fault ; 
and  this  duty,  which  humanity  enjoins,  is  now  enforced  in  England 
by  statute/ 

The  statutes  which  regulate  the  navigation  of  vessels  as  concerns 
the  United  States  are  chiefly  those  of  1864  and  1867,  with  subse- 
quent additions  and  amendments/  In  England,  regulations  have 
been  promulgated  from  time  to  time,  by  way  of  orders  in  council, 
and  statutes  have  been  enacted;  and  among  the  latter  may  be 
mentioned  the  statute  of  25  &  26  Vict.,  c.  63,  passed  in  1862, 
upon  which,  as  modified  by  an  order  in  council,  Jan.  9,  1863, 
our  act  of  1864  is  based.  The  rules  of  navigation  relate  in  part 
to  lights,  in  part  to  fog  signals,  and  in  part  to  the  method  of  steer- 
ing the  vessel,  and  the  precautions  proper  when  approaching 
another  vessel.^ 

7.  The  Gray  Eagle,  9  Wall.  505;  1.  The  Celt,  3  Hagg.  Adm.  321;  25 
The  Carroll,  8  Wall.  302;   The  Poto-       &  26  Vict.,  c.  63,  §  33. 

mac,  8  Wall.  590;  Bright.  Fed.  Dig.  ^  ^^^  ^^^  jj  g  j^^^  g^^^^^  gg 
(Suppl.)  "Navigation;"  Vaux  v.  4233-4251 
ShefFer,  8  Moore  P.  C.  75;  The  Sap- 
phire, 11  Wall.  164;  The  North  Star,  3.  See  1  Pars.  Shipping,  348  et  seq.; 
106  U.  S.  17;  The  Nevada,  106  U.  S.  Maude  &  Poll.  Shipping,  3d  ed.,  449- 
154.  See  as  to  limitation  by  the  465.  English  regulations  for  pre- 
value  of  the  vessel,  Beatty  v.  Hanna,  venting  collisions  at  sea,  made  under 
12'2  U.  S.  97.  the  authority  of  the  English  merchant 

8.  See   1   Pars.   Shipping,   527,   528.  shipping   acts,    1854    to    1873,    must, 

9.  1  Pars.  Shipping,  525,  and  cases  under  36  &  37  Vict.,  c.  85,  §  17,  be 
cited;  Bright.  Fed.  Dig.   583-586. 

486 


CHAP.  I.] 


SHIPS    AND    VESSELS. 


§  328a 


§  328a.     Limitation  of  Liability. 

The  Act  of  Congress  of  1893,  commonlj  known  as  the  Harter 
Act,  was  passed  to  prohibit  the  owners  of  vessels  from  limiting 


strictly  followed.  5  App.  Cas.  876. 
And  see  new  Orders  in  Council 
(1893)  p.  343.  As  to  rules  for  navi- 
gating the  Thames,  see  5  P.  D.  276. 
Wherever  a  statute  regulation  is  dis- 
regarded by  a  vessel,  it  lies  orf  that 
vessel  to  show  that  the  accident  in 
case  of  collision  was  not  owing  to 
such  neglect ;  but  if  it  is  shown  that 
the  accident  was  due  wholly  to  other 
causes,  and  that  this  breach  of  the 
statute  did  not  contribute  to  the 
collision,  the  violation  will  have  no 
effect.  Waring  v.  Clark,  5  How.  465 ; 
Mackay  v.  Roberts,  9  Moore  P.  C. 
368;  The  Fannie,  11  Wall.  239;  The 
Farragut,  10  Wall.  334.  But  wher- 
ever there  is  a  positive  breach  of 
statute,  the  burden  of  exoneration 
rests  very  heavily  upon  the  vessel  un- 
der the  decisions.  Belden  v.  Chase, 
150  U.  9.  674.  Regard  is  paid  to  the 
situation  and  circumstances  of  each 
vessel  in  prescribing  rules  of  navi- 
gation ;  and  that  one  which  can  avoid 
disaster  more  readily  than  the  other 
is  usually  required  to  take  more  ac- 
tive measures.  Thus^  a  steamer  ap- 
proaching a  sailing  vessel  is  bound  to 
keep  out  of  her  way;  steamers  having 
no  tow  must  regard  with  care  those 
having  them ;  a  ferry  boat  accustomed 
to  a  harbo/  should  steer  clear  of  a 
vessel  coming  in  from  sea  and  anclior- 
ing  in  a  fog;  and  a  ship  sailing  be- 
fore the  wind  is  expected  to  avoid  one 
which  is  close-hauled,  the  latter  keep- 
ing its  course.  The  Fannie,  11  Wall. 
238;  The  Carroll,  8  Wall.  302;  The 
Johnson,  9  Wall.  146;  The  Syracuse, 
9  Wall.  672;  Crowel  v.  Bark  Radama, 


2  Cliff.  551;  The  Gregory,  6  Blatchf. 
528  ;  The  Spring,  L.  R.  1  Ad.  &  Ecc. 
99;  The  Abbotsford,  98  U.  S.  440; 
The  Benefactor,  102  U.  S.  214.  And 
if  the  steamer  must  keep  out  of  the 
way  of  a  sailing  vessel,  it  is  equally 
imperative  on  the  latter  to  keep  her 
course.  The  Illinois,  103  U.  S.  298; 
The  Blue  Jacket,  144  U.  S.  371,  12 
Sup.  Ct.  711.  A  ship  being  towed  by 
a  tug,  ship  and  tug  are,  as  a  rule,  to 
be  treated  as  one  vessel  under  steam. 
"  The  Civilta  "  v.  "  The  Restless,"  103 
U.  S.  699.  Steamers  navigating  in 
the  dark  or  in  a  crowded  harbor  or 
during  a  fog  are  bound  to  move  with 
great  care ;  and  if  unusual  ma- 
noeuvres are  attempted,  where  a  col- 
lision is  imminent,  the  manoeuvring 
vessel  should  make  sure  that  the  other 
understands  in  season  and  makes  cor- 
responding movements.  The  Johnson, 
9  Wall.  146;  The  Corsica,  9  Wall. 
146 ;  The  Syracuse,  9^  Wall.  672 ;  The 
Kirby  Hall,  8  P.  D.  71.  As  to  other 
violations  of  sailing  rules  in  deter- 
mining blame,  see  the  Annie  Linds- 
ley,  104  U.  S.  185;  Cooper  v.  Eastern 
Co.,  75  N.  Y.  116 ;  Kennedy  v.  Steam- 
boat Co.,  12  R.  I.  23.  A  steamer  is 
not  bound  to  change  her  course  for  a 
row-boat.  Philadelphia  R.  v.  Adams, 
89  Penn.  St.  31.  We  may  observe 
further  that  the  conduct  of  the  ves- 
sels while  approaoliing  each  other  is 
regarded  in  determining  which  of  the 
two  is  essentially  to  blame ;  not 
merely  the  moment  before  collision, 
when  a  slight  mistake  during  the 
confusion  niiglit  be  inadvertently 
made  by  the  one  without  affecting  the 


487 


§  328a 


THE  LAW  OF  PEKSONAL  PROPERTY. 


[part  III. 


their  liability  for  negligence  in  loading  or  storing  or  navigation. 
Before  the  passage  of  the  act  there  was  a  warranty  on  the  part  of 
the  ship-owner  that  the  ship  was  seaworthy  at  the  beginning  of 


general  liability  properly  imposed 
upon  the  other  for  its  carelessness. 
See  The  Carroll,  8  Wall.  302.  The 
question  is,  which  vessel  substantially 
caused  the  disaster;  though  the  ves- 
sel claiming  damage  should  not  ap- 
pear really  culpable  as  contributing 
iihereto.  And  while  the  omission  of 
a  vessel  to  exhibit  the  proper  signal 
lights,  or  showing  the  wrong  one, 
puts  it  prima  facie  in  the  wrong,  this 
does  not  absolve  other  vessels  from  the 
consequences  of  their  own  negligence. 
The  Gray  Eagle,  9  Wall.  505;  Hoff- 
man V.  Union  Ferry  Co.,  47  N.  Y. 
176;  4  P.  D.  219.  If  a  proper  look- 
out was  not  employed  on  a  vessel,  as 
required  by  law,  it  should  be  asked 
whether  his  absence  had  anything  to 
do  in  causing  the  collision.  The 
Fannie,  11  Wall.  238 ;  Thorp  v.  Ham- 
mond, 13  Wall.  408;  The  Clara,  102 
U.  S.  200.  Racing  to  enter  a  harbor 
first  would  render  a  vessel  culpable, 
if  collision  resulted.  The  Spray,  12 
Wall.  366.  But  even  if  flagrant  fault 
be  committed  by  one  vessel,  the  other 
is  bound  to  adopt  every  proper  pre- 
caution to  avoid  the  collision  immi- 
nent, or  it  will  be  treated  as  equally 
liable  for  the  consequences.  The 
Maria  Martin,  12  Wall.  31;  The  Sap- 
phire, 11  Wall.  164.  A  vessel  aground 
at  night  in  a  navigable  channel  should 
apprise  other  vessels  of  its  position. 
The  Industria,  L.  E.  3  Ad.  &  Ecc. 
303.  It  is  a  rule  that  inevitable  acci- 
dent which  proper  skill  and  precau- 
tion could  not  prevent  relieves  from 
the  liabilities  attending  a  collision. 
The  Louisiana,  3  Wall.  164;   1  Pars. 


Shipping,  525 ;  The  Virgil,  2  W.  Rob. 
201 ;  Stainback  V.  Rae,  14  How.  532 ; 
Bright.  Fed.  Dig.  587.  But  a  col- 
lision arising  from  the  negligence  of 
the  crew  is  not  damage  of  the  seas 
within  the  meaning  of  an  exception 
in  a  biU  of  lading.  Grill  v.  Collier 
Co.,  L.  R.  1  C.  P.  600.  See  The 
Ariadne,  13  Wall.  475.  One  vessel 
brought  into  jeopardy  by  another's 
fault  is  not  held  culpable  for  want 
of  perfect  skill  and  presence  of  mind 
in  the  extremity  of  danger.  Blue 
Jacket  v.  Tacoma  Mill  Co.,  144  U.  S. 
371,  12  Sup.  Ct.  711. 

There  are  cases  which  hold  that 
where  the  value  of  the  vessel  at  fault 
is  not  enough  to  satisfy  a  claim  for 
collision,  the  homeward  freight  on 
the  cargo  is  liable  to  contribute  to 
satisfy  it,  though  the  cargo  itself 
should  be  released.  The  Orpheus, 
L.  R.  3  Ad.  &  Ecc.  308;  The  Flora, 
L.  R.  1  Ad.  &  Ecc.  45.  But  English 
statutes  now  qualify  and  limit  the 
liability  of  ship-owners  for  a  collision 
occurring  without  tlieir  fault  or  priv- 
ity. See  The  Velasquez,  L.  R.  1 
P.  C.  494;  The  Obey,  L.  R.  1  Ad.  & 
Ecc.  102;  The  lona,  L.  R.  1  P.  C. 
426;  The  George  and  Richard,  L.  R. 
3  Ad.  &  Ecc.  466;  5  P.  D.  6.  The 
maritime  law  of  limited  liability  is 
adopted  by  U.  S.  Rev.  Stats.,  §§  4282- 
4289.  The  Scotland,  105  U.  S.  24; 
Eo)  parte  Slayton,  105  U.  S.  451.  See 
The  Manitoba,  122  U.  S.  97. 

In  measuring  the  damages  in  a 
case  of  collision,  loss  of  freight,  de- 
tention, expense,  and  all  the  other 
direct    and    immediate    consequences. 


488 


CHAP.  I.] 


SHIPS    AND    VESSELS. 


329 


the  voyage,  but  since  then  the  act  itself  provides  the  rule  for  all 
cases  covered  by  it."* 

The  liability  of  the  owners  may,  however,  be  limited  by  law  to 
the  ship  itself,  and  a  foreign  ship  may  claim  exemption  in  the 
United  States  courts  for  limitation  of  liability.^ 

§  329.     The  Same  Subject;    Salvage. 

Salvage  is  a  word  which  is  used  in  two  different  senses.  Its 
ordinary  meaning,  in  admiralty,  is  that  compensation  which  the 
maritime  law  gives  for  service  rendered  in  saving  a  ship  or  its 
cargo  from  peril ;  and  in  that  sense  we  shall  here  regard  it.  The 
other  meaning  of  the  word,  not  uncommon  among  insurers,  is  the 


will  be  taken  into  consideration.  For 
restitutio  in  integrum  is  the  leading 
maxim  applicable  to  injuries  from 
collision.  Bright.  Fed.  Dig.  586, 
587 ;  The  Countess  of  Durham,  cited 
1  Pars.  Shipping,  538;  The  Baltimore, 
8  Wall.  377.  As  to  the  injured  ves- ' 
ael,  where  repairs  are  practicable,  the 
damages  assessed  Shall,  in  general,  be 
sufficient  to  restore  it  to  the  condition 
in  which  it  was  at  the  time  the  col- 
lision occurred ;  and  where  new  ma- 
terials for  repairs  are  furnished  in 
place  of  the  old,  the  deduction  usual 
in  insurance  cases  cannot  be  made, 
though  the  value  of  the  vessel  be 
thereby  enhanced.  The  Baltimore, 
8  Wall.  377.  The  fact  that  the  in- 
jured vessel  is  sunk  does  not  neces- 
sarily imply  that  there  is  a  total 
loss ;  nor  sliould  vessel  or  cargo  be 
abandoned,  unless  it  appears  that  the 
vessel  could  not  be  raised  or  saved, 
or  that  the  cost  of  raising  and  re- 
pairing it  would  exceed  its  value 
after  the  repairs  were  made.  lb. 
Where  two  vessels  are  in  fault,  the 
injured    party    may    proceed    against 


■both  together  and  hold  both  liable  for 
the  collision ;  in  which  case  the  dam- 
ages are  properly  apportionable 
equally  between  the  two  ves.sels,  while 
the  claimant  may  collect  the  entire 
amount  of  either,  if  the  other  is  un- 
able to  respond  for  a  due  proportion. 
The  Washington  and  The  Gregory,  9^ 
Wall.  513.  And  see  The  Virginia 
Ehrman  and  The  Agnese,  97  U.  S. 
309,  323;  The  Connecticut,  103  U.  S. 
710. 

The  latest  cases  relating  to  col- 
lision are  very  numerous,  as  reference 
to  the  latest  English  and  American 
annual  digests  will  show ;  and  the 
present  writer  undertakes  in  this 
volume  no  more  than  a  general  analy- 
sis of  the  essential  principles.  The 
U.  S.  District  and  Circuit  Court  series 
(e.  g.,  Blatchford's  and  Benedict's 
reports)  contain  many  decisions  of 
value  under  this  head. 

4.  The  Southwark,  191  U.  S.  1.  24 
Sup.  Ct.  1,  48  L.  ed.  65. 

5.  The  Titanic,  233  U.  S.  718,  34 
Sup.  Ct.  754,,  58  L.  ed.  — . 


489 


§  329         THE  LAW  OF  PERSONAL  PROPERTY.      [pART  lit. 

property  which  is  saved  from  a  wrecked  vessel.^  In  order  to  give 
the  claim  of  salvage  the  subject  rescued  should  be  employed  in 
navigation ;  ^  and  salvage  service  of  the  higher  grade  involves 
one's  peril  of  life,  limb,  or  property, —  gallantry,  courage,  or  hero- 
ism.^ The  doctrine  of  salvage  does  not  apply  to  an  aeroplane 
fallen  in  navigable  waters.^  There  seems  reason,  however,  why  it 
should  sometimes  apply  to  a  hydroaeroplane  or  flying  boat. 

It  is  a  leading  rule  that  salvage  services  must  be  performed  by 
persons  not  legally  bound  to  render  them.  Thus,  the  master  and 
crew  cannot  in  general  be  treated  as  salvors  of  their  own  ship  and 
cargo ;  for  it  would  be  an  unwise  policy  to  tempt  those  whose  duty 
it  is  to  stand  by  the  vessel  and  all  it  carries,  to  invite  danger  for 
the  sake  of  extra  profit.^  Yet  there  are  circumstances  under  which 
seamen  have  been  allowed  to  claim,  on  the  ground  that  their  con- 
tract with  the  vessel  saved  was  at  an  end,  or  because  the  service 
performed  was  entirely  out  of  the  line  of  their  duty.^  Pilots  and 
passengers,  too,  according  to  the  best  authorities,  may  become 
salvors  when  they  perform  services  to  a  ship  in  distress  beyond  the 
line  of  their  duty;  and  certainly  the  duties  of  passengers  in  and 
about  a  ship  are  much  less  than  those  of  master,  pilot,  or  crew, 
who  are  hired  to  manage  it.''  The  statutes  of  our  States  are  quite 
liberal,  too,  in  giving  pilots  extra  compensation  for  extraordinary 
services ;  and,  on  the  whole,  American  cases  seem  rather  more 
favorable  to  salvage  claimants  than  those  of  the  mother  country. 
Revenue  officers,  and  persons  belonging  to  the  United  States  navy, 

6.  Bouv.  Diet.  "Salvage;  "  2  Pars.  1.  Bright.  Fed.  Dig.  "Salvage," 
Shipping,  260.  749;    2  Pars.   Shipping,  264,  266. 

7.  A  fixed  structure,  like  a  dry  2.  lb.;  Mason  v.  The  Blaireau,  2 
dock,  is  not  a  subject  of  salvage  Cr.  240;  The  Florence,  20  E.  L.  A 
service.     Cope  v.  Dry  Dock  Co.,   119  Eq.  607. 

U.  S.  625.  3.  Akerblom   v.   Price,   7    Q.   B.    D. 

8.  Irvine  v.  The  Hesper,  122  U.  S.  129;  Newman  v.  Walters,  3  B.  &  P. 
256.  612;  2  Pars.  Shipping,  268-271.     The 

9.  The  Crawford  Brothers,  215  Fed.  principle  of  remuneration  for  salvage 
269   (Wash.  D.  C.  1914).  by   an   agent  is  discussed   in    (1892) 

P.  366. 

490 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    329 

and  troops  on  a  transport,  have  been  allowed  salvage.'*  So  has  a 
corporation  chartered  for  saving  vessels;  though  in  this  case  it 
seems  to  be  rather  for  the  use  of  apparatus  furnished  and  skill  in 
handling  ti  than  on  the  ordinary  principle  which  regards  personal 
gallantry  and  sacrifice.^  And  even  g,  steam-tug,  towing  fire- 
engines  from  a  wharf  into  a  harbor  where  a  vessel  is  on  fire,  and 
rendering  prompt  and  useful  servace  with  the  fire-engine  company, 
may  claim  salvage,  as  may  also  the  fire  department.^  Xothing, 
indeed,  according  to  the  principles  announced  in  the  Supreme 
Court  of  the  United  States,  will  bar  a  meritorious  claim  for  sal- 
vage, on  the  part  of  those  not  ordinarily  concerned  in  and  about 
the  rescued  vessel,  short  of  a  contract  to  pay  a  given  sum  for  the 
services  or  a  binding  engagement  to  pay  at  all  events.^  And 
where  two  ships  belong  to  the  same  owner,  the  crew  of  the  one  may 
recover  salvage  reward  for  assistance  rendered  to  the  other,  in  a 
meritorious  case.^ 

It  is,  however,  a  general  rule  that  none  can  claim  salvage  who 
did  not  aid  and  participate  directly  in  the  salvage  service,  or  pro- 
mote those  services  by  doing  the  work  of  those  rendering  them ; 
some  exceptions  being  made  on  the  principle  of  agency.'  Nor  can 
salvage  accrue  from  a  wrong;  as  where  the  master  and  crew  of 
one  vessel  save  the  cargo  of  the  other  from  perils  resulting  from  a 
collision  in  which  both  were  to  blame. ^  As  to  steamboats  assisting 
vessels  in  distress,  a  distinction  must  be  made  between  the  agree- 
ment to  tow  a  vessel  whole  or  disabled,  and  the  rendering  of  an 
extraordinary  service  outside  of  that  agreement,  and  of  course 
deserv'ing  further  compensation.     And  here  it  is  not  even  neces- 

4.  Brifrht.    Fed.    Dig.    748,    749;    2      Jane,  14  Jur.  857;  s.  c.  L.  R.  3  P.  C. 
Pars.     Shipping,     272,     273;     United       690. 

States  V.  The  Amistad,  1.5  Pet.  518.  9.  The  Camanche.  supra  :  The  Vine, 

5.  The  Camanche,  8  Wall.  448;  The  2  Hagg.  Adm.  1;  The  San  Bernardo, 
Morning  Star,  6  Blatchf.  C.  C.  154.  1  Rob.  Adm.  178;   2  Pars.  Shipping, 

6.  The  Blackwell,  10  Wall.  1.  277,  278. 

7.  See  The  Camanche,  8  Wall.  448;  1.  Cargo  ex  Capella,  L.  R.  1  Ad.  & 
The  Waverley,  L.  R.  3  Ad.  &  Ecc.  369.  Ecc.  356.     And  see  Bright.  Fed.  Dig. 

8.  See  The  Sappho,  L.  R.   3  Ad.  &  749,  750. 
Ecc.    142,    distinguishing   The    Maria 

491 


§  380  THE  LAW  OF  PEESOXAL  PEOPERTY.      [PAET  III. 

sary  that  there  should  have  been  any  actual  interruption  in  the 
towage ;  for  the  vessel  contracting  to  tow  becomes  a  salvor  when 
such  supervening  circumstances  have  occurred  as  justify  an  aban- 
donment of  the  contract, —  where,  for  instance,  there  is  a  serious 
danger,  not  contemplated  bj  the  parties  when  the  contract  was 
made.^  But  where  a  vessel  which  contracts  to  tow  a  disabled  ship 
is  compelled  to  leave  her  in  a  more  dangerous  position  than  before, 
there  may  be  a  claim  for  towing  but  none  for  salvage.^ 

§  330,     The  Same  Subject. 

The  courts  are  very  liberal  in  deciding  what  constitutes  a  sal- 
vage service.  Keeping  near  a  vessel  in  distress,  boarding  it  for  a 
message,  giving  advice,  transshipping  a  cargo,  aiding  to  put  out 
a  fire, —  any  and  all  of  these  ser-vdces  may  give  a  salvage  claim ; 
the  reward  being  mainly  for  gallantry  in  the  hour  of  peril,  which 
goes  in  a  material  degree  towards  preserving  the  ship,  its  appur- 
tenances, or  its  cargo ;  and  a  service  is  a  salvage  service  whether 
rendered  while  the  vessel  is  at  sea  or  when  it  is  off  the  coast.'^ 
JSTor,  as  it  has  been  frequently  ruled,  is  it  necessary  that  the  dis- 
tress should  be  actual  or  immediate,  or  that  the  danger  should  be 
imminent  and  absolute ;  it  is  sufficient  if,  at  the  time  the  assist- 
ance is  rendered,  the  ship  has  encountered  any  damage  or  misfor- 
tune which  might  possibly  expose  it  to  destruction  if  the  services 
were  not  rendered.^  But  no  claim  for  salvage  is  allowable  unless 
the  property  in  question  was  in  point  of  fact  saved  from  destruc- 
tion.^    Articles  derelict  —  as,  for  instance,  a  ship  which  has  been 

2.  The  Potter,  L.  R.  3  Ad.  &  Ecc.  3.  The  Benlarig.   14  P.   D.   3.     Cf. 

2«2.     See  2  Pars.   Shipping,  274-277.  14  P.  D.  132. 

To    bar    a    meritorious    claim    for  4.  2   Pars.   Shipping,   285-287:    The 

salvage  by  special  contract,  such  con-  Westminster,  1  W.  Rob.  229  :   Bright, 

tract  should  at  least  permit  of  some  Fed.  Dig.  749. 

recompense   for   services   rendered    in  5.  The  Charlotte.  3  W.  Rob.  6S,  71 : 

case  of  calamity.     The  Excelsior,  123  2  Pars.  Shipping,  283;  The  Saragossa, 

U.   S.    40.      Salvage   claims   rest,   not  1  Ben.  551. 

upon    contract,    but    upon    the    right  6.  Bright.     Fed.     Dig.     "  Salvage." 

to   be   paid   out   of  what   is   rescued.  747.      Salvage     service     may     consist 

See   (1895)   P.  193.  essentially    in    toAving    the    disabled 

492 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    330 

fully  and  finally  abandoned  by  her  crew,  with  no  hope  of  saving 
or  recovering  it  —  follow  a  rule  somewhat  peculiar  at  the  common 
law;  belonging,  in  England,  as  they  did  for  some  time,  to  the 
Lord  High  Admiral,  and  afterwards  to  the  sovereign ;  and  wrecks, 
by  which  is  meant  property  cast  «shore,  often  vested  in  the  lord  of 
the  manor;  but  the  disposition  to  be  made  of  property  thus  aban- 
doned is  now  frequently  regulated  by  statute.^  The  amount  of 
salvage  compensation  to  be  awarded  in  a  given  case  will  depend 
greatly  upon  the  circumstances  shown  as  to  danger  to  vessel, 
hazard  of  exposure,  value,  lentgh  of  service,  and  so  on.  There  is 
no  fixed  rule  as  to  amount ;  and  our  tribunal  of  final  appeal  is 
quite  reluctant  to  disturb  an  award  made  in  the  court  below.^  A 
moiety  was  given  in  old  times  where  there  had  been  a  derelict; 
and  where  the  case  is  exceedingly  meritorious,  this  is  still  given  as 
perhaps  a  maximum  rate  of  salvage  compensation ;  but  more  fre- 
quently the  salvage  allowed  on  derelict  is  nearer  one-third  of  the 
value  of  the  property,  and  on  property  not  derelict  a  much  lower 
rate.^  Salvage  for  saving  life,  unconnected  with  property,  is  not 
allowed ;  but  if  life  be  saved,  it  may  enhance  the  amount  of  salvage 
allowed  on  the  property.^ 

vessel.     The  Jubilee,   42   L.   T.   n.   s.  duct  on  the  part  of  salvors  may  lie 

594.      Cf.    The    Liverpool.    (1893)    P.  ground   for    reducing   the   amount   of 

154.  salvage  reward.     Tlie  Marie,  7  P.  D. 

7.  See  2  Pars.  Shipping,  288-29'2,  203.  Nor  will  an  oppressive  special 
and  cases  cited;  Act  17  &  18  Vict.,  agreement  for  salvage  be  enforced. 
c.  104,  §§  471-475;  Bright.  Fed.  Dig.  The  Silesia,  5  P.  D.  177.  Whatever 
258,  750.  See  post,  vol.  ii,  part  iv,  the  nature  of  the  property  thus  saved, 
c.  1.  whether  it  be  ship,  cargo,  or  freight, 

8.  The  Camanche,  8  Wall.  448;  a  salvage  coni]>en?ation  is  usually  de- 
Post  v.  Jones,  19  How.  150,  161;  2  creed.  To  this  rule,  however,  excep- 
Pars.  Shipping,  292,  293 ;  The  Aquila,  tions  are  sometimes  made,  out  of  re- 
1  Jlob.  Adm.  37,  45.  See  The  Zea-  gard,  perhaps,  to  decency  or  the  mean- 
land,  Lowell,  1,  where  the  whole  pro-  ness  of  the  claim.  See  Bright.  Fed. 
eeeds  of  a  small  derelict  were  given  Dig.  747;  2  Pars.  Shipping,  302-305; 
to  salvors.  also,   Tome  v.    Dubois.   6    Wall.    548 : 

9.  lb.;  Bright.  Fed.  Dig.  752,  753;  L.  R.  3  Ad.  &  Ecx-.  487.  Bullion 
8  P.  D.  24,  65.  saved    must    contribute    for    salvage, 

1.  Bright.,  Fed.  Dig.  747;  8  P.  D.  6  P.  D.  60.  Wherever  courts  of  ad- 
115.      Violent    and    overbearing    con-      miralty    can    take    jurisdiction,    they 

493 


§  331 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  IU. 


§  331.     Average  in  Maritime  Losses. 

The  principle  of  *'  general  average  "  has  been  applied  to  mari- 
time losses  from  the  earliest  days  of  commerce ;  it  was  part  of  the 
law  of  Rhodes,  and  in  fact  prevailed  along  the  Mediterranean  and 
Adriatic  seas  while  as  yet  Greece  and  Rome  had  but  a  feeble 
existence.^  No  rule  of  the  kind  has  ever  yet  been  enforced  as 
against  property  on  land,  though  often  it  might  fairly  be  applied ; 
yet  when,  for  the  common  benefit,  property  is  partially  destroyed 
at  sea,  or  expenses  necessarily  incurred,  this  principle  of  general 
average  comes  in  to  apportion  the  loss;  so  that  no  one  may  lose 
more  than  his  fair  share.  Ship  and  cargo  are  thus  regarded  as 
combined  in  a  perilous  adventure.  There  is  a  certain  equity  in 
the  doctrine;  for,  as  it  is  well  observed,  common  justice  dictates 
that  where  two  or  more  parties  are  engaged  in  the  same  sea  risk, 
and  one  of  them,  in  a  moment  of  imminent  peril,  makes  a  sacrifice 


will  in  general  enforce  the  lien  for 
salvage  service;  nor  will  they  appar- 
ently forego  making  government  lia- 
ble like  an  individual,  provided  only 
the  property  can  be  held  by  judicial 
process;  for,  as  a  matter  of  principle, 
personal  property  of  the  United  States 
on  board  of  a  vessel,  for  transporta- 
tion, is  bound  to  respond  for  salvage 
services  rendered  in  saving  the  prop- 
erty. The  Davis,  10  Wall.  1.  But 
ships  of  war  enjoy  some  peculiar 
immunities.  See  L'Invincible,  1 
Wlieat.  238;  The  Santissima  Trini- 
dad, 7  Wheat.  283.  And,  further- 
more, what  is  called  military  salvage 
is  sometimes  allowable  in  case  a  ves- 
sel or  other  property  is  captured  by 
an  enemy  and  then  recaptured  before 
condemnation  as  prize  by  a  compe- 
tent tribunal.  2  Pars.  Shipping,  315  ; 
The  Adeline,  9  Cr.  244;  Bright.  Fed. 
Dig.  750.  Sometimes  there  is  more 
than  one  set  of  salvors;  as,  for  in- 
stance,   where   a    salving   vessel    falls 


into  distress,  and  another  comes  up 
to  assist;  and  here  both  sets  must 
take  their  due  proportion;  but  un- 
necessary interference  of  any  sort, 
whether  by  one  set  of  salvors  or  an- 
other, can  give  no  claim  for  salvage 
against  the  vessel  intruded  upon.  2 
Pars.  Shipping,  279-282;  The  Fleece, 
3  W.  Rob.  278;  The  Mary,  2  Wheat. 
123;  Bright.  Fed.  Dig.  748.  And  it 
is  ruled  that  a  vessel  is  not  liable  for 
the  salvage  due  from  the  cargo,  nor 
the  cargo  for  that  due  from  the  ves- 
sel, but  each  must  pay  its  own  por- 
tion. The  Pyrennee,  Brow.  &  L. 
Adm.  183.  As  to  proceedings  by  li- 
bel for  salvage,  see  The  Sabine,  101 
U.  S.  384.  Proceedings  in  rem  and 
in  personam  should  not  thus  be 
joined.  lb.  Those  entitled  to  sal- 
vage may  apportion  the  amount 
among  themselves  by  fair  agreement. 
5  P.  D.  192. 

2.  Dig.   14.  2;   Abb.  Shipping,  473; 
1  Pars.  Shipping,  339. 


494 


CHAP.  I.]  SHIPS    AND    VESSELS.  §    331 

to  avoid  the  impending  danger  or  incurs  extraordinary  loss  or 
expenses  to  promote  the  general  safety,  the  loss  or  expenses  so 
incurred  shall  be  assessed  upon  all  in  proportion  to  the  share  of 
each  in  the  adventure.^ 

There  appears  to  be  some  confusion  as  to  the  exact  definition  of 
the  term  "  general  average."  Some  apply  this  term  to  the  con- 
tribution ;  others,  such  as  Parsons,  to  the  loss  itself  which  is  aver- 
aged,—  the  expense,  the  sacrifice,  the  damage,  according  to  cir- 
cumstances.'* But  a  "  general  average  contribution  "  is  defined 
properly  as  "  a  contribution  by  all  the  parties  in  a  sea  adventure 
to  make  good  the  loss  sustained  by  one  [or  more]  of  their  number 
on  account  of  sacrifices  voluntarily  made  of  part  of  the  ship  or 
cargo  to  save  the  residue  and  the  lives  of  those  on  board  from  an 
impending  peril,  orfor  extraordinary  expenses  necessarily  incurred 
by  one  or  more  of  the  parties  for  the  general  benefit  of  all  the 
interes.ts  embarked  in  the  enterprise."  ^  General  average  losses, 
then,  are  divided  into  two  classes  :  ( 1 )  those  which  result  from  the 
sacrifice  of  part  of  the  property;  (2)  those  resulting  from  the 
extraordinary  expense  necessarily  incurred.* 

Some  attempts  have  been  made  to  limit  the  application  of  the 
general  average  rule,  so  as  to  exclude  from  its  operation,  by  a  sort 
of  quibble,  sacrifices  made  where  otherwise  the  whole  adventure 
would  have  been  a  total  loss,  and  in  cases  of  voluntary  stranding; 
but  the  latest  cases  of  authority  in  this  country  give  little  sanction 
to  such  an  interpretation,  and  on  the  contrary  regard  the  rule  as 
therein  applied  with  liberal  favor.^  Voluntary  stranding  is,  in 
these  days,  to  be  made  good  by  general  contribution.     The  strand- 

3.  ClifTord,  J.,  in  The  Star  of  Hope,  average  is  not  founded  upon  contract, 
9  Wall.  228.  or   thti   relation    created    by   contract; 

4.  Soo    Bouv.    Diet.    "Average;  "    1  but  upon  a  rule  of  the  common  law, 
Pars.    Shipping,    338,   and   n.;    Wads-  and  upon  the  principle  of  th«>  ancient 
worth  V.  Pacific  Ins.  Co.,  4  Wend.  33;  maritime  law.     Pirie  v.  Middle  Dock 
3  Kent  Com.   232;   Bright.   Fed.   Dig.  Co.,  44  L.  T.  N.  s.  426. 
"Average,"  67.  7.  See  The  Star  of  Hope,  9   Wall. 

5.  See  The  Star   of  Hope,   9   Wall.  2^8;    Maude   &   Poll.    Shipping,    320; 
2'S:8;   2  Arn.  Ins.  770.  Barnard    v.    Adams,    10    How.    270; 

6.  Semble  that  the  right  to  general  Fowler   v.    Rathbones,    12    Wall.    118. 

495 


§  332  THE  LAW  OF  PERSONAL  PROPERTY.      [pART  III. 

ing  of  a  ship  is  voluntary,  whenever  the  will  of  man  in  some 
degree  contributes  to  the  result,  though  the  existence  of  the  par- 
ticular reef  or  bank  on  which  the  vessel  grounds  was  not  before 
known  to  the  master,  and  though  he  did  not  intend  to  strand  the 
vessel  thereon;  provided  he  was  aware  that  this  danger  was  the 
chief,  and  deliberately  chose  the  risk  as  the  preferable  one  for  the 
interests  of  all  concerned,  passengers  aboard,  shippers,  and  ship- 
owners. And  although  the  ship  be  totally  lost,  yet  if  the  strand- 
ing was  voluntary  and  was  designed  for  the  common  safety,  and  it 
appears  that  the  act  of  stranding  resulted  in  saving  the  cargo,  the 
case  is  one  for  general  average.^  In  other  words,  it  may  be  said 
that  property  being  selected  for  the  common  peril  that  the  re- 
mainder might  be  saved,  it  is  not  necessary  ithat  there  should  even 
have  been  an  intention  to  destroy  the  selected  property,  in  order  to 
give  a  claim  for  contribution.  Extraordinary  expenditure  for  the 
general  benefit  in  landing  and  transporting  the  cargo  to  a  place  of 
safety  may  give  rise  to  a  general  average.^ 

§  332.     The  Same  Subject. 

But  general  average  contribution  can  only  be  claimed  where  the 
sacrifice,  or  at  least  the  exposure  to  sacrifice,  has  been  for  the 
common  benefit ;  and,  furthermore,  where  the  sacrifice  has  accom- 
plished the  desired  object.^  The  sacrifice  must  have  been  reason- 
ably necessary,  and  it  must  have  been  voluntary  and  intended, — 
not  a  sacrifice  by  the  owners'  fault  or  by  mere  peril  of  the  sea.^ 
Thus,  if  goods  improperly  carried  on  deck  happen  to  be  washed 
overboard,  there  is  here  no  general  average;    while  the  throwing 

8.  The  Star  of  Hope,  9  Wall.   203.  cargo   to   contribute  on   the  principle 

See  Austin   Friars   Steamship   Co.   v.  of  general  average. 

Spillers  &  Baker  (I^IS),  3  K.  B.  586.  9.  Rose    v.     Bank    of    Australasia, 

•where  the  master  ran  the  ship  against  (1894)   App.  C.  687. 

a  dock  instead  of  suffering  a  greater  1.  See  Bright.  Fed.  Dig.  67,  68;   1 

loss  hy  running  her  aground,  and  the  Pars.  Shipping,  347;  Williams  v.  Suf- 

owners  were  obliged  to  pay  for  the  folk  Ins.  Co.,  3  Sumner,  510. 

damage  to  tbe  dock   and   then   were  2.  See    1    Pars.    Shipping,    345-362, 

allowed  to  force  the   owners  of   the  and  cases  cited;  Bright.  Fed.  Dig.  69. 

496 


CHAP.    I.]  SHIPS    AXD    VESSELS.  §    332 

of  goods  overboard  for  the  common  benefit  —  or,  as  merchants 
would  say,  a  "  jettison  "  —  to  relieve  the  ship  in  distress,  cutting 
away  the  masts,  and  the  like,  all  give  claim  for  contribution,  if 
the  object  in  view  be  attained  for  the  common  benefit.^  And  again, 
the  community  of  extraordinary  peril  must  have  continued  during 
the  period  of  sacrifice ;  for,  as  between  ship  and  cargo,  the  latter 
is  not  liable  to  contribute  in  favor  of  the  former,  after  it  has  been 
completely  separated  from  the  ship,  so  as  to  leave  no  community 
of  interest  in  the  adventure.*  Damages  occasioned  to  ship  or 
cargo  by  causes  existing  prior  to  and  irrespective  of  the  peril  on 
which  the  claim  of  general  average  is  founded  should  not  be 
reckoned.^ 

General  average  contribution  is  enforced  on  the  principles  above 
set  forth,  in  such  cases  as  a  salvage  for  the  common  benefit,  or 
expense  incurred  by  an  extraordinary  and  necessary  deviation  of 
the  ship;  and  contribution  is  enforced  against  ship,  freight,  and 
cargo."  Yet  as  to  the  interest  of  each  and  every  party  in  the 
adventure,  the  sacrifice  made  or  expenditure  incurred  must  have 
been  for  the  benefit  of  that  interest;  otherwise  the  party  is  not 
liable  in  this  respect." 

The  rule  of  adjustment  in  cases  of  this  sort  is  that  what  is  given 
for  the  general  benefit  of  all  shall  be  made  good  by  the  contribu- 
tion of  all.  This  principle  applies  whether  the  sacrifice  is  that  of 
a  part  of  the  cargo  or  of  the  whole  or  a  part  of  the  ship;  although 
controversies  concerning  the  adjustment  of  a  general  average  con-' 
tribution  arise  most  frequently  in  cases  where  some  of  the  cargo* 
has  been  thrown  overboard.^ 

3.  lb.  See  Butler  v.  Wildman,  3  B.  6.  Bright.  Fed.  Dig.  fir,  fi8 :  Co- 
&  Aid.  402.                                                        lumbian   Ins.   Co.   v.    Ashhy,    13    Pet. 

4.  McAndrews  v.  Thatcher,  3  Wall.       331. 

347.     And  see  Hugg  v.  Baltimore,  &.C.,  7.  lb.,  and   cases  supra.     See  Wil- 

Mining   Co.,    35    Md.    414;    180    Fed.  son  v.  Bank  of  Victoria,  L.  R.  2  Q.  B. 

C81;    The  Wm.   J.   Quillan,   180   Fed.  203. 

681,  103   C.  C.  A.   647;    Pettijohn  v.  8.  The  Star  of  Hope,  9  Wall.   231. 

Oregon  Co.,  58  Ore.  392,  113  Pac.  438.  et  seq.     Where  a  ship  has  sustained 

5.  See  Fowler  v.  Rathbones,  12  injuries  owing  to  voluntary  stranding. 
Wall.   102.  iuu!  undergoes  repairs  in  consequence, 

32  497 


§  333 


THE    LAW    OF    PEJtSO.NAL    PROPERTY.  [PART    III. 


§   333-     Captures,   Privateering,   Piracy,   etc. 

Besides  these  topics  are  others  peculiar  to  the  law  of  shipping, 
which  it  would  be  foreign  to  our  purpose  to  notice  at  length. 


its  contributory  value  is  its  worth 
before  such  repairs  were  made, — 
just  arid  reasonable  deduction  being 
made  in  all  cases  for  deterioration. 
And  on  this  point  the  ship's  value  in 
the  policy  of  insurance  at  the  port  of 
departure  is  competent  prima  facie 
evidence.  lb.  In  case  of  a  jettison 
of  goods,  their  value  is  generally  esti- 
mated at  their  prime  cost  or  original 
value;  yet  the  place  where  average 
shall  be  stated  is  dependent  to  some 
extent  upon  circumstances  which  af- 
fect rather  the  practical  closing  of 
the  adventure  than  any  technical  ter- 
mination of  the  voyage;  and  it  is 
well  settled  that,  if  the  cargo  arrive 
finally  at  its  port  of  destination,  the 
value  of  the  goods  at  that  port  shall 
be  taken.  Barnard  v.  Adams,  10  How. 
270;  Bright.  Fed.  Dig.  69.  The  con- 
tributory value  of  the  freight  is  ac- 
cording to  the  practice  of  some  lo- 
calities, found  by  deducting  one-third 
of  the  gross  amount;  an  arbitrary 
rule,  of  course,  but  founded  upon  a 
rough  estimate  of  the  usual  deduc- 
tion of  wages  and  expenses,  which 
could  not  be  ascertained  in  a  given 
ease  without  nice  calculations.  See 
Humphreys  v.  Union  Ins.  Co.,  3  Mass. 
439,  per  Story,  J.  As  to  the  ex- 
penses allowable,  it  may  be  generally 
observed  that  in  all  cases  the  wages 
and  provisions  of  master  and  crew, 
and  indeed  all  expenses  necessarily 
incurred  during  a  detention  for  the 
benefit  of  all  concerned,  should  be 
averaged;  also  repairs  on  the  ship, 
so  far  as  they  may  be  necessary  to 
enable  the  voyage  to  be  resumed ;  also 


sacrifices,  by  way  of  sales  of  cargo, 
the  payment  of  extraordinary  inter- 
est, or  otherwise,  such  as  are  prop- 
erly made  by  a  prudent  master  to 
raise  the  means  for  such  repairs; 
and  finally  surveys,  port  charges, 
towage  into  the  port  of  repair,  and 
those  extraordinary  expenses  in  un- 
loading and  reloading  a  cargo  which 
must  depend  greatly  on  the  special 
circumstances  of  the  case;  the  allow- 
ances being  liberal  enough  in  general, 
to  secure  a  complete  indemnity  for  a 
prudent  master's  outlay  in  strict  con- 
nection with  the  disaster  for  which 
contribution  is  claimed.  The  Star  of 
Hope,  9  Wall.  234-237;  Abb.  Ship- 
ping, 601;  1  Pars.  Shipping,  400; 
Orrok  v.  Commonwealth  Ins.  Co.,  21 
Pick.  469;  Bright.  Fed.  Dig.  69; 
Barker  v.  Baltimore  R.,  22  Ohio  St. 
45.  But  expense  for  repairs,  or  le- 
gal expenses,  are  not  to  be  averaged 
in  a  case  of  collision  where  the  vessel 
was  culpable.  Emery  v.  Huntington. 
109  Mass.  431.  Where  the  parties 
enter  into  an  "  average  bond,"  they 
are  bound  by  a  settlement  made  pur- 
suant to  its  terms.  Fowler  v.  Rath-" 
bones,  12  Wall.  102.  And  a  case  of 
general  average  settled  in  a  foreign 
port,  according  to  the  local  law,  may 
bind  the  parties  concerned  in  this 
county,  though  not  in  accordance 
with  our  own  rule.  Peters  v.  Warren 
Ins.  Co.,  14  Pet.  99.  See  Fletcher  v. 
Alexander,  L.  R.  3  C.  P.  375. 

Such,  then,  is  the  doctrine  of  gen- 
eral average  as  fully  established  in 
this  country.  But  in  England  the 
law  in  this  respect  is  not  so  clearly 


498 


CHAP.  I.] 


SHIPS    AND    VESSELS. 


§  33;] 


Thus  we  have  a  mass  of  decisions  in  the  federal  courts  of  the 
United  States  relative  to  captures  during  our  belligerent  years  by 
way  of  prize.  When  two  powers  are  at  war,  the  seizure  and 
detention  of  a  ship  at  sea  by  authority  of  one  of  the  belligerents, 
with  the  design  of  appropriating  vessel  and  cargo,  or  either,  makes 
it  prize,  and  it  becomes  the  lawful  property  of  the  captor  after 
condemnation  in  a  prize  court.^  Privateering  and  piracy  consti- 
tute each  a  sort  of  robbery  or  forcible  depredation  on  the  high  seas. 
The  latter  has  long  been  treated  as  a  heinous  crime  by  the  law  of 
nations,  and  punishable  with  death ;  and  the  former  is  likely  to 
become  so  regarded,  if  the  world  grows  better  instead  of  worse; 
for  though  it  is  said  that  privateering  is  lawful  because  permitted 
by  a  belligerent  party,  while  piracy  is  unlawful  because  there  is  no 
such  permission  given,  yet  in  either  case,  and  whether  there  be 
peace  or  war,  the  plunder  is  that  of  private  individuals  who  avail 
themselves  of  opportunities  to  fill  their  purses  and  satiate  a  reck- 
less greed ;  not  that  of  the  military  or  naval  forces  of  a  belligerent.^ 


settled,  and  the  American  rule  of  con- 
tribution has  sometimes  been  ques- 
tioned in  the  courts  of  that  country. 
Fowler  v.  Rathbones,  12  Wall.  102. 

The  English  rule  of  average,  as 
announced  in  late  decisions  of  the 
English  courts,  isi  as  follows : 
Where  goods  are  jettisoned  for  the 
common  good,  the  loss  as  a  rule 
comes  within  general  average,  and 
must  be  borne  proportionally  "  by 
those  interested."  To  this  rule  there 
i&  an  exception,  viz.,  that  deck  cargo 
jettisoned  is  not  entitled  to  general 
average  contribution.  To  this  excep- 
tion, however,  there  are  two  excep- 
tions, viz.,  that  coasting  vessels  are 
without  the  exception,  and  also  those 
cases  where  by  custom  the  deck 
cargo  is  one  customary  in  the  trade, 
and,  perhaps,  also  from  the  port. 
Semble,  that  where  by  agreement 
with  the  shipper  the  cargo  is  shipped 


on  deck,  no  exception  is  created. 
Wright  V.  Marwood,  7  Q.  B.  D.  62, 
commenting  on  former  decisions. 
Lost  freight  subjected  to  a  common 
average  contribution.  Pirie  &  Co.  v. 
Middle  Dock  Co.,  44  L.  T.  N.  S.  426. 
And  see  Whitecross  Wire  Co.  v.  Sa- 
vill,  S  Q.  B.  D.  653;  Machlachlan 
Merchant  Shipping,  3d  ed.  653-693; 
1  Maude  and  Pollock  on  Merchant 
Shipping,  4th  ed.  425-437. 

9.  See  1  Kent  Com.  101;  Bright. 
Fed.  Dig.  688-705;  2  Pars.  Shipping, 
458  et  seq.  The  late  civil  war  in 
America  (1861-65)  gave  occasion  for 
an  exhaustive  investigation  of  the 
law  of  prize  in  the  United  States 
courts,  which,  as  later  volumes  of  re- 
ports show,  has  been  nearly  concluded. 
See  U.  S.  Rev.  Stats.,  §g  711.  5308 
et  fteq. 

1.  See  1  Kent  Com.  96,  183 ;  United 


499 


§    334  THE   LAW   OF    PERSONAL    PKOPEETT.  [PAET  III. 

Privateering  may  be  an  effective  weapon  to  use  in  war  against 
one's  enemy;  but  only  in  the  same  sense  as  private  spoliation,  by 
troops  in  an  enemy's  country:  it  is  opposed  to  the  idea  of  a 
humane  self-restraint  and  generous  combat. 

§  334.     Jurisdiction  of  Courts  of  Admiralty. 

Fifth,  as  to  the  jurisdiction  of  courts  of  admiralty,  to  whose 
authority  are  peculiarly  committed  the  interests  of  all  concerned 
in  navigation.  Appropriate  tribunals  for  the  exercise  of  admir- 
alty powers  have  long  existed  in  Great  Britain.  On  the  subject 
of  admiralty  jurisdiction  in  the  United  States,  we  may  briefly 
observe  that  the  Federal  Constitution  provides  that  "  the  judicial 
power  shall  extend  to  all  cases  ...  of  admiralty  and  mari- 
time jurisdiction."  The  Judiciary  Act  of  1789  vests  the  exercise 
of  all  the  civil  admiralty  jurisdiction  in  the  district  courts  of  the 
United  States ;  and  by  subsequent  statutes  this  jurisdiction  is  con- 
firmed, if  not  extended ;  so  that  now  this  admiralty  jurisdiction 
is  fully  recognized  as  embracing  not  only  tide-waters,  but  also  the 
great  lakes  and  their  connecting  waters,  and  all  rivers  capable  of 
being  navigated  by  vessels  which  the  statute  recognizes  as  large 
enough  to  be  engaged  in  commerce ;  nor  limited  alone  to  foreign 
or  interstate  commerce,  but  applicable  as  well  to  commerce  between 
ports  of  a  State.  In  these  matters  the  Supreme  Court  of  the 
United  States  is  the  appellate  tribunal  of  last  resort;  and  that 
court  in  its  latest  decisions  maintains  the  admiralty  jurisdiction 
of  the  federal  courts,  as  against  all  State  encroachments,  with 
strength  and  vigor.^ 

The  most  important  questions  relating  to  the  law  of  shipping 
are  decided  in  the  admiralty  courts,  and  the  process  in  rem  which 

States    V.     Smitb,     5     Wheat.     153 ;  The  term  "  torts "  in  admiralty  juris- 

Bright.  Fed.  Dig.  216,  856.  diction    embraces    wrongs    which    are 

2.  See  Const.,  art.  3,  §  2;  Bright.  suflFered  in  consequence  of  negligence 

Fed.    Dig.     "Admiralty."    and    cases  and  malfeasance.     Leathers  v.  Bless- 

eited;    The  Eagle,   8   Wall.    15,   com-  ing.  105  U.  S.  626.    And.  see  Ex  parte 

menting  upon  The  Genesee  Chief,  12  Gordon,  104  U.  S.  515. 
How.   443;  U.  S.  Rev.  Stats.,  §  711. 

500 


CHAP.  I.] 


SHIPS    AND    VESSELS. 


§  334 


brings  ship  and  cargo  into  the  judicial  custody  has  obvious  advan- 
tages over  common-law  remedies.  Yet  courts  of  common  law  fre- 
quently adjudicate  important  controversies  which  grow  out  of  the 
maritime  contract;  and  wherever  the  admiralty  and  common  law 
give  the  same  remedies,  under  the  law  of  shipping,  as  in  most 
suits  in  personam,  ihe  suitor  may  elect  his  tribunal, —  for  the 
Judiciary  Act  saves  to  all  suitors  "  the  right  of  a  common-law 
remedy,  where  the  common  law  is  competent  to  give  it."  ^ 


3.  Jurisdiction  of  a  State  court  in- 
sisted upon  in  certain  cases.  Hill 
Man.  Co.  v.  Providence  Steamship 
Co.,  113  Mass.  49i5.  Exclusive  juris- 
diction is  not  claimed  by  federal 
courts  in  suits  in  personam  growing 
out  of  collision  on  inland  waters. 
Schoonmaker  v.  Gilmore,  102  U.  S. 
118.  A  Tahiable  article  on  the  '"His- 
tory of  Admiralty  Jurisdiction "  in 
this  country  will  be  found  in  the 
American  Law  Eeview  for  July,  1871, 
where  the  whole  subject  is  examined 
in  its  historical  bearings  to  that 
date.  As  to  hypothecation,  bottomry, 
lien,  and  marine  insurance,  see  appro- 
priate chapters,  post. 

As  to  jurisdiction  of  State  courts 
concerning  marine  torts,  see  Kenner- 
son  V.  Thames  Co.,  89  Conn.  367,  94 
Atl.  372  (navigable  waters  of  State, 
etc.). 

As  to  a  foreign  vessel  notwithstand- 
ing American  charter,  etc.,  see  Man- 
ning V.  International  Co.,  312  Fed. 
933,  129  C.  C.  A.  453.  And  see  The 
Bee,  216  Fed.  709;  Oehler  v.  Ham- 
burg-American Co.,  84  Misc.  272,  145 
N.  Y.  S.  1090  (tort  on  the  high  seas)  ; 
The    Seven    Brotliers,    170    Fed.    126 


(R.  I.  D.  C,  1909)    (malicious  tort). 

The  general  law  of  Shijjping  lias 
lost  much  of  its  former  importance 
to  American  practitioners,  partly  as 
a  consequence  of  our  rcivil  conflict  of 
1861-65,  during  whose  progress  Amer- 
ican commerce  became  transferred  .to 
foreign  flags. 

Merchant  shipping  and  commer- 
cial law  have,  on  the  other  hand, 
become  subjects  of  vast  importance 
to  the  English  profession  during  the 
same  era.  A  new  edition  of  Ab- 
bott's work  (the  twelfth)  has  ap- 
peared in  London.  And  among  more 
recent  English  treatises  upon  the 
same  subject  are  two  of  considerable 
merit:  Maude  and  Pollock  on  Mer- 
chant Shipping  (which  has  reached 
its  fourth  edition  and  is  cited  as 
authority  in  the  English  courts)  ;  and 
Maclachlan  on  Merchant  Sliipping  (of 
which  a  third  edition  has  appeared). 
Neither  of  these  Avorks  is  prepared  or 
edited  for  the  use  of  American  stu- 
dents. Common  Carriore.  by  land  or 
water,  are  considered  in  Schoul.  Bail- 
ments, parts  vi,  vii,  and  in  various 
special  works  on  Carriers. 


501 


CHAPTER  II 


MONET 


§  335.     Money  Defined;    Its  Nature  and  Uses. 

The  second  and  onlj  remaining  species  of  personal  property  of 
a  corporeal  character  which  claims  our  attention  by  reason  of  its 
unusual  significance  at  the  law  is  money.  By  the  word  "  money  " 
we  may  denote  that  medium  of  exchange  which  'any  people  uses. 
With  the  American  people,  and  among  all  civilized  nations  with 
whom  we  hold  intercourse,  this  word  is  confined  to  metallic  coins, 
except  so  far  as  a  paper  currency  which-  by  law  or  usage  rs  per- 
mitted to  circulate  in  the  community  for  the  like  purposes  of  ex- 
change may  bo  allowed  to  come  within  the  definition.  The  great 
characteristics  which  money  possesses,  and  the  qualities  which  give 
it  so  great  power,  are  seen  in  two  facts :  that  it  is  everywhere 
accepted  within  the  public  jurisdiction  as*  the  convenient  standard 
by  which  may  be  measured  the  exact  value  of  all  other  things ; 
and  that  it  is  also  the  common  and  appropriate  medium  whereby 
a  person  may  barter  services,  or  may  exchange  one  article  with 
which  he  means  to  part  for  another  which  he  desires  to  acquire. 
Money,  in  other  words,  is  both  a  standard  of  value  and  a  medium 
of  exchange.^ 

In  the  history  of  all  governments  what  we  call  money  has 
exerted  an  immense  influence;  yet  very  numerous  and  dissimilar 
substances  have  sei'ved  the  purposes  of  exchange  and  standard  of 
value  at  different  periods  and  among  various  tribes  and  nations. 
The  Carthaginians  used,  it  is  said,  a  sort  of  leather  bank-note; 
bark  of  the  mulberry-tree  cut  in  round  pieces,  and  stamped  with 
the  sovereig-n's  mark,  suffice  for  some  of  the  Asiatic  countries; 
coal,  shell,  and  bone,  together  with  various  metals  and  minerals 
more  or  less  precious,  have  served  frequently  as  the  clumsy  medium 
fnr  simple  and  unlettered  tribes ;    again,  as  students  of  American 

1.  See  Mapree  on  Banks  and  Bank  ing. 
502 


CHAP.  II,]  MOXEY.  §    336 

history  need  not  be  reminded,  the  Indians  who  held  sway  while 
this  continent  was  a  wilderness  made  of  their  wampum,  or  strings 
of  small  spiral  shells,  a  currency  sufficient  for  all  their  needs. 
But  gold  and  silver  attained  early  a  pre-eminence,  among  civilized 
nations,  as  the  most  convenient  medium  of  exchange  and  the  money 
standard;  and  from  an  international  standpoint,  as  also  from 
local  public  considerations,  some  accepted  unit  of  a  money  stand- 
ard is  desirable,  such  as  the  more  precious  and  rarer  of  these  metals 
the  better  affords. 

§  336.     The  Same  Subject;    Coinage  of  Money. 

Yet  it  was  a  long  time  before  these  precious  metals  became  sub- 
jected to  the  process  of  coinage;  the  money  of  the  ancient  Jews 
and  others  of  whom  we  have  authentic  accounts  being  weighed, 
and  not  counted  out.  Possibly  to  the  Lydians,  perhaps  to  the 
people  of  -^gina,  but  more  probably  to  some  Asiatic  country  older 
than  either,  is  the  world  indebted  for  the  introduction  of  the  coin- 
age system, —  a  system  whereby  the  sovereign  gains  a  strong  control 
of  the  metals  in  common  circulation ;  not  without  conferring  upon 
his  people  positive  benefits  in  return,  by  enabling  the  value  of  each 
piece  to  be  detected  at  a  glance,  and  the  false  to  be  distinguished 
from  the  true  with  comparative  ease,  as  also  increasing  the  con- 
venience of  circulation.  The  rise  of  commerce  and  navigation 
among  the  ancients  was  certainly  followed  speedily  by  the  introduc- 
tion and  growth  of  coinage  as  an  art ;  and  it  might  well  be  sup- 
posed that,  as  the  demand  for  a  circulating  medium  increased  and 
broadened,  those  who  were  accustomed  to  using  pieces  of  gold  and 
silver  cut  into  shekels,  talents,  and  drachms,  bethought  themselves 
how  they  might  stamp  and  mark  each  piece  in  such  a  manner  that, 
once  weighed  and  passed  into  circulation,  the  successive  holders 
should  feel  confident  of  its  true  worth  and  weight  without  casting 
it  into  the  scales  anew.  From  Grooco  the  system  of  coiimgo  pene- 
trated into  Gaul,  and  from  the  colony  of  Massilia,  now  ^Marseilles, 
extended  to  Britain.^ 

2.  See     Encycl.      Am.      "Money:"      Bl.   Com.   276:    Storj-   Const..   §    1111 
Encycl.    Britt.    "Money;"    1    Ewell's      et  scq. 

503 


§  338  THE  LAW  OF  PEKSONAL  PROPERTY.       [PAKT  III. 

§  337.     Copper,  etc.,  Coins,  and  Their  Uses. 

As  a  baser  metal,  copper  was  used  according  to  weight  from  a 
very  early  period  in  Rome;  nor  was  it  until  about  two,  centuries 
before  the  Christian  era  that  the  Romans  issued  gold  and  silver 
coins  by  way  of  substitute  for  the  first  time.  The  ancient  Britons 
had  coins  of  imported  brass,  also  of  tin  and  iron,  the  product  of 
their  own  mines ;  and  Csesar  at  the  time  of  his  invasion  found 
them  with  "both  lozenge  and  gold  money;  or,  instead  of  money, 
rings  adjusted  to  a  certain  weight."  Some  base  metals  are  found 
convenient  in  every  community ;  the  obvious  purpose  of  their  use 
being  to  avoid  the  necessity  of  making  subdivisions  of  the  more 
precious  metals  so  minute  as  would  render  them  of  inconvenient 
size  for  passing  from  hand  to  hand  when  exchanges  of  small  value 
were  to  be  effected ;  and  the  same  principle  applying  to  silver  for 
an  intermediate  base  use  as  compared  with  gold.  Copper  coins 
are  found  convenient  in  these  days  for  such  small  fractional  cir- 
culation ;  they  constitute  the  pence  and  half  pence  of  England ; 
and  in  this  country  copper  —  or  more  recently,  a  sort  of  amalgam 
of  copper  with  nickel  and  other  specified  metals  —  is  coined  and 
issued  from  the  mint  to  answer  a  like  purpose,  in  accordance  with 
statute  and  the  usage  of  government  for  nearly  a  hundred  years 
previous.^ 

§  338.     Advantages  of  Gold  and  Silver  for  Purposes  of  Money. 

Some  of  the  greatest  advantages  possessed  by  gold  and  silver 
over  all  the  other  articles  which  have  been  used  to  serve  the  pur- 
poses of  money  are:  jirst,  that  these  metals  are  sufficiently  rare, 
the  world  over,  to  have  an  intrinsic  value  corresponding  to  the 
bulk,  which  constitutes  a  convenient  medium  of  exchange  and 
transportation;  second,  that,  being  metals,  they  can  be  melted, 
run  into  moulds,  and  exactly  divided  into  fractional  parts ;  third, 

3.  See    7    Jefferson's    Works,    462;  Encycl.  Am.  '*  IMoney."     Evidence  by 

Legal  Tender  Cases,  per  Clifford,  J.,  common  knowledge  of  value  of  silver 

13   Wall.    587;    Briglit.   Dig.    "Coin-  coins,  see  Chamberlayne  Evid.,  §  725. 
age;"      Encyel.      Britt.      "Money;" 

504 


CHAP.  II.]  MONEY.  §    339 

tliat  they  can  be  kept  for  an  indefinite  period  without  deteriorat- 
ing; fourth  J  that  while  from  various  causes  almost  all  other  com- 
modities rise  and  decline  rapidly  in  value  and  are  subject  to  great 
fluctuation  in  price,  the  value  of  gold  and  silver  changes  only  by 
slow  degrees ;  fifths  that  they  do  not  wear  out  readily  by  the  con- 
stant handling  to  which  all  money  is  exposed;  sixth,  that  their 
identity  is  perfect,  the  pure  gold  and  silver  furnished  by  the  mines 
of  one  country  having  the  same  qualities  with  those  of  another. 
Hence  gold  and  silver  became  universal  money ;  "  not,"  as  Turgot 
has  observed,  "  in  consequence  of  any  arbitrary  agreement  among 
men,  or  of  the  intervention  of  any  law,  but  by  the  nature  and 
force  of  things."  '^ 

§  339.     Money  as  a  Standard  of  Value ;    Its  Circulation  Limited. 

Yet,  notwithstanding  the  introduction  of  gold  and  silver  as 
money,  equivalents  are  still  given  for  equivalents,  and  the  stand- 
ard of  value  is  not  necessarily  increased  or  diminished  thereby. 
We  might  still  say  that  a  plough  was  worth  so  much  corn,  or,  as 
they  expressed  it  in  Homer's  day,  that  a  full  armor  cost  so  many 
oxen.^  One  thing  is  frequently  exchanged  for  another,  without 
the  medium  which  gold  and  silver  coins  present,  and  with  that 
mental  comparison  of  commodity  values  made  more  obvious,  which 
the  medium  reference  diverted  from  sight.  Gold  and  silver  may 
be  sold  like  other  merchandise,  as,  for  instance,  where  a  jeweller 
buys  it  to  be  fashioned  into  plate.  And  as  money  is  the  means, 
and  not  the  end ;  something  for  procuring  food,  clothes,  neces- 
aaries,  and  luxuries,  not  the  substance  to  be  enjoyed  or  consumed, 
it  is  manifest  that  only  a  limited  amount  is  needed  for  circulation 
in  any  community ;  which  amount  must  depend  greatly  upon  the 
fluctuating  population  and  the  products  to  be  circulated  upon  tlie 
separate  transactions  which  are  effected  through  the  giving  or  tak- 
ing of  money  in  payment.  But  when  a  plough  is  said  to  be  worth 
so  much  com,  there  is  an  uncertainty  in  the  minds  of  those  who  do 
not  deal  in  corn ;    and  so  men  agree  to  rate  corn,  ploughs,  and  all 

4.  See  Encyel.  Britt.  "  Money."  5.  Homer   Iliad,   lib.  6,  line  235. 

505 


§  341  THE  LAW  OF  PEKSOXAL  PKOPEKTY.       [pART  III. 

other  -articles  of  property  according  to  the  moriej  standard,  and 
we  know  then  by  arithmetical  comparison  what  each  thing  is 
worth. 

§  340.     Money  with  Reference  to  Sale,  Barter,  etc. 

So,  in  the  common  language  of  mercantile  men,  the  giving  of 
money  for  a  commodity  is  termed  buying;  and  the  giving  of  a 
commodity  for  money,  selling.  By  price,  too,  we  signify  the  value 
of  a  commodity  rated  in  money.  And  in  case  one  transfers 
directly  goods  and  chattels  for  other  goods  and  chattels  of  equal 
value,  without  the  use  of  money,  it  is  usually  said  that  he  makes 
a  barter  or  exchange, —  not  a  sale.^ 

§  341.     "  Lawful  Money,"  as  Contrasted  with  Bullion,  etc. ;  Legal 
Tender. 

While  the  reader  may  understand,  from  what  has  been  already 
said,  that  money  is  a  species  of  corporeal  property,  or  a  chose  in 
possession,  with  an  ultimate  identity  of  its  own,  he  should  also  be 
reminded  that  the  system  of  coinage  now  so  prevalent  among  civil- 
ized nations  brings  about  a  more  conventional  definition  of  the 
word  "  money  "  than  that  already  given.  We  do  not  usually  apply 
the  word  to  gold  and  silver  uncoined  and  in  the  lump  or  mass; 
for  that  is  termed  bullion.  And  the  word  "  bullion,"  when  con- 
sidered in  connection  with  our  coinage  acts,  includes,  apparently, 
even  foreign  coins,  which  must  be  melted  up  and  recoined  before 
they  can  circulate  in  this  country;  though  with  reference  to  the 
usages  and  laws  of  the  country  where  they  were  coined,  and  where 
they  circulate,  one  should  still  speak  of  them  as  money.'' 

In  common  language  the  word  "  money  "  is  used  as  synonymous 
with  gold  and  silver  coins, —  the  coins  which  usually  circulate  in 
a  country  as  the  sole  authorized  medium  of  exchange.     So  far  as 

6.  See    the    above    words    in    Bouv.  7.  See  Bouv.  Diet.  '"  Bullion."     Evi- 

Dict. ;  also,  Webster  and  Worcester;  dence  to  identify  money,  see  Cham- 
also  vol.  ii,  post,  as  to  Sales.  berlayne  Evid.,   §    1131. 

506 


CHAP.  II.]  MONEY.  §    342 

concerns  the  United  States,  indeed,  this  has  been  thought  by  many 
to  be  the  only  legal  definition  of  the  word;  for  the  Constitution 
provides  that  Congress  shall  have  power  "  to  coin  money,  regulate 
the  value  thereof,  and  of  foreign  coin ;  "  and,  again,  that  no  State 
shall  coin  money,  emit  bills  of  credit,  or  make  anything  but  gold 
and  silver  coin  a  tender  in  payment  of  debts ;  and  hence  it  is 
argued  that  the  only  lawful  "  money  "  of  the  United  States  con- 
sists of  our  gold  and  silver  coin.  But,  as  we  shall  presently  see, 
this  is  a  theory  which  has  been  disputed  and  apparently  overthrown 
in  a  remarkable  instance.^  That  the  word  "  money "  was  gen- 
erally used  in  that  exclusive  sense  until  the  era  of  our  civil  war 
will  hardly  be  disputed,  however,  by  any  one  familiar  with  Ameri- 
can legislation.  And  so  well  did  Congress  maintain  the  doctrine 
that  our  gold  and  silver  coin  constituted  the  only  lawful  money  of 
the  United  States,  that  they  were  careful,  until  much  later,  not  to 
legislate  that  our  copper  and  nickel  coins  or  the  coins  of  foreign 
nations  should  do  more  than  "  pass  current,"  —  regulating  the 
value  of  the  latter  as  the  Constitution  gave  them  power  to  do.' 
And  yet  our  gold  and  silver  were  constantly  declared  to  bo  a  ''  legal 
tender  "  for  pa^nnents,  each  according  to  its  nominal  value ;  that 
is,  that  any  one  owing  a  debt  might  tender  gold  and  silver  coin  of 
the  United  States  for  the  full  amount  to  his  creditor,  who  was 
legally  bound  to  receive  it  in  payment  and  satisfaction.^ 

§  342.  Distinction  Between  Corporeal  and  Incorporeal  Person- 
alty with  Respect  to  Money. 
This  "  legal-tender  "  aspect  of  money,  it  may  be  added,  which 
is  an  important  on(>  in  connection  with  its  use  as  a  medium  of 
exchange,  becomes  in  practice  the  convoniont  test  for  distinguishing 
money  from  that  which  passes  about  as  though  it  were  money;  a 
bank  check  or  note,  for  instance,  which  is  ni\er\  taken,  yot  may  be 

8.  Spo   Const.   IT.    R.,   art.    1.    §§   8,  9.  See    Bri<rht.    Di^r.    T".    S.    Laws, 

10.     And  see  Legal  Tender  Cases,  12       "Coinage;"  ib.  Suppl. 
Wall.  457.  1.  Tb.        And       see       Bouv.       Diet. 

"  Money." 

.507 


§    343  TPIE    LAW    OF    FEKSONAL    PROPERTY.  [PART  III. 

refused,  in  pa;yment  of  a  debt,  from  the  gold  or  silver  coin  bearing 
the  stamp  of  the  mint,  which  government  compels  to  be  received 
in  payment  whether  the  creditor  will  or  no.  And  herein  we  con- 
sider the  true  distinction  lies  between  the  thing  corporeal  and  the 
thing  incorporeal,  as  concerns  personal  property;  for  if  notes  are 
lawfully  issued,  under  authority  of  the  Constitution,  to  pass  as  a 
legal  tender  for  the  payment  of  debts  at  their  nominal  value,  they 
become  "  money ;  "  and  being  money,  or  that  thing  which  extin- 
guishes all  debts  as  between  individuals,  and  not  a  debt,  each  note 
for  itself,  nor  the  evidence  of  a  debt,  to  be  extinguished  afterwards, 
in  their  dealings,  by  the  payment  of  gold  and  silver,  the  legal- 
tender  notes  are  still  to  be  considered  in  transactions  between 
individuals  as  corporeal  property;  or,  as  our  law-writers  would 
generally  express  it,  choses  in  possession,  and  not  choses  in  action.- 

§343.     Coinage  by  Government ;   English  Money. 

The  power  to  coin  money  and  regulate  its  value  has  usually  been 
exercised  by  government,  and  not  by  individuals.  The  Emperor 
Justinian  lent  his  sanction  to  the  exercise  of  this  power;  and 
among  modern  nations  the  right  to  do  so  is  as  little  questioned  as 
the  expediency.  Yet  we  read  that  during  the  reign  of  the  early 
kings  of  England,  and  for  some  time  after  the  JSTorman  conquest, 
not  only  was  the  right  to  coin  money  exercised  by  bishops  and 
abbots,  but  almost  every  baron  issued  money  by  his  own  authority, 
until  the  coinage  was  brought  to  utter  confusion.  Henry  II.  in 
1154,  and  after  him  Henry  III.  and  the  Edwards,  brought  the 
coinage  system  of  England  more  mider  their  sovereign  control, 
and  laws  were  made  and  orders  issued  from  time  to  time  to  keep 
out  foreign  coins  and  for  the  purpose  of  recoining  and  even  debas- 
ing, for  selfish  purposes,  the  common  money  of  the  realm.     From 

2.  The     full     expression     of     such  requiring    an    involuntary     contribu- 

notes  is  to  make  them  a  legal  tender  tion,  are  not  "debts"  in  this  sense, 

"in  payment  of  all  debts,  public  and  Hagar   v.    Reclamation   District,    111 

private,    within    the   United    States."  U.   S.  701,   706.     See  §   345.     Identi- 

But   public   taxes,   which   are    in   the  fication  of  bank  notes.  Chamberlayne 

nature  of  an  exaction  under  the  law,  Evid.,  §§  1872,  1131,  2181,  2213. 

508 


CHAP.  II.]  MONEY.  §    344 

the  period  of  the  Saxon  heptarchy,  the  standard  money  of  England 
has  consisted  of  pounds,  shillings,  and  pence;  and  at  first  the 
pound  consisted  of  an  actual  pound  of  silver,  each  pound  being 
coined  into  two  hundred  and  forty  pennies.  The  term  ''  sterling  " 
was  used  at  a  later  period  to  signify  that  this  was  the  standard 
money  of  England.  And,  still  later,  the  weight  of  the  pound  was 
diminished  by  successive  kings."'  At  the  present  day  the  words 
"  pound  "  and  "  sovereign  "  are  used  as  synonymous  terms  in  that 
country,  and  the  value  of  the  pound  sterling  is  rated  here  by 
various  acts  of  CongTess.'* 

§  344.     The  Same  Subject;   American  Money. 

The  dollar  is  the  money  unit  in  the  United  States,  and  so  has 
been  ever  since  its  first  establishment  under  the  Confederation  by 
resolution  of  Congress,  July  6,  1785,  when  it  was  further  resolved 
that  the  smallest  coin  (the  half-cent)  be  of  copper,  of  which  two 
hundred  should  pass  for  a  dollar;  and  that  the  several  pieces 
should  increase  in  a  decimal  ratio.  Up  to  this  time  xYmericans 
had  adopted  no  money  standard  of  their  own,  but  as  colonists  had 
followed  that  of  the  mother  country.  On  the  8th  of  August,  1786, 
Congress  further  established  the  standard  for  gold  and  silver; 
making  only  a  silver  dollar  at  this  time,  but  rating,  in  the  decimal 
ratios  of  ten,  mills,  cents,  dimes,  and  dollars,  as  we  still  reckon 
them ;  and  authorizing  two  gold  pieces  to  be  coined,  the  eagle  and 
half-eagle,  the  former  being  equivalent  to  ten  dollars.^  The  Con- 
stitution of  the  United  States,  adopted  soon  after,  took  from  the 
several  States,  by  force  of  the  articles  to  which  we  have  already 
alluded,  the  power  to  coin  money,  and  re-vested  it  exclusively  in 
the  Congress  of  the  United  States ;    and  accordingly  laws  were  once 

3.  See  Encycl.  Am.  and  Encycl.  putes  it  at  four  dollars  and  cij^hty-six 
Britt.  "Money,"  with  authorities  conts  and  six  and  one-half  mills.  See 
cited.  U.    S.    Rev.    Stats.,    §    3565;    U.    S. 

4.  Tb.     See  Act  July  27,  1842,  §  1 :  Comp.  Stat3.,  1?16,  §  6537. 

5   Stat.  496.     Act  of  184a  rated  the  5.  See    Articles    Confed.    IX.    con- 

pound  sterlincr  as  equal  to  four  dollars      ferrinsr  power  on  Congress, 
and  eighty  cents.     Act  of  1873  com- 

509 


§  344         THE  LAW  OF  PERSONAL  PKOPERTY.      [PAKT  III. 

more  enacted,  regulating  the  valne  of  the  several  coins, —  to  much 
the  same  effect  as  before.  After  the  establishment  of  a  United 
States  mint,  under  the  act  of  April  2,  1792,  the  coinage  of  dollars 
and  the  establishment  of  a  decimal  system  first  commenced  in  this 
country, —  in  1794,  as  it  is  said.^  And  while  for  centuries  "  the 
image  and  superscription  "  of  the  sovereign  had  appeared  stamped 
upon  the  gold  and  silver  coin  of  most  nations,  our  government, 
born  of  the  people  and  for  the  people,  took  at  once  its  own  choice 
emblems  of  liberty  and  the  eagle;  for  we  acknowledged  neither 
prince,  nor  potentate,  nor  warrior  as  worthy  of  giving  significance 
and  currency  to  the  coined  money  of  the  United  States.'^ 

With  the  changing  wants  and  increasing  demands  of  trade  and 
population,  as  well  as  the  discovery  of  new  mines,  came  modifica- 
tions of  our  coinage  laws ;  such  as  the  establishment  of  branches 
of  the  United  States  mint,  and  assay  offices,  and  modifications  of 
law  concerning  the  standard  weight  and  value  of  the  dollar,  the 
comparative  value  of  foreign  coins,  and  the  kinds  and  relative 
proportion  of  pieces  to  be  sent  out  for  general  circulation.  The 
Act  of  March  3,  1849,  authorized  the  coinage  of  gold  dollars,  con- 
formably to  the  standard  for  gold  coins  previously  existing;  and 
the  silver  dollar  was  for  the  time  driven  out  of  circulation  in  this 
country,  by  the  passage  of  the  Act  of  Feb.  21,  1853,  which  reduced 
the  weight  of  the  half-dollar  and  smaller  coins  without  changing 
that  of  the  larger  denomination:  whereby  two  silver  half-dollars 
purchased  as  much  as  a  silver  dollar,  though  containing  some 
twenty-eight  grains  less  of  the  precious  metal.  Such  was  the  law- 
ful money  of  the  United  States  as  regulated  by  Congress  up  to  the 
year  1862.^ 

G.  See     Bright.     Dig.     "Coinage,"  a    dollar,    Act    21    Feb.,    1857.      And 

passim;  also,   Bouv.   Diet.    "Dollar."  see,    for    later    modifications    of    the 

7.  As  to  legal  tender  of  a  worn  or  coinage  law,  U.  S.  Rev.  Stats.,  §§ 
cracked  coin,  se^e  Cincinnati  Co.  v.  3563-3568.  The  policy  in  Congress'  of 
Rosnagle,  84  Ohio  St.  310,  95  N.  E.  later  years  appears  to  have  been  to 
884.  favor  the  restoration  of  a  bi-metallic 

8.  lb.  See,  as  to  receiving  Spanish  currency;  though,  as  to  silver  dol- 
and  Mexican  dollars  and  fractions  of  lars,  thus  far  with  scarcely  any  prac- 

510 


CHAP.  II.]  MONET.  §    345 

§  345.     "  Legal  Tender  "  Notes,  Whether  American  Money. 

In  April,  1801,  began  that  memorable  civil  conllict  which  lasted 
for  more  than  four  years  and  resulted  in  the  final  downfall  of 
human  slavery  in  the  United  States.  The  necessities  of  the  nation 
during  the  period  of  that  perilous  struggle  drove  our  government 
into  strange  financial  experiments,  and  developed  new  constitu- 
tional doctrines  touching  the  money  powers  of  Congress  which 
have  since  agitated  the  courts  and  affected  the  executive  policy. 
With  the  first  touch  of  war,  gold  and  silver  coin  melted  away  like 
snow  before  the  breath  of  spring.  For  purposes  of  ordinary  cir- 
culation the  paper  bills  of  local  banks  redeemable  in  metallic 
money  had  been  found  a  convenient  currency,  because  so  easily 
carried  about  in  large  amounts,  unlike  the  coin  which  they  repre- 
sented ;  and  these  banks  suspending  specie  payments,  the  bills  still 
floated  about  in  a  depreciated  condition.  Postage-stamps,  vouch- 
ers, private  checks  and  counters  at  once  came  into  use  for  small 
change  in  place  of  the  silver  half-dollar  pieces,  quarters,  dimes, 
and  half-dimes.  Gold  and  silver  rose  in  the  scale  high  above  par. 
All  this  was  new  to  us  of  that  generation,  yet  it  was  the  old  story 
of  past  revolutionary  struggles.  For  there  are  certain  truths 
which  are  well  establidied  in  political  economy:  namely,  that  only 
a  limited  amount  of  money  is  needed  for  circulation  in  a  com- 
munity, and  that  any  forced  excess  results  in  depreciation,  and 
leads  towards  utter  worthlessness ;  that  where  there  is  paper 
money  redeemable  on  demand,  the  bills  sent  out  in  excess  of  the 
immediate  wants  of  circulation  return  to  the  counters  whence  they 
issued,  whereby  an  equilibrium  is  presented  in  the  community; 
that  the  moment  paper  circulating  in  excess  of  the  general  demand 
is  made  irredeemable,  it  drives  out  the  gold  and  silver  which  it 
represented,  since  irredeemable  paper  finds  no  circulation  out^side 
of  the  nation  which  issues  it  or  permits  its  issue,  while  gold  and 

tical  success.     See  U.  S.  Rev.  Stats.,  ver  purchase  act  of  1890  repealed  by 

§   3513   et  seq.;  Joint  Res.  July  22,  Act    November     1,     1893     (28     Stat. 

1876;   19  Stat.  L.   215;   Act  Feb.   28,  L.  4). 
1878    (20  Stat.  L.  25).     See  also  sil- 

511 


§  345  THE  LAW  OF  PERSONAL  PROPERTY.      [pART  III. 

silver,  the  universal  medium  of  exchange,  have  the  whole  civilized 
world  wherein  to  find  a  level,  and  may  be  melted  up,  exported,  and 
recoined  at  pleasure ;  that  where  a  paper  dollar  and  a  gold  dollar 
are  found  representing  the  unit  of  value  together,  but  the  former 
is  thus  depreciated,  while  the  latter  maintains  its  value,  compara- 
tively speaking,  the  less  in  value  supplants  in  local  circulation  the 
greater,  and  the  gold  dollar  sells  for  its  equivalent  in  paper,  or, 
since  the  latter  remains  the  unit  of  value,  is  said  to  rise  above  par. 

Under  circumstances  like  these,  and  goaded  by  the  immediate 
needs  of  a  war  which  was  draining  the  national  resources  and 
impoverishing  the  whole  country,  the  nation  resorted,  for  the  third 
time  in  the  history  of  this  country  under  the  Constitution,  to  an 
internal  system  in  addition  to  that  of  the  customs  for  procuring  an 
immediate  revenue,  besides  borrowing  sums  on  the  credit  of  tke 
United  States,  as  largely  and  as  rapidly  as  possible.  And,  what  is 
most  pertinent  to  our  present  investigation,  Congress,  urged  by 
the  financial  advisers  of  the  nation,  took  advantage  of  the  existing 
state  of  the  currency  to  put  upon  the  market  notes  of  the  nation 
designed  to'  serve  as  the  general  circulating  medium  of  the  people, 
to  be  in  effect  lawful  money;  thereby  adding  immensely  to  the 
public  resources,  while  in  some  degree  alleviating  tJie  distress 
which  prevailed  in  business  circles.  The  first  of  these  acts  of 
Congress  —  since  known  as  the  "  Legal  Tender  Acts  "  —  was  that 
of  Feb.  25,  1862,  which  authorized  the  issue  of  one  hundred  and 
fifty  million  dollars  of  such  notes ;  and  other  acts  of  like  import 
speedily  followed,  dated  July  11,  1862,  and  March  3,  1863,  and 
increasing  the  volume  of  legal-tender  currency  to  the  immense  sum 
of  four  hundred  and  fifty  millions ;  not  to  speak  of  interest-bear- 
ing notes  which  soon  came  to  be  authorized  besides.  These  notes 
were  made  by  statute  law  receivable  in  payment  of  all  loans  made 
to  the  United  States,  and  of  all  duties,  debts,  and  demands  due  to 
the  United  States  except  duties  on  imports  and  interest,  and  of  all 
claims  and  demands  against  the  United  States  substantially  except 
for  interest  on  its  coin-bearing  loans ;  and  it  was  added  that  they 
should  also  "  be  lawful  money  and  a  legal  tender  in  payment  of 

512 


CHAP.  II.] 


MONEY. 


§  345 


all  debts,  public  and  private,  within  the  United  States,"  ^  with  the 
exceptions,  as  just  stated,  of  duties  on  imports  and  interest,  which, 
as  before,  together  with  the  interest  and  principal  of  new  coin- 
bearing  loans,  continued  to  be  payable  in  gold  and  silver  coin. 
Such  was  the  new  money  of  the  United  States,  destined  to  become 
historical  as  "  legal  tenders  "  or  "  greenbacks.;  "  and  whose  crea- 
tion led  to  those  heated  controversies  in  the  courts  over  the  con- 
fititutional  powers  of  Congress  which  culminated  in  the  summer 
of  1871  in  the  memorable  decision  of  the  Supreme  Court  of  the 
United  States,  in  what  are  well  known  as  the  Legal  Tender  Cases} 


9.  Si'e  §  342,  note. 

1.  See  Legal  Tender  Cases,  12  Wall. 
457,  overruling  Hepburn  v.  Griswold, 
8  Wall.  603.  The  legal  result  thus 
arrived  at,  and  what  we  may  call,  if 
permanently  sustained,  the  later 
American  doctrine,  is  that  there  are 
two  kinds  of  lawful  money  of  the 
United  States,  either  or  both  of  which 
may  be  permitted  to  pass  current 
under  the  Constitution ;  the  one  con^ 
sisting  of  coined  money,  the  other  of 
legal-tender  notes.  And  since,  wher- 
ever both  circulate  at  the  same  time, 
the  latter  kind  is  depreciated  as  com- 
pared with  the  former,  there  must 
be  a  hardship  under  the  operation  of 
this  doctrine,  as  seen  in  the  fact  that 
one  who  loans  so  many  dollars  in 
coined  money  prior  to  the  passage 
of  a  legal-tender  act  is  compelled  to 
take  his  pay  after  its  passage,  and 
while  it  remains  in  force,  in  depre- 
ciated paper,  which,  tliough  nomi- 
nally for  the  same  number  of  dollars, 
is  actually  for  a  much  smaller  amount 
in  purchasable  value  than  though  ex- 
pressed to  be  in  coin.  Yet  such  has 
been  the  current  of  decision  in  a 
large  number  of  the  State  courts  dur- 
ing the  continuance  of  the  rebellion 
and   since   its   close.,   hardship   or    no 


hardship;  the  almost  uniform  pref- 
erence being  to  uphold  the  constitu- 
tionality of  the  Legal  Tender  Acts, 
whatever  the  circumstances  at  issue; 
though  patriotism  and  an  inflexible 
purpose  of  sustaining  the  public 
credit  at  all  hazards  doubtless  influ- 
enced these  results  in  a  remarkable 
degree.  .  And  while  a  multitude  of 
precedents  may  be  gathered  from  the 
local  reports  for  the  ten  years  imme- 
diately succeeding  the  passage  of  the 
first  of  these  "  Legal  Tender  Acts," 
to  support  the  doctrine  that  promises 
to  pay,  whether  made  before  or  after 
February,  1862,  can  be  discharged  in 
paper  dollars  for  tlie  nominal  amount 
promised, —  and  this,  too,  even  though 
the  contract  were  to  pay  in  "  coin  of 
tho  L^nited  States," — we  apprehend 
that  all  these  cases  are  to  be  consid- 
ered of  somewhat  temporary  import- 
ance, and  liable  to  be  modified,  because 
of  the  later  decisions  of  the  Supreme 
Court  of  the  United  States,  the  final 
arbiter  in  constitutional  questions  of 
this  sort.  See  Aletropolitan  Bank  v. 
Van  Dyck,  27  N.  Y.  400;  Schollen- 
berger  v.  Brinton.  o2  Penn.  St.  9, 
100;  Latham  v.  United  States,  1  C.  01. 
149;    George    v.    Concord,    45    N.    H. 


33 


513 


§  345 


THE    LAW    OK    I'KUSOXAL    PROPERTY. 


PART  III, 


And  to  take  the  place  of  postage  and  revenue  stamps  and  the 
fractional  "  postage  currency,"  the  issue  of  fractional  notes  was 
regularly  commenced  under  authority  of  law,  and  continued  many 


484;    Carpi-iiter    v.    Xortlifield    Bank, 
39  Vt.  46. 

The  doctrine  of  the  American 
courts,  as  thus  expounded  by  the 
tribunal  of  last  resort,  we  conceive 
to  be  suitably  expressed  in  these 
propositions:  first,  that  under  ordi- 
nary circumstances  the  only  "  lawful 
money  of  the  United  States  "  recog- 
nized by  the  Constitution  is  gold  and 
silver  coin ;  second,  that  amid  ex- 
traordinary circumstances  of  public 
peril,  and  by  virtue  of  what  are  called 
war  powers  under  the  Constitution, 
Congress  may  issue  paper  notes  to 
serve  as  money  and  a  legal  tender  in 
payment  of  all  debts  whether  con- 
tracted before  or  after  the  passage 
of  the  aet  authorizing  such  issue, — 
these  notes  to  constitute  a  sort  of 
war  currency,  and  to  be  retired  by 
government  as  soon  as  may  be  after 
the  emergency  has  passed ;  third, 
that  legal-tender  notes  having  been 
issued  under  such  circumstances,  a 
contract  for  the  payment  of  money 
generally  may  be  discharged  in  these 
notes,  instead  of  in  gold  and  silver 
coin,  at  the  debtor's  option ;  but 
fourth,  that  where  a  contract  is  ex- 
pressly made  payable  for  so  many 
dollars  "  in  specie,"  or  in  "  gold  and 
silver  coin,"  or  other  like  expressions 
are  used,  clearly  indicating  an  inten- 
tion that  paper  dollars  shall  not  be 
acceptable  in  payment  of  the  obliga- 
tion incurred,  payment  must  be  made 
accordingly  in  gold  and  silver  dol- 
lars; fifth,  that  contracts  contemplat- 
ing the  piirchase  of  gold  or  silver  as 
a  commodity  are  also  to  be  so  satis- 


fied, and  not  in  legal-tender  notes  at 
a  nominal  rate;  sixth,  that  to  avoid 
ambiguity  and  prevent  a  failure  of 
justice,  judgments  may  be  entered 
for  the  payment  of  coined  dollars, 
whenever  that  kind  of  money  is  spe- 
cifically designated  in  the  contracts 
upon  which  suit  is  brought.  See 
Legal  Tender  Cases,  12  Wall.  457. 
passim,  with  all  opinions  rendered ; 
Trebileock  v.  Wilson,  ib.  687;  Bron- 
son  V.  Rhodes,  7  Wall.  229.  And 
see  Bank  of  the  State  v.  Burton,  27 
Ind.  426;  Essex  Co.  v.  Pacific  Mills,. 
14  Allen,  389;  Christ  Church  Hos- 
pital V.  Fueschsel,  54  Penn.  St.  71 ; 
Hinneman  v.  Rosenback,  39  N.  Y. 
98.  And,  we  may  add  that,  while 
the  Supreme  Court  of  the  United 
States  pronounced  for  the  last  three 
of  these  propositions  with  something 
approaching  unanimity,  and  that,  too, 
at  a  time  when  public  opinion  fa- 
vored the  issue  of  irredeemable  paper 
notes  more  than  it  is  likely  to  again 
soon,  the  judges  were  so  completely 
at  variance  on  the  second  and  third 
propositions  that  in  1870  there  waa 
found  a  bare  majority  to  repudiate 
the  legal-tender  doctrine  in  tota, 
whose  decision  was  in  turn  reversed 
by  another  bare  majority,  one  year 
later ;  the  law  officers  of  government 
pressing  new  test  cases  forward,  and 
important  changes  having  meantime 
taken  place  in  the  composition  of  the 
bench.  See  Legal  Tender  Cases,  11 
Wall.  682;  12  ib.  457;  overruling 
Hepburn  v.  Griswold,  8  Wall.  603. 

This  chapter  was  first  written  dur- 
in<r  the  era  succeeding  the  civil   con- 


514 


CHAl'.  II.] 


MONEY. 


§   346 


years  after  for  the  purpose  of  petty  circulation, —  not,  however, 
as  "  legal  tenders,"  strictl}'  speaking." 

§  346.     Effect  of  "  Confederate  "  Currency. 

Other  money  questions  growing  out  of  the  same  civil  conflict 
aflfect  the  validity  of  contracts  ptiyable  in  notes  of  the  insurgent 
government.  While  there  is  no  doubt  that  contracts  in  aid  of 
rebellion  against  the  United  States  are  to  be  deemed  utterly  void, 
and  that  the  paper  money  issued  by  insurgent  authorities  is  a 
nullity,  yet  the  settled  doctrine  is  that  such  a  currency  as  was 
issued  by  the  Confederate  government,  while  it  held  sway,  must 
be  regarded  as  a  currency  imposed  on  the  community  under  Con- 
federate control.  And  the  same  rule  would  hold  trne  if  its  own 
currency  were  issued  by  a  foreign  government  temporarily  occupy- 
ing part  of  the  territory  of  the  United  States.^  Hence,  an  ordi- 
nary contract,  made  not  for  the  purpose  of  aiding  rebellion,  but 
in  the  usual  course  of  business,  and  between  parties  subjected  to 
the  Confederate  sway,  and  payable  in  Confederate  ''  dollars,"  is 


flict,  while  sptH;ie  payments  were  sus- 
pended, and  the  second  of  the  "  legal 
kinder "  decisions  above  noted  was^ 
supposed  to  lend  the  government  a 
moral  support  in  such  general  sus- 
pension. Under  a  later  act  of  Con- 
gress approved  Jan.  14,  1875,  specie 
payments  were  practically  resumed 
in  the  Uniti'd  States,  the  act  taking 
effect  Jan.  1,  1879.  Various  State 
decisions  meanwhile  were  rendered 
after  1870,  conforming  to  the  later 
decision  of  the  Supreme  Court  of  the 
United  Strifes  above  referred  to.  Kel- 
logg V.  Page,  44  Vt.  356.  The  Su- 
preme Court,  by  a  majority,  reaHirmed 
its  decision  as  to  the  constitutionality 
of  the  legal-tender  acts  in  various 
later  instances  l>efnre  1875.  Bigler 
v.  Waller,  14  Wall.  297:  Railroad 
Co.  V.  Johnson.  15  Wall.  195.  But 
once  more   (1884)   by  a  decision  from 

51; 


whicli  only  one  of  the  justices  dis- 
sented, and  in  a  test  case  brought 
upon  a  legal  tender  note  reissued 
after  the  war,  tlie  Supreme  Court 
abandoned  this  whole  financial  issue 
to  the  omnipotent  discretion  of  Con- 
gress; declaring  that  Congress  has. 
in  times  of  either  peace  or  war,  the 
constitutional  power  to  make  the 
notes  of  the  United  States  treasury 
a  legal  tender.  Juilliard  v.  Green- 
man,  110  U.  S.  421.  Yet,  this  should 
be  considered  as  largely  by  way  of 
dictum,  under  a  .'situation  growing 
out  of  the  Civil   War  essentially. 

2.  See  Act  March  .1,  1863,  §  4: 
Bright.  Fed.  Dig.  "  Currency."  And 
see  U.  S.  Rev.  Stats.  (1878),  §§  3571- 
3583,  for  the  currency  acts. 

3.  Tliorington  v.  Smith,  8  Wall.  1. 
11. 


§  347  THE  LAW  OF  PERSONAL  PKOPEKTY.       [ PART  III. 

binding  to  the  extent  of  the  actual  value  of  these  dollars,  at  the 
time  and  place  of  the  contract,  in  lawful  money  of  the  United 
States."*  Yet  payment  in  Confederate  currency  having  been  made 
and  accepted  in  good  faith  as  between  individuals  of  an  insurgent 
State,  the  debt  was  discharged.^ 

But  it  is  also  decided  that,  after  the  conflict  broke  out,  debtors 
in  the  rebellious  States  had  no  right  to  discharge  debts  owing  their 
creditors  in  the  loyal  States,  in  any  other  currency  than  the  legal 
currency  of  the  United  States.^  Nor  is  the  claim  that  payment 
in  Confederate  currency  was  intended,  to  be  set  up  in  doubtful 
cases/ 

§  347.     Specie  and  Currency  Distinguished. 

"  Specie  "  and  "  currency  "  are  words  now  in  familiar  use,  and 
deserve  a  passing  distinction.  The  term  "  in  specie,"  as  applied 
to  money,  has  acquired,  among  business  men  in  this  country,  the 
signification  that  the  amount  payable  shall  be  in  so  many  gold  or 
silver  dollars  of  the  coinage  of  the  United  States.  On  the  other 
hand,  commercial  usage  generally  applies  the  words  "  in  currency  " 
to  denote  that  the  note  is  payable  in  paper  notes,  and  not  in 
metallic  coin,  if  the  two  kinds  of  money  are  in  circulation.^ 
Specie,  in  other  words,  is  restrictive  in  its  application ;  while  cur- 
rency has  a  very  broad  signification  when  used  with  reference  to 
money,  and  includes  the  aggregate  of  coin,  bills,  and  notes  in  cir- 
culation as  money  without  qualification.  We  speak  of  metallic 
currency,  paper  currency,  and  a  mixed  currency;  but  specie 
dollars  are  gold  and  silver  dollars  and  nothing  else. 

4.  lb.;  Bisscll  v.  Heyward,  96  U.  S.  as  to  Virginia  coupon  cases  (coupons 
580;  Effinger  v.  Kenny,  115  U.  S.  receivable  for  the  State  taxes)  ;  Poin- 
566.  dexter  v.   Greenhow,   114   U.   S.   270; 

5.  Glasgow  V.  Lipse,  117  U.  S.  327;  Carter  v.  Greenhow.  114  U.  S.  317; 
94  U.   S.   434.  Ryan  v.  U.  S.,  135  U.  S.  664. 

6.  Fretz  v.  Stover,  22  Wall.  198.  8.  See  Field,  J.,  in  Trebilcock  v. 
See  as  to  "bankable  currency"  in  a  Wilson,  12  Wall.  695;  also,  Worces- 
Confederate  contract,  Rives  v.  Duke,  ter's  and  Webster's  Diet.  "  Currency," 
105  U.  S.  132.  "  Specie." 

7.  Cook  V.  Lillo,  103  U.  S.  792.    See 

516 


CHAP.  II.]  MOITET.  §    348 

§  348,     Counterfeiting,  Forgery,  and  Kindred  Crimes. 

Govermnents  having,  as  wo  have  seen,  long  asserted  the  prerc^a- 
tive  of  regulating  and  controlling  the  coinage,^  counterfeiting  the 
coin  is  usually  treated  by  the  common  law  of  England  as  an 
offence  against  the  king  or  government.  It  was  formerly  punished 
as  treason,  though  now  it  is  only  felony.  But  perhaps  the  better 
opinion  is,  that  counterfeiting  is  a  species  of  the  crime  of  forgery, 
to  which  it  is  at  all  events  quite  analogous;  and  forgery  rests  on 
the  broad  foundation  of  an  attempt  to  defraud  individuals,  and 
is  punishable  accordingly.'  The  Constitution  of  the  United  States 
gives  Congress  the  power  *'  to  provide  for  the  punishment  of  coun- 
terfeiting the  securities  and  current  coin  of  the  United  States."  ^ 
Congress  has  accordingly,  from  time  to  time,  enacted  laws  for 
punishijig  crimes  against  the  coinage.^  And,  besides  the  offence 
of  making  counterfeit  money  in  imitation  of  that  of  the  United 
States,  there  are  the  kindred  offences  of  uttering  or  passing  coun- 
terfeit money,  and  of  debasing  the  coinage ;  counterfeiting  foreign 
money  being  also  punishable :  all  of  which  matters  Congress  aims 
to  control  by  legislatioiu  And  with  the  issue  of  legal-tender 
notes,  and  other  paper  currency,  and  the  vast  increase  of  our 
public  debt,  this  sort  of  legislation  advances  still  further ;  and 
bonds,  coupons,  national  currency.  United  States  notes,  treasury 
notes,  fractional  notes,  checks  for  money  issued  by  officers  of  the 
United  States,  certificates  of  indebtedness,  certificates  of  deposit, 
stamps,  and  other  representatives  of  value  of  whatever  denomina- 
tion issued  by  any  Act  of  Congress,  are  all  made  punishable  by 
law,  the  crime  of  counterfeiting  thus  still  more  closely  assimilating 
to  that  of  forgery.'* 

9.  Supra,  §   343.  or    both,    at    the    discretion    of    the 

1.  See  1  Bish.  Crim.  Law,  4th  ed.,  court,  according  to  the  aprj^ravation 
§  930;  2  ib.,  §  260  et  seq.;  4  Ewell's  of  the  offence.  Sec  Bright  Fed. 
Bl.  Com.  97;  1  Russ.  Crimes,  Grea.  Dig.  "Crimes;"  Act  Tune  8,  1864, 
ed.  54  et  seq.  §  1. 

2.  Const.  U.  S.,  art.  1,  §  8.  4.  See  ib.,  Act  June  30,  1864,  §  13 ; 

3.  Thus,  by  aet  of  June  8,  1864,  the  Act  March  3,  1863,  §  8;  United  States 
penalty   is  by   fine   or   imprisonment,  v.  Howell,  11  Wall.  432. 

51Y 


§  -349 


THE    LAW    OF    PKIJSOXAI,     I'UOPEKTY. 


[PAKT  III. 


§349.     Bills  of  Credit ;    Prohibition  upon  States. 

Since  the  Constitution  prohibits  States  from  coining  money, 
emitting  bills  of  credit,  and  making  anything  but  gold  and  silver 
a  tender  in  payment  of  debts,  while  conferring  upon  Congress  the 
vast  money  powers  which  we  have  just  considered,  the  exclusive 
regulation  of  the  currency  is  in  the  federal  government.^  But 
such  was  not  the  case  prior  to  1789.  The  American  colonies 
being  almost  destitute  of  coined  money  from  the  earliest  period, 
and  having  the  balance  of  trade  constantly  against  them  in  their 
transactions  with  Europe,  were  early  driven  to  the  issue  of  paper 
money  for  home  circulation.  During  the  Revolutionary  war,  the 
several  States  vied  with  the  Continental  Congress  in  furnishing 
an  irredeemable  paper  medium.  So  terribte  were  the  conse- 
quences, that  the  framers  of  our  present  Constitution,  still  strug- 
gling with  the  continental  currency,  were  zealous  in  the  effort  to 
guard  against  like  calamities  for  the  future ;  and  hence  this  pro- 
hibition to  the  States.     Bills  of  credit,  then,  cannot  be  issued  by 


The  words  "  false,  forged,  and 
counterfeit,"  in  a  statute  of  this  sort, 
will  receive  a  fair  construction  in  the 
courts;  and  the  use  of  such  words 
implies  that  the  coin  or  bill  issued 
was  something  purporting  to  be,  or 
in  the  similitude  of,  the  lawful  money 
of  the  government,  and  not  in  reality 
genuine  or  valid.  United  States  v. 
Howell,  11  Wall.  432.  And  see  U.  S. 
Rev.  Stats.,  §§  5413-5437,  5457-5462. 
Nor  does  it  appear  that  the  constitu- 
tional grant  of  power  to  provide  "  for 
the  punishment  of  counterfeiting " 
admits  of  narrowing  down  so  as  to 
defeat  its  just  intent;  for  though  the 
offence  of  "  passing  "  counterfeit  coin 
is  not  clearly  embraced  within  the 
words  of  the  Constitution,  yet  in  a 
number  of  statutes  and  decisions, 
the  right  of  Congress  to  punish  this 
offence      is      assumed.      See      Bright. 


Dig.  "Crimes;"  Bright.  Fed.  Dig. 
"Crimes;"  Bish.  Crim.  Law,  §  268 
et  seq.  But  see  Fox  v.  State  of  Ohio, 
5  How.  410,  passim.  And  it  is  clearly 
established  that  Congress  may  pro- 
vide for  the  punishment  of  bringing 
into  the  United  States,  from  abroad, 
false,  forged,  and  counterfeit  coin, 
made  in  the  similitude  of  federal 
money;  and  for  the  punishment  of 
uttering  and  passii^  the  same. 
United  States  v.  Marigold,  9  How. 
560.  The  different  States  frequently 
enact  laws,  likewise,  punishing  the  of- 
fence of  circulating  counterfeit  coin 
of  the  United  State's;  and  such  stat- 
utes are  not  repugnant  to  the  Consti- 
tution. Fox  V.  State  of  Ohio,  5  How. 
410.  See  83  Fed.  736,  106  C.  C.  A. 
174. 

5.  See  Const.,  art.  1,  §§  8,  10. 


518 


CHAP.  11.]  :>iom:y.  §  350 

a  State,  under  the  Coustitiition  of  the  United  States,   in  force 
since  1789. 

But  what  are  "  bills  of  credit "  within  the  prohibition  of  the 
Constitution?  To  constitute  such  a  bill,  it  must  be  issued  by  a 
State,  on  the  faith  of  the  State,  and  be  designed  to  circidato  as 
money  in  the  ordinary  uses  of  business.^  And  thus  it  has  been 
held  that  certificates  issued  by  a  State  in  small  sums,  receivable  in 
payment  of  State,  county,  and  town  dues,  are  bills  of  credit  and 
so  prohibited/  lint  where  a  bank  was  incorporated  by  a  State, 
was  managed  by  directors  under  its  charter,  had  a  capital  stock 
actually  paid  in  and  liable  for  its  debts,  and  was  subject  to  suit 
for  non-payment,  the  Supreme  Court  of  the  I'nitcd  States  refused 
to  treat  its  bills  as  "  bills  of  credit "  issued  by  the  State,  though 
the  State  owned  the  entire  stock,  the  legislature  elected  the  direc- 
tors, and  the  faith  of  the  State  was  pledged  for  the  redemption  of 
the  bills,  these  being  made  receivable  in  payment  of  all  public 
dues.^  It  has  since  been  suggested  that  the  principal  ground  for 
distinguishing  these  last  bills  from  "  bills  of  credit "  as  emitted 
by  a  State  was,  that  they  rested  not  on  the  credit  of  the  State,  but 
on  that  of  a  corporation  as  derived  from  its  capital  stock;  '  and 
perhaps  that  decision  went  to  the  very  verge  of  constitutional 
limitations. 

§  350.     National  Banks  and  Their  Currency. 

To  provide  for  possible  exigencies  of  the  government,  besides 
furnishing  to  the  people  a  convenient  circulating  medium  usually 
redeemable,  national  banks  have  sometimes  been  deemed  a  public 
necessity.  In  the  time  of  William  and  Mary  was  established  the 
Djink  of  England,  by  whose  operations  wars  are  carried  on  and 

6.  Briscoe  v.  Bank  of  Kontiioky,  11  of  Arkan'ias;,  l.i  How.  31 S.  Coupons 
Pot.    311.  issuixi   by  a   State,   payable  at  a  day 

7.  CraiR  v.  I^Iissouri,  4  Pet.  410.  portiiin,  and  rowivable  after  maturity 

8.  Darrington  v.  Bank  of  Alabama,  by  tbe  .State  fur  taxes  and  debts,  are 
13  How.  12.  See  WoodrufT  v.  Trap-  not  bills  of  cre<lit,  if  not  used  nor 
nail,  10  How.   190.  intended  to  circulate  as  money.    Poin- 

9.  See  Curtis,  .1.,  in  Curran  v.  State  dexter    v.    Greenhow,    114   U,    S.    270. 

r)lf) 


§    350  THE    LAW    OF    I'EESONAL    PKOPEKTY.  [PART  III. 

the  sinews  of  government  supplied.  The  notes  of  this  bank  have 
circulated  throughout  Great  Britain,  in  times  of  financial  pres- 
sure, to  much  the  same  effect  as  a  legal  tender  currency,  even  where 
they  were  not  made  a  legal  tender  by  law ;  and  since  the  resump- 
tion of  specie  payments  in  that  country  after  the  terrible  wars 
with  Napoleon,  the  act  rechartering  the  Bank  of  England  has 
made  its  notes  a  legal  tender.^  A  bank  with  similar  powers  wajs 
organized  in  this  country  for  like  purposes  under  an  act  of  Con- 
gress passed  soon  after  the  adoption  of  the  Constitution.  The 
Bank  of  the  United  States  —  for  such  was  its  name  —  was  re- 
garded then  and  for  many  years  after  with  an  almost  superstitious 
veneration,  as  part  of  the  indispensable  financial  machinery  of 
government.  It  contributed  materially  in  supplying  the  govern- 
ment with  money,  and  gave  to  the  people  a  uniform  currency. 
But  a  corporation  wielding  powers  so  vast  could  not  be  popular; 
and  its  charter  was  not  renewed.  Hence,  in  the  war  with  Great 
Britain  in  1812,  the  nation  became  sadly  straitened.  Large  loans 
found  no  purchasers  on  favorable  terms.  The  Secretary  of  the 
Treasury  was  forced  to  issue  treasury  notes  in  large  quantities, 
which  ran  for  short  periods,  and  were  made  a  legal  tender  for  all 
debts  due  the  United  States, —  not,  however,  like  the  more  recent 
legal  tenders,  so  as  to  affect  the  contracts  of  individuals  with  one 
another.  Soon  after  the  return  of  peace  these  notes  were  called 
in,  for  the  finances  of  the  country  at  once  began  to  mend.  And 
now  the  United  States  Bank,  with  features  substantially  as  before, 
was  once  more  put  into  operation,  in  1816,  as  a  remedy  against 
those  ills  from  which  the  people  had  just  escaped.  Part  of  the 
capital  was  subscribed  by  the  Government,  which  was  also  repre- 
sented in  the  Board  of  Directors.  To  furnish  a  redeemable  cur- 
rency, to  supply  the  public  loans,  to  hold  the  national  deposits, — 
these  were  its  great  objects.  This  bank  shot  out  its  branches  into 
the  several  States.  The  validity  of  its  charter,  and  the  constitu- 
tional power  of  Congress  to  establish  such  an  institution,  received 

1.  See    Encycl.     Britt.     "  Money ;"  Bradley,   J.,   in  Legal   Tender   Cases, 
la  Wall.  568,  569. 
520 


CHAP.  II.]  MONET.  §    350 

the  final  sanction  of  the  Supreme  Court.^  Notwithstanding  all 
this,  the  United  States  Bank  soon  fell.  Its  monopoly  features 
rendered  it  odious.  The  same  opposition  arose  as  before.  Presi- 
dent Jackson  gave  the  corporation  its  d^ath-blow;  its  charter 
failed  of  renewal ;    and  bank  and  State  were  once  more  divorced. 

The  sub-treasury  system  to  which  the  nation  gradually  drifted, 
after  some  futile,  but  nearly  successful,  attempts  to  re-establish 
something  like  the  old  United  States  Bank,  has  stood  ever  since, 
though  much  of  its  distinctiveness  is  now  disappearing.  It  was 
the  only  fiscal  agent  of  the  United  States  during  our  war  with 
Mexico, —  the  third  critical  period  of  our  national  finances. 
Banks  and  banking  companies  organized  under  State  charters 
gradually  assumed  the  important  trust  of  furnishing  to  the  country 
a  paper-money  circulation,  their  notes  being  redeemable,  of  course, 
in  specie  on  demand  at  their  respective  counters.  But  with  so 
many  States,  so  many  systems,  and  so  many  banks, —  good,  bad, 
and  indifferent, — 'a  uniform  and  stable  paper  currency  was  want- 
ing; and  when  our  civil  war  commenced,  in  1861,  these  banks 
suspended  specie  payments  at  once.^ 

The  experiment  of  the  federal  government  with  its  legal  tenders 
opened  the  way,  under  such  favoring  circumstances,  for  a  renewed 
effort  to  give  to  this  broad  continent  a  stable,  permanent,  and  uni- 
form currency;  in  other  words,  to  re-establish  a  sort  of  United 
States  Bank,  shorn  of  its  corporate  powers,  and  now  become  a 
cluster  of  local  institutions  capable  of  creation  on  liberal  terms 
and  without  essential  favoritism.  The  first  of  these  National 
Banking  Acts  is  that  of  Feb.  25,  1863,  though  there  is  later  legis- 
lation of  importance  on  the  subject.'*  The  details  of  the  system 
are  under  superintendence  of  an  ofiicer  of  government,  who  looks 
after  the  banks  and  issues  the  bills,  and  who  is  designated  as  the 

2.  See  McCulloch  v.  Maryland,  4  4.  Seo  also  U.  S.  Rev.  Stats.,  tit. 
Wheat.  316.  See  1-4  Schouler'a  Ixii. ;  ib.  Suppl.  (1874-1881),  58,  123, 
History  of  the  United  States,  passim.      217. 

3.  5  Schoulcr's  United  States,  pas- 
sim. 

521 


§  350  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  III. 

Comptroller  of  the  Oiirrency.  Banking  associations  are  organized 
to  continue  in  operation,  the  capital  stock  of  each  consisting  partly 
of  United  States  securities  which  are  deposited  at  the  treasury, 
thus  constituting  a  trust  fund  to  secure  its  circulation ;  whereupon 
currency  notes  are  issued  for  a  certain  amount  by  the  Comptroller 
to  be  put  into  circulation  in  the  name  of  the  bank.  The  number 
of  banks  to  be  organized,  and  the  amount  of  circulating  notes  to 
be  issued,  are  regulated  by  Congress.  These  notes  are  made  re- 
ceivable at  par,  except  for  duties  on  imports,  interest  on  bonds, 
and  redemption  of  the  currency.  National  banks  may  also  be 
designated  as  depositaries  of  public  moneys.^ 

The  number  of  these  institutions  now  in  active  operation  is 
large,  and  their  aggregate  circulation  is  to  the  full  extent  allowed 
by  law.  Many  of  them  are  simply  old  banks  reorganized  and 
bearing  the  same  general  name  as  before,  the  bills  issued  formerly 
under  the  State  charters  having  been  taxed  by  Congress  out  of 
existence.  It  will  be  seen  that  the  new  banking  system  is  built 
upon  the  national  debt;  for  the  grand  financial  policy  of  the 
government  at  the  time  the  act  passed  was  to  pour  the  banking 
capital  of  the  country  in  time  of  war  into  the  federal  exchequer.^ 
The  system  is  now  supplemented  by  the  Federal  Reserve  Act  of 
1913,  providing  for  the  systematic  pooling  of  bank  reserves  and 
an  elastic  currency  so  as  to  avoid  money  panics. 

5.  The  equalization  of  circulation  Lionberger  v.  Rouse,  9  Wall.  468; 
among  the  States  is  repealed,  the  ag-  Kennedy  v.  Gibson,  8  Wall.  498; 
gregate  circulation  is  left  unlimited.  Bank  v.  Lanier,  11  Wall.  369.  As 
and  liberal  provision  is  made  for  or-  the  volume  of  our  national  war  debt 
ganizing  new  national  banks  under  .shrinks  in  size,  the  question  of  a 
the  act  Jan.  14,  1875,  which  provides  safe  substitute  security  for  a  national 
for  resuming  specie  payments.  bank  currency  to  rest   upon   becomes 

6.  A  number  of  decisions  relative  (1896)  a  pressing  one.  And  see 
to  the  National  Banking  Acts,  which  (1917)  more  recent  legislation  by 
it  would  be  foreign  to  our  purpose  to  Congress  as  to  banks,  silver  certifi- 
set   forth,   may   he   found    in   Bright.  cates,  etc. 

Fed.    Dig.    "  Banks,"    96.      And    see 


CHAP.  II.]  MONEY.  §    351 

§  351.     Bank  Notes,  etc.;    How  Far  a  Legal  Tender. 

So  much  then  for  vviiat  is,  strictly  and  properly  speak  in":,  law- 
ful money.  Yet  other  things,  besides  coin  of  the  government  and 
bills  which  are  made  a  legal  tender  by  constitutional  aurhority, 
are  frequently  considered  ''  money,"  to  use  a  popular  rather  than  a 
technical  expression.  Thus  the  current  bills  of  a  bank  are  often 
spoken  of  as  ''  money,"  because,  though  redeemable  on  demand, 
men  pay  them  out  or  take  them  as  though  they  were  gold  and 
silver;  the  great  mass  of  the  community  never  thinking  whether 
they  are  redeemable  or  not,  but  knowing  that  they  pass  current  in 
ordinary  times  for  tlie  same  amount  in  gold  and  silver  coin, 
besides  being  more  portable.  They  are  so  far  treated  as  money 
that  the  holder  of  one  stolen  from  a  bank  is  not  obliged  to  show 
how  he  came  by  it  in  order  to  recover  upon  it.^  But  bank-notes 
are  not,  strictly  speaking,  money,  and  cannot  be  in  the  true  sense 
a  legal  tender.^  Nor  can  bank-bills  be  brought  into  court  as  cash 
if  reasonably  objected  to.^  And  bills,  notes,  or  checks,  not  current 
at  their  par  value  nor  redeemable  on  presentation,  are  not  a  good 
tender,  whether  objected  to  at  the  time  of  payment  or  not.' 

Yet  current  bills  which  are  redeemed  at  the  counter  of  the  bank 
on  presentation,  and  pass  at  par  value  in  business  transactions  at 
the  place  where  offered,  may  become  by  a  corresponding  accept- 
ance a  good  tender.^  So,  for  that  matter,  upon  mutual  intent,  may 
he  a  check,  or  even  foreign  money.^  For  the  principle  here 
applied  is  that  the  crcdifor  elected  to  receive  the  thing  paid  over 

7.  Sw  Wyer  v.  Dorrhoster,  &e.,  1.  Ward  v.  Smith.  7  Wall.  447; 
Bank,  11  Cush.  51.  But  sec  De  la  Ontario  Bank  v.  Lightbody,  13  Wend. 
Chaumette    v.    Bank    of    Engcland,    9       10.'). 

B.    &    C.    208.      This    is    a    privilepje  2.  Th. ;  Pickard  v.  Bankes.  13  East, 

which    applies    to    nt^gotiable    instru-  20. 

nients  generally.     See  vol.  ii,  part  iv,  3.  Spratt  v.  Hobhouse,  4  Bing.  173 

r.  1.  National  Bank  v.  Levy,  17  R.  I.  746 

8.  Hallowell    Bank    v.    Howard,    13  Rhrenapergor  v.  Anderson,  3  Ex.  148 
Mass.    234;     Pickard    v.    Bankes,    13  Taylor   v.    Wilson.    11    Met.    44.      See 
East,   20;    Morse  Banks,   397.  §   367. 

9.  Hallowell    Bank    v.    Howard,    13 
;Mass.  234. 

523 


§    352  THE    LAW   OF    PEIISONAL    PKOI'EKTY.  [  TAUT  m, 

as  money,  and  that  such  was  the  mutual  understanding  at  the  time 
of  payment.  Accordingly  we  find  that  the  "  money  count "  in 
pleading  —  so  called  because  founded  on  an  express  or  implied 
promise  to  pay  money  in  consideration  of  a  pre-existing  debt  — 
may  be  supported  under  such  circumstances,  though  no  "  money  " 
was  received  by  defendant,  but  only  bank-notes  or  other  property 
which  he  received  as  money."*  And  it  may  be  added  that  the 
words  "  bank-bill  "  and  "  bank-note  "  are  often  used  indifferently 
and  with  the  same  meaning.^ 

§  352.  "  Money,"  "  Cash,"  etc.,  in  Testamentary  Trusts,  and 
Colloquial  Use. 
In  cases  arising  upon  the  construction  of  a  will  (where  a  tes- 
tator's intent  is  the  pole-star  for  judicial  guidance),  we  often  find 
considerable  latitude  allowed  in  determining  what  shall  pass  as  a 
bequest  of  "  money."  Under  a  bequest  of  '*  all  the  money  which 
shall  be  left  at  my  decease,"  courts  have  gone  so  far  as  to  decide, 
upon  a  general  construction  of  the  whole  will,  that  promissory 
notes  and  other  securities  for  the  payment  of  money  pass.^  And 
some  have  said  that  money  is  a  genus  that  comprehends  two 
species, —  ready  money  and  money  due.^  Certainly  current  bank- 
notes on  hand  and  money  balances  due  at  the  bank,  would  fre- 
quently be  treated  as  money,  out  of  regard  to  the  testator's  intent.^ 
"  Cash  "  and  "  ready  money  "  or  "  money  in  hand,"  are  terms 
which  require,  however,  a  stricter  interpretation.'     Where  a  rule 

4.  See  Bouv.  Diet.  "Money  had  5&2.  Notwithstanding  the  varying 
and  received;  "  1  Chitty  PI.  351  et  decisions  of  the  courts  as  to  what 
seq.  passes  under  a  bequest  of  "  money," 

5.  Eastman  v.  Commonwealth,  4  they  are  certainly  less  inclined  to  in- 
Gray,  416.      '  elude  promissory  notes,  bonds,  mort- 

6.  Morton  v.  Perry,   1  Met.   446.  gages,     and     other     securities,     than 

7.  See  Shelmer's  Case,  Gilb.  Eq.  current  bank-bills  and  deposits  at  a 
200.  bank.      See    cases    cited    in    2    Redf. 

8.  Mann  v.  Mann,  1  Johns.  Ch.  Wills,  2d  ed..  103  et  seq.  Not  even 
231;  Dabney  v.  Cottrell,  9  Gratt.  public  stocks  can  be  strictly  deemed 
572.  money.      Gosden   v.    Dotterill,    1   My. 

9.  See  Beales  v.  Crisford,  13   Sim.  &  K.    56.     But  in   an   English   case, 

524 


CHAP.  II.] 


MONET. 


§  352 


is  relaxed  out  of  regard  to  the  intent  of  a  testator  (who  cannot  be 
supposed  to  know,  ordinarily,  just  how  much  money  will  be  on 
his  person  in  coin,  rather  than  in  a  bank,  when  he  dies),  we  can- 
not well  construct  a  definition  from  the  precedents ;  and  "  money," 
as  coi*poreal  rather  than  incorporeal  property,  as  a  chose  in  pos- 
session rather  than  a  chose  in  action,  as  a  lawful  tender  for  debts, 
a  medium  of  exchange  and  a  standard  of  value,  rather  than  some- 
thing current  and  redeemable,  is  quite  different  from  that  vague 
ideal  thing  "  money  "  which  lurks  in  a  dying  man's  brain  and  so 
too  occurs  in  colloquial  use,  as  something  almost  synonymous  with 
personal  property  and  comprehensive  enough  to  embrace  the 
general  residue  of  one's  personal  estate.' 


Bank  of  England  notes  wore  thus 
included,  with  guineas  and  sover- 
eigns, while  country  bank-notes  were 
treated  as  standing  on  the  same  foot- 
ing with  promissory  notes,  and  so 
excluded.  Brooke  v.  Turner,  7  Sim. 
671.  We  have  already  noted  that 
Bank  of  England  bills  have  served 
in  England  as  a  legal  tender.  Supra, 
§  350. 

Under  a  statute  which  permits  of 
sales  for  "  cash  "  only,  ready  money 
transactions  are  intended  and  sales 
on  credit  are  excluded.  Such,  too, 
is  the  colloquial   distinction. 

1.  See  1  Jarm.  Wills,  1861,  730- 
737,  and  cases  cited;  Legg  v.  Asgill, 
cited  4  Russ.  369';  2  Rodf.  Wills,  2d 
ed.,  103  et  seq.;  1  Sehoul.  Wills,  etc., 
§  505. 

Once  more:  since  bank-bills  are 
carried  about  on  one's  person  as 
cash,  and  circulate  in  a  community 
on  the  peculiar  footing  of  a  currency, 
—  redemable     or     irredeemable,     yet 


seldom  redeemed  on  the  holder's  de- 
mand, but  rather  taken  by  one  indi- 
vidual to  be  paid  over  to  another, — 
we  cannot  doubt  (though  the  question 
was  probably  never  raised),  that 
when  a  wife  dies  leaving  a  husband 
surviving  her,  the  common  law  gives 
him,  absolutely  and  at  once,  what- 
ever bank-bills  she  leaves,  as  well 
as  her  "  lawful  money,"  strictly  so 
called.  Yet,  from  want  of  a  clear 
conception  of  the  terms  to  be  used  in 
personal  property,  it  has  been  usual 
to  say  that  the  wife's  choses  in  pos- 
session go  absolutely  to  the  husband, 
while  her  cJwses  in  action  do  not.  un- 
less he  reduced  them  into  possession 
during  her  lifetime.  See  Sehoul. 
Hus.  &  Wife,  §§  150,  151.  That,  in 
our  opinion,  mere  current  bills  are 
incorporeal,  or  choses  in  action,  while 
"  lawful  money "  is  a  chose  in  pos- 
session, we  have  already  sufficiently 
intimated  in  this  chapter. 


525 


CHAPTER  III 

DEBTS    IN    GENERAL 

§  353.     Chattels  to  be  Hereafter  Considered  are  Incorporeal. 

From  corporeal  things  personal,  or  choses  in  possession,  we  now 
come  to  incorporeal  things  personal  or  choses  in  action;  and  hav- 
ing considered  sufficiently  those  kinds  of  property  which  one  can 
touch  and  see,  whose  enumeration  is  needless  since  their  legal 
incidents  are  for  the  most  part  the  same,  we  shall  for  the  remainder 
of  the  present  volume  devote  ourselves  to  property  of  that  descrip- 
tion which  cannot,  strictly  speaking,  be  seen,  touched,  or  handled, 
and  which  has  only  an  ideal  existence.  This  latter  kind  gives  rise 
to  various  peculiar  species  which  require  legal  distinction.  That 
our  treatment  of  the  subject  may  be  logical  and  progressive,  we 
shall  first  speak  of  that  simplest  species  of  an  incorporeal  chattel 
which  is  known  as  a  debt. 

§  354.     Simple  Chattel  Incorporeal;    Debt  Defined,  etc. 

A  debt,  as  one  readily  gathers  from  its  Latin  derivation,  is  some- 
thing owed.  The  person  to  whom  it  is  owed  is  the  creditor:  the 
person  owing  it  is  the  debtor.  "  The  legal  acceptation  of  debt  is," 
says  Blackstone,  "  a  sum  of  money  due  by  certain  and  express 
agreement :  as,  by  a  bond  for  a  determinate  sum ;  a  bill  or  note ; 
a  special  bargain ;  or  a  rent  reserv^ed  on  a  lease ;  where  the  quan- 
tity is  fixed  and  specific  and  does  not  depend  upon  any  subsequent 
valuation  to  settle  it."  ^  But  perhaps  the  words  '^  certain  and 
express"  here  used  are  rather  too  strong;  for  the  creation  of  a 
debt  may  be  proved  by  any  circumstances  which  raise  an  agreement 
by  implication;  and  in  a  less  technical  sense  the  word  debt  may 
sometimes  be  popularly  used  to  denote  any  claim  for  money,  or 
any  kind  of  a  just  demand.  But  we  most  properly  use  the  word 
debt  as  denoting  in  law  that  money  is  owed ;    also  that  the  money 

1.  3   Bl.    Com.    154. 

52G 


CHAP.  III.]  DEBTS    IN    GENEKAL.  §    355 

is  owed  by  virtue  of  some  agreement  or  contract  between  the  par- 
ties; also  that  a  fixed  and  specific  amount  is  due,  and  not  some- 
thing to  be  ascertained  by  valuation  hereafter.^  To  a  debtor  cor- 
responds the  creditor;  and  the  reciprocal  rights  of  debtor  and 
creditor  are  defined  by  positive  rules  of  law  which  equity  cannot 
vary.^ 

§  355.  "Obligation"  Distinguished  from  Debt;  a  Word  of 
Larger  Scope. 
As  a  word  of  larger  scope  than  debt  we  sometimes  use  the  term 
"  obligation."  Now,  obligations  may  be  legal  and  legally  binding, 
or  moral  and  only  morally  binding.  A  legal  obligation  should 
always  be  a  moral  one  likewise ;  but  all  moral  obligations  are  not 
necessarily  legal.  An  obligation  is  that  which  binds  one  to  do 
something;  and  a  legal  obligation  binds  a  person  to  do  something 
agreeably  to  the  laws  of  the  land.  An  obligation,  in  other  words, 
is  a  duty;  and  corresponding  to  duties  and  obligations  are  rights. 
But  a  person  may  be  under  a  variety  of  obligations;  he  may  be 
obliged  to  do  a  piece  of  work,  or  to  follow  the  instructions  of  a 
superior,  or  to  pay  money;  and  the  person  to  whom  he  is  thus 
bound  has  a  corresponding  right  to  exact  the  fulfilment  of  the 
obligation.  But  the  only  right  corresponding  to  a  debt  is  that  of 
receiving  satisfaction  in  money  or  its  equivalent;  and  the  only 
thing  owed  is  money  or  what  may  be  accepted  as  its  equivalent. 
A  debt,  then,  corresponds  most  nearly  to  a  money  right ;  though 
there  may  be  "  money  rights,"  so  called,  growing  out  of  demands 

2.  S<M»  Bouv.   Diet.   "Debt:"  2   Bl.  founded   upon    a   contract   express   or 

Com.   465;    Cable   v.   McCune,  26   Mo.  implied.     Statutes  as  to  taxes  are  to 

371;    Gray    v.    Bennett.    3    Met.    522;  be  interpreted   accordin^jly,   as  to  tbe 

Milldam   Foundry'   v.  Ilovev.   21    Pick.  presumed      lefrislative      intent.      Lane 

417.  County  v.  Orejjon,  7  Wall.  80,  citing 

A  tax  is  not  in   its  essential  char-  Camden  v.  Allen,  2  Dutcher,  398,  and 

acteristics  a  debt  nor  in  the  nature  of  other    cases;    Hagar    v.    Reclamation 

a  debt;  it  is  not  founded  on  contract  District.    Ill    TT.    S.    701.      Nor    is   a 

or    agreement,    but    operates    in    in-  fine    impoatnl    by    a    court    a    "  debt." 

mtum  ;  whereas  a  debt  is   a  sum   of  Spalding  v.  New  York,  4  Row.  21. 

money    due    by    agreement,    and     is  3.  Adler   v.    Fenton,    24   How.    407. 

527 


§  350  THE  LAW  OF  PERSONAL  PROPERTY,       [PART  III. 

for  injuries  as  well  as  demands  under  a  contract, —  corresponding, 
indeed,  to  any  duty  or  obligation  of  one  person  to  pay  money  over 
to  another/ 

But  the  word  "  obligation  "  in  English  law  has  sometimes  quite 
a  technical  meaning,  which  we  may  as  well  notice  before  passing 
further.  It  was  from  an  early  period  used  to  denote  a  bond  con- 
taining a  penalty,  with  a  condition  annexed  for  the  payment  of 
money,  performance  of  covenants,  or  the  like,  therein  differing 
from  a  bill,  which  is  generally  without  a  penalty  or  condition, 
though  it  may  be  obligatory ;  namely,  to  denote  a  deed  whereby  a 
man  binds  himself  under  a  penalty  to  do  a  thing. ^  The  obligor  is 
the  person  who  makes  the  bond  or  engages  to  perform  the  obliga- 
tion; and  the  person  in  whose  favor  the  obligation  is  contracted 
is  the  obligee.  Any  obligation  may  be  personal,  in  the  sense  that 
the  obligor  binds  himself  to  perform  an  act  without  directly  bind- 
ing his  property  for  its  performance ;  or,  again,  personal,  in  the 
sense  that  he  binds  himself  only,  without  including  his  heirs  or 
representatives ;  or,  on  the  other  hand,  the  obligation  may  be 
binding  on  one,  and  his  heirs  and  representatives ;  or  it  may  be 
on  the  strength  of  certain  property,  specially  pledged  or  given  as 
security  for  its  performance.  So  obligations  may  be  expressed, 
or  they  may  be  implied  at  law. 

§  356.     Classification  of  Debts;   Priority. 

Coming  back  to  the  subject  of  debts,  we  find  them  divided  into 
three  leading  classes,  according  to  the  manner  in  which  they  are 
evidenced.  The  first  class  consists  of  debts  of  record ;  the  second 
of  specialty  debts,  or  debts  by  contract  under  seal ;  the  third  of 
debts  founded  upon  simple  contract.^  For  by  the  old  common 
law,  different  degrees  of  security  were  conferred  upon  the  creditor 

4.  Bouv.  Diet.  "Obligation;"  Inst.  6.  See  2  Swell's  Bl.  Com.  465;  3 
3,  14;  2  Pothier  Ohl.,  Evans's  ed.  ib.  154;  Wms.  Pers.  Prop.,  17th  Eng. 
56;  Cro.  Jac.  251,  §  373.                               ed.  220;  Bouv.  Diet.  "Debt." 

5.  Tb.;    Co.    Litt.    172;    Com.    Dig. 
"  Obligation." 

528 


CHAP.  III.]  DEBTS    IX    GENERAI..  §    357 

according  as  the  debt  due  him  came  within  one  or  other  of  these 
three  classes;  though  this  rule,  one  of  priority,  has  been  greatly 
disturbed  of  late  years  by  statute,  both  in  England  and  the  United 
States ;  ^  for  the  mode  of  subjecting  a  debtor's  property  to  the 
demands  of  his  creditors  rests  in  the  wisdom  of  the  Icgislatura 
Let  us  examine  these  classes  in  turn. 

§  357.     Debts  of  Record,  etc. 

A  debt  of  record,  then,  is  a  debt  which  is  due  by  the  evidence  of 
some  court  of  record.  But  what  is  a  court  of  record  ?  It  was 
formerly  said,  by  English  writers,  that  every  court,  by  having 
power  given  to  it  to  fine  and  imprison,  became  a  court  of  record.* 
But  such  a  definition  is  quite  insuiScient  for  us  of  the  present 
day.  In  this  country,  and  in  England  likewise,  statutes  abound 
which  create  and  define  the  jurisdiction  of  the  courts,  and  declare 
further  that  they  shall  be  courts  of  record ;  having  more  reference, 
apparently,  in  conferring  this  title,  to  considerations  of  conveni- 
ence,—  to  the  inquiry  whether  the  court  does  an  important  local 
business  or  not, —  than  to  definite  principle.  Blackstone  is  nearly 
right  when  he  argues,  from  the  primary  meaning  of  words,  that 
a  court  of  record  is  one  where  the  acts  and  proceedings  are  enrolled 
for  a  perpetual  memorial  and  testimony.^  Still,  this  is  not  a 
decisive  test,  even  without  reference  to  statutes.^  Chief  Justice 
Shaw,  of  Massachusetts,  gave  a  good  definition  of  a  court  of  record 
when  he  defined  it  as  a  judicial,  organized  tribunal,  having  attri- 
butes and  exercising  functions  independently  of  the  magistrate 
designated  generally  to  hold  it.^ 

7.  See  Schoul.  Wills  &  Ex'rs,  §§  426-  Ired.  231 ;  Sherwood  v.  Johnson,  1 
428;   Wms.  Ex'rs,  10th  ed.  757.  Wend.  443.     And  ;^w  Holt  v.  Murray. 

8.  Bac.  Abr.  tit.  "Courts,"  D.  1  Sim.  48".. 

9.  3  Ewell's  Bl.  Com.   24,  25.  The  tendency  in  this  country  is  to 

1.  See  remarks  in  Woodman  v.  In-  make  every  court  over  whicli  a  judpe 
habitants  of  Somerset,  37  Me.  29 ;  presides  a  court  of  record.  We  have 
Chitty's  n.  to  3  Bl.  Com.  25.  courts    of    the    United     States     and 

2.  Ex  parte  Gladhill,  8  Met.  170.  courts  of  the  several  States.    There  is 
As  to  the  judgment  of  a  justice  of      the    Supreme    Court    of    the    United 

the    peace,    see    State   v.    Johnson,    7      States,   also   the   later   Court  of   Ap- 
34  529 


§  357 


THE  T.AW  OF  PERSONAL  PROPERTY. 


[part  III. 


Bj  debts  of  record  we  mean  those  debts  which  are  due  by  the 
judgment  of  a  court  of  record  and  so  evidenced  by  such  record. 
A  judgment  varies  in  its  nature  according  to  the  nature  of  the 
action,  the  plea,  the  issue,  and  the  manner  and  result  of  the 
decision.  A  judgment  may  be  interlocutory ,  where  the  amount 
of  damages  is  not  ascertained ;  or  final,  where  they  are  fixed  and 
definite.  Judgment  is  entered  on  the  record.  But  judgment  is 
not  necessarily  awarded  upon  the  decision  of  an  issue;  for  an 
action  may  be  cut  off  and  never  come  to  an  issue  through  failure 
of  the  party  to  follow  up  his  suit,  in  which  case  the  opposite  party 


peals,  and,  going  lower  down,  we  find 
the  Circuit  and  District  Courts, —  all 
courts  of  record.  There  is  a  Supreme 
Court,  or  perhaps  ca  still  higher  Court 
of  Appeals  in  each  State,  with  in- 
ferior tribunals,  such  as  County,  Dis- 
trict, or  Superior  Courts;  also  Police 
Courts ;  the  title  and  functions  of 
local  courts  depending  upon  local 
legislation.  All  of  these  are,  gener- 
ally speakinc:,  made  courts  of  record. 
Equity  and  common-law  functions 
are  in  most  parts  of  our  country 
blended  in  the  courts  of  supreme  ju- 
risdiction ;  probate  jurisdiction  being 
lodged,  however,  in  special  indepen- 
dent tribunals  in  the  first  instance, 
with  the  right  of  appeal;  while  civil 
and  criminal  business  is  divided 
among  the  inferior  tribunals,  just 
noted,  according  to  convenience.  It 
is  a  fundamental  principle  of  Amer- 
ican policy,  that  the  judiciary  shall 
be  separated  from,  the  executive  and 
legislative  branches.  But  in  England, 
and  at  the  old  common  law,  the  king 
was  the  fountain-head  of  authority, 
and  there  is  still  a  closer  assimilation 
found  of  the  three  great  departments 
of  government  than  in  this  country. 
For  in  England,  Parliament,  the  law- 


Toaking  power,  is  also  the  supreme 
court  of  the  land;  while  the  superior 
courts  of  record  are  the  House  of 
Lords,  Chancery,  the  Courts  of 
Queen's  Bench,  Common  Pleas,  and 
Exchequer ;  and  there  are  other 
courts  with  jurisdiction  in  probate, 
divorce,  admiralty,  and  ecclesiastical 
matters,  most  or  all  of  which  are  de- 
fined by  statute  as  courts  of  record. 
It  is  said  that  the  inferior  courts  of 
record  in  that  country  generally  con- 
sist of  the  numerous  courts  estab- 
lished throughout  the  country,  under 
the  recent  acts  for  the  more  easy 
recovery  of  small  debts  and  demands 
in  England.  See  Wms.  Pers.  Prop., 
17th  Eng.  ed.,  224;  also,  Bouv.  Diet. 
"  Court  of  Record."  By  the  Eng- 
lish Judicature  Act,  1873,  as  amended 
by  the  Judicature  Acts  of  1875  and 
1876,  former  high  courts  are  consoli- 
dated into  a  Supreme  Court  of  Judi- 
cature, and  a  High  Court  of  Justice, 
and  Court  of  Appeal  are  constituted; 
appeal  to  the  House  of  Lords  being 
likewise  defined.  See  Fisher  Digest, 
Practice  (1870-1880).  And  see  still 
later  Act  44  and  45  Vict.,  e.  68 
(1881). 


530 


CHAP.  III.]  DEBTS    IN   GENERAL.  §    357 

becomes  the  victor;  as  where  the  defendant  defaults,  or  the  plain- 
tiff nonsuits,  and  there  is  consequently  no  actual  exercise  of  judg- 
ment on  the  part  of  the  court;  "^  or  where  "neither  party"  is 
entered. 

Books  of  practice  have  much  to  say,  in  this  connection,  of  a 
warrant  of  attorney  to  confess  judgment.  This  warrant  of  attor- 
ney is  a  security  given  generally  by  the  defendant  to  the  plaintiff 
on  compromising  an  action,  or  even  where  no  action  is  pending; 
being  so  called  because  it  authorizes  the  person  to  whom  it  is  given 
to  appear  for  the  defendant  in  court  and  receive  a  declaration  in 
an  action  of  debt  for  the  amount  of  the  intended  judgment  debt, 
and  thereupon  to  confess  the  action  or  suffer  judgment  to  go  by 
default  against  him,"^  Like  most  securities  for  money  by  way  of 
penal  bond,  the  penalty  is  usually  as  security  for  about  half  the 
sum  expressed,  and  is  accompanied  by  a  defeasance,  which,  as  the 
name  implies,  defeats  the  full  operation  and  confines  it  to  the  debt 
and  interest  only.  A  warrant  of  attorney  of  this  kind  is  generally 
under  seal,  though  it  has  been  held  that  the  seal  is  unnecessary.^ 
These  warrants  are  often  taken  in  an  underhand  way,  and,  giving 
parties  employing  counsel  or  familiar  with  court  practice  a  decided 
advantage,  they  lead  frequently  to  fraudulent  and  oppressive  acts 
against  the  debtor,  besides  operating  injustice  to  the  other  cred- 
itors. While  force  is  given  to  them  still  in  England  nud  many 
parts  of  this  country,  legislation  frequently  makes  it  necessary  to 
have  them  recorded  in  order  that  the  judgment  debt  shall  have 
priority,  and  renders  the  judgment  void  if  corruptly  or  fraudu- 
lently obtained.  Whatever  the  condition  tlius  imposed  by  local 
statutes,  the  party  having  a  warrant  of  attorney  must  comply  with 
it  strictly.^ 

3.  Stephen  Pleading,  108-111;  3  Bl.  5.  Kinnersloy  v.  Musscn,  5  Taunt. 
Com.  397.  264. 

4.  See  Tidd's  Praet.  3d  Am.  ed.  6.  Lawless  v.  Hackett,  16  Johns. 
345  et  seq.;  Wms.  Pers.  Prop.  17th  149;  Roundy  v.  Hunt,  24  111.  r>98; 
En<r.  ed.,  p.  231,  n. ;  Cuthbert  v.  Dob-  Harwood  v.  Hildrcth,  3  Zabr.  51; 
bin.  1  C.  B.  278.  FuHerton's  Appeal.  46  Penn.  St.  144; 

Bryan  v.  Child,  5  Ex.  368. 

531 


§    359  THE    LAW    OF    PERSONAL    PROPERTY.  [PART  IIL 

§  358.     The  Same  Subject. 

A  decree  in  equity  against  a  person  is  to  be  treated  like  a  judg- 
ment debt  at  law,  and  stands  in  the  same  order  of  preference.'' 
By  this  is  meant,  of  course,  a  decree  for  the  payment  of  money; 
and  as  decrees  to  do  other  acts  evidence  no  debt,  properly  speak- 
ing, the  common  decree  in  a  foreclosure  suit  gives  no  priority.^ 

Debts  of  record  are  also  constituted  by  recog-nizance ;  the  term 
recognizance  being  applied  in  practice  to  an  obligation  entered 
into  before  some  court  of  record  or  magistrate  duly  authorized, 
with  condition  to  do  some  legal  act  therein  specified,  as  to  appear 
at  the  next  term  of  court,  or  to  keep  the  peace,  or  in  a  civil  case 
to  pay  the  debt,  interest,  and  costs  recovered  by  plaintiff.  The 
usual  object  of  a  recognizance  is,  to  secure  the  presence  of  a  per- 
son, on  whom  a  writ  is  served,  at  court  when  the  proper  time 
arrives;  and  its  authentication  is  not  by  the  party's  seal,  but  by 
record  of  the  court.^ 

§  359.     Same  Subject ;   Priority  of  Debts  of  Record. 

Such  being  the  usual  debts  of  record  in  modern  practice,  the 
rule,  in  absence  of  statutes  to  the  contrary,  is,  that  they  take  prior- 
ity of  all  other  debts ;  yet  among  these  there  is  found,  according 
to  the  English  rule,  a  certain  order  of  precedence,  where  a  debtor 
has  died  insolvent ;  judgment  debts  ranking  first,  without  priority 
among  themselves,  and  debts  by  recognizance  second.^ 

7.  Shafto    V.    Powel,    3    Lev.    355;  Where  a  recognizance  for  the  appear- 
Robinson  v.  Tonge,  3  P.  Wms.  401,  n.  ance  of  a  principal  is  joint,  and  not 

8.  Wilson    V.     Lady     Dunsany,     18  several,    the   failure   of   tlie    principal 
Bear.  293,  299.  to  appear   is   a   breach   of   the   condi- 

9.  3  Ewell's  Bl.  Com.  341 ;  4  ib.  297.  tion.     Mifhler   v.   Commonwealth,    62 
Sharswood's'  n. ;   Bouv.  Diet.  "  Recog-  Penn.  St.  55 

nizanee;  "    Wms.    Pers.    Prop.     17th  1.  2    Wms.    Ex'rs,    10th    Eng.    ed. 

Eng.  ed.  232.     And  see  2  Wms.  Ex'rs,  757;    Schoul.   Wills  &  Ex'rs,   §    142.6. 

10th    Eng.    ed.    767;    also    works    on  But      as     to     technical      distinctions 

Criminal        Practice.        Recognizance  founded    upon    the    date    of    entering 

bond    held    good    notwithstanding    a  judgment,  see  ib. 
blank.    Gorman  v.  State,  38  Tex.  112. 

532 


CHAP.  III.]  DEBTS    IN    GENERAL.  §    360 

§  360.     Specialty  Debts;    Covenants,  Bonds,  etc. 

Next  after  debts  of  record,  come  specialty  debts,  which  are 
debts  evidenced  by  contracts  under  seal, —  as  on  bonds,  covenants, 
and  other  instruments  under  the  seal  of  the  party  to  be  bound. 
All  these,  as  special-contract  debts,  are,  by  the  common  law,  pre- 
ferred to  debts  by  simple  contract.^  Where,  too,  the  relation  of 
landlord  and  tenant  exists  between  parties,  arrears  of  rent  are 
entitled  to  the  rank  of  the  specialty;  but  this  right,  which  grows 
out  of  privity  of  estate,  not  privity  of  contract,  applies  equally  on 
feudal  principles,  whether  the  rents  were  reserved  by  lease  or  by 
parol. ^  Here,  again,  the  old  rule  was  to  subdivide  in  certain 
cases,  as  to  the  order  of  precedence.'* 

The  instrument  by  which  a  specialty  debt  is  created  may  be  a 
deed  containing  some  covenant  for  the  breach  of  which  money  is 
due  from  the  party  who  covenants.  A  covenant  may  be  after  this 
form :  "And  I,  the  said  A.  B.,  for  myself  and  my  heirs,  executors, 
and  administrators,  do  hereby  covenant  to  and  with  the  said  C.  D., 
his  heirs  and  assigns,"  or,  "  his  executors  and  administrators,"  to 
do  or  not  to  do  something  specified.^ 

Or,  again,  the  instrument  may  be  in  the  form  of  a  bond ;  this 
being  an  obligation  in  writing  and  under  seal.  Bonds  may  be 
single, —  sixplex  ohligatio, —  as  where  the  obligor  binds  himself, 
his  heirs,  executors,  and  administrators,  to  pay  a  certain  sum  of 
money  to  another  at  some  future  day  designated ;  or,  they  may  bo 
conditional  (as  they  usually  are),  that  if  the  obligor  does  some 
particular  act,  the  obligation  shall  be  void,  or  else  remain  in  full 
force.^     We  are  to  observe  that  the  condition  need  not  be  to  pay  a 

2.  ff  Co.  88  b;  2  Bl.  Com.  341;  2  U.  S.  Dig-.  "Covenant;"  Wms.  Pers. 
Wms.  Ex'rs,  lOtli   Enjr.  od.  757.  Prop.  5th  Enjr.  ed.  102. 

3.  2  Wms.  Ex'rs,  945  and  n.;  Clough  6.  Bonv.  Diet.  -  Bond;  "  U.  S.  Di,<r. 
V.  French,  2  Coll.  277;  Willett  v.  "Bond;"  Wm».  Pers.  Prop..  17th 
Earle,  1  Vt.  490;  Kidd  a'.  Boone,  Eng.  ed.  235.  In  this  country  a  bond 
L.  R.  12  Eq.  89.  often  runs  to  this  effect:  "Know  all 

4.  2  Jarm.  Wills.  2d  (xl.  4fffi.  510;  men  by  these  presents,  that  T,  A.  B.. 
Richardson  v.  Jenkins,  1  Drew.  477;  of  [such  a  place],  am  held  and  firmly 
Schoul.  Wills  &  Ex'rs,  Si  427.  bound  unto  C.  D.,  of  [sueh   a   place], 

5.  See    Bouv.    Diet.    "  Covenant ;  "  in  the  sum  of  one  thousand  dollars, 

533 


§  361  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

certain  sum  of  money.  It  may  be  for  a  variety  of  purposes :  as, 
for  instance,  to  perform  an  award,  to  execute  a  conveyance,  to 
refund  payment  of  a  legacy  in  certain  contingencies,  and  so  on. 
There  are  official  bonds,  as  that  a  treasurer  shall  perform  his  duties 
properly,  and  bonds  or  indemnity  to  secure  a  person  who  pays  over 
money  under  doubtful  circumstances  against  the  risk  of  compul- 
sion to  pay  again.  Statutes  require  bonds  to  be  given  under  a 
great  variety  of  circumstances;  and  under  the  head  of  shipping 
we  find  bottomry  and  respondentia  bonds.  Bonds  are  frequently 
given  with  sureties,  who,  in  default  of  the  principal  party,  are 
themselves  liable  for  the  debt. 

§  361.     The  Same  Subject. 

The  mere  recital  of  a  debt  under  hand  and  seal  is  held  to  be  no 
specialty  debt.  For  while  a  recital  of  the  existence  of  a  debt  may 
amount,  by  reference  to  the  context,  to  an  implied  contract  or 
covenant  to  pay,  it  does  not  of  itself  necessarily  imply  such  a  con- 
tract or  covenant.^  And  if  there  be  a  conveyance  on  trust,  the 
mere  conveyance  does  not  amount  to  any  contract  on  the  trustee's 

good  and  lawful  money  of  the  United  might  follow:    "The  condition  of  this 

States,  to  be  paid  to  the  said  C.  D.,  obligation  is  such,  that  if  the  above- 

his  executors,  administrators,  and  as-  bound  A.  B.,  his  heirs,  executors,  and 

signs;     to   which   payment,   Arell   and  administrators,  or  any  of  them,  shall 

truly  to  be  made,  I  do  bind  mysolf,  and  do  well  and  truly  pay,  or  cause 

my  heirs,  executors,  and  administra-  to    be    paid,    unto    the    above-named 

tors,  firmly  by  these  presents.     Sealed  C.   D.,   his  executors,   administrators, 

with    my    seal,    dated "    [at    such    a  or  assigns,  the  full  and  just  sum  of 

time] .     Here  we  observe  that  execu-  five  hundred  dollars,  lawful  money  as 

tors  and  administrators  are  bound  in  aforesaid,  with  interest  for  the  same 

express  terms  as  well  as   the  heirs:  at  the  rate  of  six  per  cent,  per  an- 

though  a   covenant  or  bond  does   not  num,    on    or    before    [such    a    date], 

need   these  words,   since   the  mention  without   fraud   or   further   delay    [or 

of    "  heirs "    alone    would    make     it  without  any  deduction   or   abatement 

equally    eflfeetual.      Co.    Litt.    209    a;  whatsoever],  then  this  obligation  shall 

Barber  v.  Fox,  2-  Wms.   Saund.   136.  be  void,  otherwise  shall  remain  in  full 

This  form  .would  sufiice  for  a  simple  force  and  virtue." 
bond;    but  in  a  conditional  bond  the  7.  Lacam   v.    jMertins,    1   Ves.    Sen. 

condition  follows.     Thus,   if  the  con-  313;    Ivens  v.   Elwes,   3  Drew.   25;    6 

dition  be  to  pay  money,  these  words  De  G.  M.  &  G.  572. 

534 


CHAP.  III.] 


DEBTS    IN   GENEEAX. 


§  361 


part ;  whence  it  follows  that  a  mere  breach  of  trust  does  not  con- 
stitute a  specialty  debt ;  the  more  so  if  the  trustee  never  executed 
the  deed.  But  it  is  otherwise  if  the  language  of  the  deed  be  clear 
and  strong  enough  to  raise  a  covenant  on  his  part.^  Breaches  of 
trust  are  generally  ranked  •per  se  among  simple-contract  debts; 
yet  in  cases  where  the  debt  and  breach  of  trust  both  arise  from  the 
violation  of  some  obligation  under  seal,  they  are  entitled  to  rank 
with  specialty  debts.^  Debts  due  by  covenant  are,  of  course,  spe- 
cialty debts  of  the  same  nature  as  those  by  bond.'  And  debts  by 
mortgage  are  usually  ranked  in  this  same  class,  because  of  the 
covenant  or  bond  which  is  expressed  for  payment  of  the  money; 
though  in  respect  merely  to  the  promissory  note  which  the  mort- 
gage secures,  they  would  seem  to  belong  to  the  class  of  simple- 
contract  debts.^ 


8.  Adey  v.  Arnold,  2  De  G.  M.  &  G. 
432,  437;  2  Wms.  Ex'rs,  10th  Eng. 
ed.  771 ;  Richardson  v.  Jenkins,  1 
Drew.  477. 

9.  Benson  v.  Benson,  1  P.  Wms. 
130;  Turner  v.  Wardle,  7  Sim.  80;  2 
Wms.  Ex'rs,  10th  Eng.  cd.  771. 

1.  See  2  Wms.  Ex'rs,  10th  Eng.  ed. 
771,  and  cases  cited;  Plumer  v.  Mar- 
chant,  3  Burr.  1380. 

2.  See  Galton  v.  Hancock,  2  Atk. 
435;  Howell  v.  Price,  1  P.  Wms.  291. 
There  are  numerous  decisions  as  to 
bonds.  For  instance,  the  writing 
which  purports  to  be  an  obligation 
should  name  the  obligee.  Pelham  v. 
Grigg,  4  Ark.  141;  Phelps  v.  Call,  7 
Ired.  262.  But  it  is  unnecessary  that 
the  obligor's  name  should  appear  in 
the  bond,  provided  it  be  signed  and 
sealed  by  liim.  Pequawkett  v.  Mathes, 
7  N.  H.  230;  Smith  v.  Crookcr,  5 
Mass.  538;  Ex  parte  Fulton,  7  Cow. 
484;  Ahrond  v.  Odiorno,  13.')  Mass.  50. 
A  bond  should  be  signed,  sealed,  and 
delivered  in  order  to  gain  full  force. 


And  the  usual  rules  applicable  to  eon- 
tracts  under  seal  here  apply.  An 
ante-dated  bond  does  not  bind  for  the 
period  preceding  delivery,  if  the  lan- 
guage is  not  retrospective.  Hyatt  v. 
Sewing-Machine  Co.,  41  Mich.  225. 
See  Graves  v.  Lebanon  Nat.  Bank,  10 
Bush,  23.  A  statute  bond,  to  be  gocd 
as  such,  must  be  conditioned  and  exe- 
cuted according  to  all  the  statute  re- 
quirements. But  if  not,  it  might  be 
good  at  the  common  law.  Howard  v. 
Brown,  21  Me.  385;  1  Brook.  177. 

Where  a  bond  is  conditioned  for 
the  payment  of  a  certain  sum,  and 
no  time  is  fixixl  therein  for  payment, 
it  is  in  law  a  covenant  for  immediate 
payment.  Rhoades  v.  Reed,  89  Penn. 
St.  436.  Wlion  a  bond  has  a  condi- 
tion for  performance  prcn-eded  by  re- 
citals, it  is  a  general  rule  that,  where 
the  undertaking  is  general,  its  obliga- 
tory force  shall  Ih»  limited  within  the 
recitals.  Sanger  v.  Bauniberger,  51 
Wis.  592.  Where  the  conditions  of  a 
bond  which   are   not  sustainable  are 


535 


§  361 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


A  bond  is  good,  thougli  a  voluntary  one;  that  is  to  say,  where 
no  consideration  was  contracted  for  or  expected.^  For  where  we 
say  that  the  "  want  of  consideration  "  is  a  defence  to  a  bond,  we 
mean  that  where  the  obligor  fails  to  receive  the  consideration  con- 
tracted for,  and  on  the  faith  of  which  he  entered  into  the  obliga- 
tion, he  need  not  pay  his  bond."^  At  the  same  time,  a  voluntary 
bond  is  postponed  in  equity  to  all  creditors,  even  to  those  who  have 
simple-contract  debts ;  on  the  broad  principle  that  volunteers  can- 
not stand  in  the  way  of  one's  creditors, —  a  principle  subject  to 
some  exceptions.^  In  general  a  bond  under  seal  imports  a  con- 
sideration.^ 


severable  from  those  which  are,   the      recognized      until      the      contingency 


latter   hold   good   pro   tanto.      United 
States  V.  Mora,  W  U.  S.  413. 

Sureties  to  a  penal  bond  are  not 
holden  if  the  person  named  as  prin- 
cipal fails  to  execute.  Kussell  v. 
Annable,  109  Mass.  72. 

3.  Lomas  v.  Wright,  3  Myl.  &  K. 
769;  Candor's  Appeal,  27  Penn.  St. 
119;  Archer  v.  Hart,  5  Fla.  234; 
U.  S.  Dig.  1st  Series,  Bonds,  Iff; 
Vroonian  v.  Phelps,  2  Johns.  177;  2 
Mass.  159.  An  illegal  consideration 
vitiates  a  bond.  U.  S.  Dig.  1st  Series, 
26,  29. 

4.  See  Lewis,  C.  J.,  in  Candor's 
Appeal,  27  Penn.  St.  119;  Mount 
Pleasant  v.  Hobart,  25  Kan.  719. 
Parol  evidence  of  the  circumstances 
of  the  transaction  is  now  usually  ad- 
mitted.    Chicago  V.  Gage,  95  III.  593. 

5.  See  1  Eq.  Cas.  Abr.  84,  pl.  2; 
Stephens  v.  Harris,  6  Ired.  Eq.  57 ; 
Tanner  v.  Byne,  1  Sim.  160;  Payne 
V.  Mortimer,  4  De  G.  &  J.  447.  The 
duty  of  executors  and  administrators 
in  settling  the  estate  of  the  dead  per- 
son whom  they  represent  is  usually 
to  pay  debts  all  the  same,  whether 
due  presently  or  in  the  future.  And 
yet   a   mere   contingent   debt   is   not 


transpires  and  the  debt  becomes  ab- 
solute. 5  Co.  28  b;  2  Sehoul.  Wills 
&  Ex'rs,  §  1428;  Read  v.  Blunt,  5 
Sim.  567;  Bacon  v.  Thorp,  27  Conn. 
251;  2  Wms.  Ex'rs,  10th  Eng.  ed.  773, 
and  eases  cited.  Such  questions  come 
up  in  dealing  with  bonds  of  indem- 
nity and  the  like,  which  would  occa- 
sion great  perplexity  did  not  equity 
mould  its  doctrines  to  meet  each  case. 
The  law  formerly  was,  that  on  breach 
of  any  part  of  the  condition  the  whole 
penalty  became  due;  and  judgment 
and  execution  might  be  had  thereon, 
subject  only  to  the  interference  of 
equity  upon  application  for  relief. 
But  now  the  obligee  must  usually,  in 
common-law  practice,  state  or  assign 
the  breaches  made  by  the  obligor, 
when  he  sues;  and  though  judgment 
be  recovered  for  the  whole  penalty, 
execution  issues  only  for  damages  in 
respect  to  the  breaches  actually  com- 
mitted, and  the  judgment  remains  as 
a  further  security  against  future 
breaches.  Wms.  Pers.  Prop.  5th  Eng. 
ed.  104;  Grey  v.  Friar,  15  Q.  B.  89'1, 
910.  Bonds  were  formerly  enforceable 
to  the  full  extent  of  the  penal  simi. 
But    equity    subsequently    interfered. 


536 


CHAP,  in.] 


DEBTS    IN   GENEEAL. 


§    363 


§  362.     Simple-Contract  Debts. 

Simple-contract  debts  stand  lowest  on  the  list.  And  all  debts 
bj  contract  not  under  seal,  whether  verba)  or  written,  belong  to 
this  class;  including  bills  and  notes  in  general  ('*  sealed  notes" 
being  of  course  excepted),  and  indeed  all  debts  which  have  not 
already  been  enumerated  as  belonging  to  one  or  the  other  of  the 
two  preferred  class'es/ 

§  363.     Priority  of  Debts  Depends  Sometimes  upon  the  Parties 
Concerned. 

Hitherto  we  have  considered  the  doctrine  of  priority  of  debts 
according  to  the  nature  of  the  debt.  But  preferences  are  often 
founded  upon  the  parties  concerned  instead  of  the  subject-matter. 
Thus  government  has  long  been  disposed  to  assert  its  own  priority 
over  private  creditors,^  as  in  the  Bankruptcy  Act  of  1898.' 


and  prevented  the  creditor  from  en- 
forcing more  than  the  amount  of  dam- 
age he  had  actually  sustained.  The 
courts  of  law  adopted  afterwards  the 
same  rule.  Finally  came  legislation 
to  confirm  the  practice  by  providing 
that  payment  of  the  lesser  sum  named 
in  the  bond,  with  interest  and  costs, 
.should  be  taken  in  full  satisfaction. 
And  now  this  principle  is  fully  recog- 
nized in  England  and  America;  and 
bonds  are  usually  made  out  for  double 
the  amount  of  debt  actually  created, 
in  the  expectation  that  they  will  be 
cut  dowTi  if  sued  upon.  See  Litt. 
340;  Stat.  4  &  5  Anne,  c.  16,  §§  12, 
13  ;  2  Bl.  Com.  341 ;  Wms.  Pers.  Prop. 
103.  For  unless  there  has  been  vexa- 
tious delay  interposed  by  the  debtor, 
or  the  debt  is  collaterally  securetl  as 
by  bond  and  mortgage,  the  univer»al 
rule  is,  that  no  one  can  recover  more 
than  the  penalty  named  in  the  bond 
either  at  law  or  in  equity.  Clarke 
v.  Seton,  6  Ves.  411;  Clarke  v.  Lord 


Abingdon,     17    Ves.     106;     Grant    v. 
Grant,  3  Sim.  340. 

6.  Barrett  v.  Garden,  65  Vt.  431. 

7.  2  Wms.  Ex'rs,  10th  Eng.  ed.  75. 

8.  In  England  the  sovereign  is  pre- 
ferred to  all  others,  provided  tlie  debt 
be  a  debt  of  record,  or  a  debt  by  spe- 
cialty ;  and  if  the  debt  be  by  simple 
contract  alone,  ho  will  have  prefer- 
ence over  the  other  simple-contract 
creditors  of  the  debtor,  and,  as  some 
say,  even  over  otlier  creditors  by  spe- 
cialty. Bac.  Abr.  Ex'rS;  2  Wms. 
Ex'rs,  9.58.  Tn  this  country  the 
United  States  has  lieen  constituted  a 
preferred  creditor  by  statute,  though 
whether  the  right  is  founded  in  sover- 
eign prerogative  st^nis  not  clearly 
•settled.  1  Kent  Com.  243-248.  and 
oases  cited;  Bright.  Fed.  Dig.  7.'>,  717. 
The  United  States  haS  the  constitu- 
tional power  to  declare  its  priority  in 
four  casi-s:  (1)  where  a  debtor  dies 
without  leaving  siinioicnt  assets;  (2) 
where  a  debtor  is  a  legal  bankrupt  or 


537 


§  364 


THE  LAW  OF  PERSONAL  PROPEKTY. 


[part  III. 


§  364.     Rule  as  to  Preferences  Among  Creditors. 

In  legal  assets,  attachment  or  execution  creditors  are  as  a  rule 
entitled  to  priority,  subject  of  course  to  pre-existing  liens.     The 


insolvent;  (3)  where  a  debtor  is  in- 
solvent, and  voluntarily  assigns  all 
of  his  property  to  pay  his  lebts;  (4) 
where  a  debtor  absents  or  conceals 
himself  or  absconds,  and  his  effects  are 
attached  by  process  of  law.  1  Kent 
Com.  247.  Prerogatives  like  these  are, 
of  course,  in  derogation  of  the  rights 
of  the  citizen,  and  should  not  rest 
upon  uncertainty.  The  priority  of 
government  is  not  in  the  nature  of  a 
lien;  nor  can  it  defeat  prior  mort- 
gages, attachments,  or  liens  generally, 
which  already  exist  for  the  benefit  of 
private  creditors.  See  Beaston  v. 
Farmers'  Bank  of  Delaware,  12  Pet. 
102;  Bright.  Fed.  Dig.  75,  717;  Brent 
V.  Bank  of  Washington,  10  Pet.  596. 
The  modern  tendency,  especially  in 
this  country,  is  to  upturn  the  whole 
doctrine  of  priority  according  to  the 
classes  of  debts,  and  where  a  debtor  is 
insolvent  to  introduce  preferences 
among  private  claimants  founded 
rather  upon  considerations  of  decency 
and  humanity.  Thus,  by  the  statutes 
of  most  States,  the  expenses  of  last 
illness  and  funeral,  and  the  adminis- 
tration expenses,  are  placed  upon  the 
common  footing  of  priority  over  all 
the  general  debts  of  a  deceased  person. 
See  3  Redf.  Wills.  249 :  2  Wms.  Ex'rs, 
10th  Eng.  ed.  739.  And  the  wages  of 
domestic  servants  and  of  laborers  are, 
whether  as  legally  or  morally  bind- 
ing, treated  with  considerable  favor 
wherever  an  insolvent  estate  is  wound 
up.  2  Bl.  Com.  511;  2  Wms.  Ex'rs, 
10th  Eng.  ed.  761;  2  Schoul.  Wills  & 
Ex'rs.  §  1428.  So,  too,  the  widow  of 
a  deceased  insolvent  has  special  al- 


lowances granted  for  the  wants  of 
herself  and  children,  that  they  may 
not  be  left  utterly  destitute.  See  2 
Schoul.  Wills  &  Ex'rs,  §  1451.  In  many 
parts  of  the  United  States  the  order 
of  paying  the  expenses  and  debts  of 
a  deceased  person  in  case  of  insol- 
vency is  prescribed  by  local  statute. 
3  Schoul.  Wills  &  Ex'rs,  §  1428,  and 
note.  And  general  bankrupt  or  State 
insolvent  laws  are  expressed  with  cor- 
responding precision.  See  Wilson  v. 
Shearer,  9  Met.  504;  2  Kent  Com. 
419,  n. 

Not  to  examine  more  minutely  the 
American  statutes  on  this  perplexed 
subject  of  priority,  it  is  enough  to 
add  that,  while  we  find  a  recognizance 
admitted  to  be  of  higher  dignity  than 
a  debt  by  specialty  by  many  of  our 
courts,  we  also  find  that  all  distinc- 
tions as  to  order  of  payment  between 
specialty  and  contract  debts  are  rap- 
idly fading  out  of  American  practice. 
In  some  States,  docketed  judgments 
are  entitled  to  priority  according  to 
the  order  of  docketing.  It  is  quite 
common  to  place  most  simple-contract 
debts  as  on  the  same  footing  with  cer- 
tain specialty  debts.  See  various 
statutes  cited  in  2  Kent  Com.  417- 
419,  n.;  2  Schoul.  Wills  &  Ex'rs, 
§§  1426-1428.  In  England  such  was 
tile  dissatisfaction  in  later  times  with 
the  preferential  distinctions  between 
the  specialty  and  simple-contract 
debts  of  deceased  persons,  that  Parlia- 
ment, by  Stat.  32  &  33  Vict.,  c.  46, 
abolished  (1870)  all  such  priorities. 
In  short,  the  whole  doctrine  of  prior- 
ity   is    shaped    by    legislation;      and 


538 


CHAP.  III.]  DEBTS    IN   GENERAI..  §    365 

creditor  who  thus  gets  priority  at  law  is  entitled  to  retain  it 
But  the  principle  which  obtains  in  equity,  and  which  is  recognized 
especially  in  settling  insolvent  estates  of  the  dead  or  living,  is, 
subject  to  the  preferred  classification  already  noticed,  to  share  the 
estate  among  creditors  in  their  just  and  due  proportions.  Yet 
superior  diligence  may  give  a  preference  in  equity,  where  no  ques- 
tion of  insolvent  distribution  arises,  but  the  controversy  is  rather 
over  a  particular  fund;  and  the  creditor  first  pursuing  the  fund 
will  be  entitled  to  the  benefit  of  it  over  other  creditors.^  Under 
local  insolvent  laws,  the  doubtful  policy  was  sometimes  sustained 
of  permitting  an  insolvent  who  assigns  to  prefer  as  among  his  o\vn 
creditors.^  But  under  the  Federal  Bankruptcy  Act  of  1898,  which 
superseded  local  laws,  preferences  were  forbidden  by  an  insolvent, 
and  the  trustee  of  the  bankrupt  was  even  authorized  in  certain 
cases  to  recover  from  the  preferred  creditor  money  paid  him  by 
the  bankrupt.^ 

§  365.     How  a  Debt  is  Discharged. 

Debts  are  discharged  in  various  ways ;  but  the  principal 
method,  according  to  the  law-books,  and  certainly  the  most  proper, 
as  all  creditors  will  admit, —  though  debtors  sometimes  think  other- 
wise,—  is  by  payment.  And  by  payment  we  usually  mean  the 
discharge  in  lawful  money  of  the  sum  due.  Yet,  as  we  have  seen 
in  the  preceding  chapter,  debts  may  be  practically  discharged  by 
giving  goods  in  return,  or  by  rendering  some  service,  or  by  paying 
checks,  notes,  or  bills:,  midor  siiitablo  circumstances,  as  the  accepted 

sometimes   debts   aro   classed    accord-  v.   Mason,  4   Hare,   132;   c.   on   Liens, 

ing  to  the  form  of  the  debt,  sometimes  post. 

accordingr  to  the   party   creditor,   and  9.  Sw  Collier  on  Bankruptcy  for  a 

sometimes  accordinjr  to  the  nature  of  full  consideration  of  this  statute. 

the    debt.      Local    statutes    create    at  1.  Codwise    v.    Gelston.    10    Johns. 

pleasure  purely  arbitrary  preferences.  507;   Gordon   v.   Ix)well,   21   Me.   2.51; 

And    whatever    the    legal    preference  4  Johns.  Ch.  687;  2  Stew.   (Ala.)  378. 

among    debts,    existing    liens    on    the  2.  See  Clarke  v.  White.  12  Pet.  178 ; 

property,  whether  created   by   law   or  Fitzpatrick   v.    Flannagan,   106   U.   S. 

contract,  must  first  be  satisfied.     See  648. 

Turain  v.  Gibson,  3  Atk.  720:  Lloyd  3.  See  Collier  on  Bankruptcy. 

539 


§  365  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  III. 

substitute  for  money.'*  Sometimes  the  duty  to  pay  and  the  right 
to  receive  payment  vest  eventually  in  the  same  person.  A  debt 
may  also  have  been  released  by  the  creditor.  And  when  one  is  a 
bond  fide  bankrupt  or  insolvent,  an  opportunity  is  afforded  him 
by  the  bankrupt  or  insolvent  laws  to  have  all  his  debts  wiped  out 
after  he  has  surrendered  up  his  property  and  otherwise  complied 
with  the  requirements  of  statute.  So,  when  one  dies,  his  debts, 
whether  he  leaves  the  means  for  paying  them  or  not,  become  dis- 
charged by  the  final  settlement  of  his  estate,  and  his  heirs  need 
not  assume  a  dollar  of  them.  And,  to  a  certain  extent,  the  policy 
of  our  law  permits  a  person  to  hold  articles  of  property  necessary 
and  suitable  for  himself  and  his  family,  free  from  the  demands 
of  all  creditors  whomsoever;  while  a  creditor  may  likewise  lose 
the  opportunity  of  recovering  the  debt  due  him,  by  neglecting  to 
bring  suit  within  the  period  fixed  by  the  statute  of  limitations. 
And  though  the  honest  payment  of  debts  was  so  strongly  enforced 
and  inculcated  in  the  days  of  our  Anglo-Saxon  ancestors,  that  a 
poor  man  who  failed  to  pay  his  creditors  might  be  thrown  into 
prison,  the  established  American  policy  and  the  prevailing  tend- 
ency of  legislation  in  all  civilized  countries  is  to  abolish  utterly 
the  penalty  of  imprisonment  for  debt,  to  set  the  unfortunate  man 
on  his  feet,  and  bid  him  go  forth  and  try  once  more  to  make  a 
name  and  gain  an  honest  livelihood.^ 

4.  See  supra,  §  351 ;  Very  v.  Levy,  charges  l,  joint  debt  may  discharge 
13  How.  345;  First  Nat.  Bank  v.  the  several  liabilities  of  the  joint 
Davis,  135  Ga.  687,  70  S.  E.  246.  debtors  also.     Rixon  v.  Emary,  L.  R. 

5.  See  1  Poth.  Obi.  408,  429,  443,  3  C.  P.  546.  See  Gates  v.  Andrews, 
449;  Bouv.  Diet.  "Debt;"  2  Kent  37  N.  Y.  657.  And,  in  general,  a 
Com.  403.  The  full  discussion  of  release  to  one  of  several  joint  debt- 
these  subjects  belongs  properly  to  ors,  on  accepting  his  proportion  of 
other  works.  There  may  be  a  tech-  a  release  of  all  the  joint  debtors. 
nical  discharge  of  a  debt,  not  as  a  Milliken  v.  Brown,  1  Rawle,  391. 
fact,  but  by  operation  of  law;  for  But  see  Smith  v.  Bartholomew,  1 
instance,  where  two  are  jointly  liable  Met.  276.  And  where  a  creditor  ac- 
and  a  judgment  is  obtained  against  cepts  the  sole  liability  of  one  or  more 
one,  the  debt  is  extinguished  as  joint  debtors,  this  is  a  good  eonsider- 
against  the  other.  Wms.  Pers.  Prop.,  ation  for  his  agreement  to  discharge 
17th  Eng.  ed.  460.    A  deed  which  dis-  all   the  other  debtors   from   liability. 

540 


CHAP.  III.] 


DEBTS    IN   GENERAL. 


§    360 


§  366.     The  Same  Subject;    Effect  of  Paying  Smaller  Sum,  etc. 

Concerning  the  payment  of  debts,  there  are  a  great  many  re- 
ported cases  in  the  books,  by  no  means  harmonious  in  the  con- 
clusions they  reach ;  these  questions  usually  arising  where  a  partial 
payment  of  the  debt  is  made  by  the  person  owing  it.  But  we  may 
now  accept  it  as  a  rule,  that  the  payment  of  a  smaller  sum  is  no 
valid  legal  discharge  of  a  larger  one,  and  cannot  be  pleaded  either 
as  payment  of  an  unquestioned  debt,  or  as  accord  and  satisfaction, 
unless  there  be  some  legal  benefit  or  legal  possibility  of  a  benefit 
to  the  creditor,  sufficient  to  amount  to  a  consideration  for  his 
promise  to  relinquish  the  residue.^  For  even  if  the  creditor  so 
agreed,  his  promise  is  nudum  pactum,  and  without  legal  force. 
And  yet  the  modern  tendency,  especially  in  this  country,  where 
credit  is  frequently  so  carelessly  or  unwisely  given,  and  it  is  often 
found  quite  convenient  to  take  what  a  debtor  offers  rather  than 
run  the  risk  of  losing  all  that  is  due,  is  undoubtedly  to  strain  a 
point  for  discovering  some  new  consideration  or  collateral  benefit, 


Lyth  V.  Ault,  7  Ex.  669;  Sheehy  v. 
Mandeville,  6  Cr.  253.  Where  two 
are  jointly  bound  as  principals,  re- 
lease of  one  will  operate  to  release  the 
other,  unless  the  remedy  is  expressly 
reserved.  Yates  v.  Donaldson,  5  Md. 
389.  Though  joint  creditors  cannot 
generally  divide  a  claim,  yet  if  a 
debtor  procures  release  from  a  por- 
tion of  them  he  cannot  object  that 
the  others  sue  separately  in  equity. 
Upjohn  V.  Ewing,  2  Oliio  St.  13. 
Taking  new  security  from  one  of  two 
joint  debtors  will  release  the  other, 
only  where  express  or  implied  inten- 
tion of  creditor  favors.  Parker  v. 
Cousins,  2  Gratt.  372.  On  the  death 
of  one  of  two  joint  debtors,  the  cred- 
itor may  proceed  against  the  sur- 
vivor, or  against  the  estate  of  the 
deceased,  at  his  option.  Ralston  v. 
Moore,  105  Ind.  243.  Agreement  of 
creditor  to  discharge  one  partner,  on 


his  securing  the  payment  of  a  portion 
of  the  debt,  but  reserving  the  right  to 
proceed  against  another  partner,  is 
held  (without  here  discussing  prin- 
ciples, but  rather  considering  the  in- 
tent), not  to  operate  to  discharge  the 
latter  partner.  Browning  v.  Grady, 
10  Ala.  999. 

6.  Norman  v.  Thompson,  4  Ex.  755; 
Cumber  v.  Wane,  1  Str.  426,  s.  c, 
with  notes  and  comments,  1  Smith 
Lead.  Cas.  439  et  scq. :  Fitch  v.  Sut- 
ton, 5  East,  2-30:  Cooper  v.  Parker, 
15  C.  B.  822;  Evans  v.  Po^vis,  1  Ex 
601 ;  Dederick  v.  Leman,  9  Johns 
333;  White  v.  Jordan,  27  Maine,  370 
Warren  v.  Skinner,  20  Conn.  r>59 
Curtis  V.  Martin.  20  111.  557;  Har 
riman  v.  Harriman,  12  Gray,  341; 
Bryan  v.  Fox.  69  N.  C.  45:  Bliss  v 
Schwarts,  64  Barb.  215;  Whiting  v. 
Plumas  Co..  64  Cal.  65;  Longworth 
V.  Hiaham.  89  Ind.  352. 


)41 


§  366 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


SO  as  to  sustain  the  creditor's  promise  to  take  the  lesser  sum  in 
satisfaction  of  the  greater.^  And  the  concurrence  of  some  or  all 
of  the  other  creditors  of  a  debtor  in  extending  time  or  accepting  a 
composition,  will  prevent  such  promises  from  being  a  nudum 
pactum.^  An  agreement  to  release  a  debt  based  upon  the  per- 
formance of  specified  considerations  requires,  of  course,  perform- 
ance before  the  satisfaction  is  complete.' 

The  rule  that  payment  of  a  smaller  sum  cannot  be  a  satisfaction 
of  a  larger  debt,  applies,  too,  only  to  cases  of  strict  debt, —  that  is, 
where  the  larger  sum  owing  by  contract  is  fixed  and  liquidated,  or 


7.  See  Kellogg  v.  Eichards,  14 
Wend.  116;  Brooks  v.  White,  2  Met. 
283 ;  Harper  v.  Graham,  20  Ohio,  105 ; 
1  Smith  Lead.  Cas.  447,  Hare  &  Wal- 
lace, notes. 

8.  lb.;  §  372,  post.  Accord  and 
satisfaction  ought  to  be  full,  perfect, 
and  complete,  in  order  to  stand 
strongly.  As  to  equivocal  acceptance 
see  Willey  v.  Warden,  27  Vt.  655. 
Taking  certain  other  property  of  the 
debtor  as  in  full  satisfaction,  may,  in 
a  perfectly  fair  and  bona  fide  case, 
suffice.  Williams  v.  Phelps,  16  Wis. 
80;  Very  v.  Le\^,  13  How.  345.  And 
see  Parker  v.  Parker,  1  Gray,  245. 
But  the  money  or  property  must  have 
been  accepted  in  payment,  and  not  by 
way  of  security.  Barnes  v.  Lloyd,  1 
How.  (Miss.)  584.  It  is  said  that 
accord  of  a  deed  cannot  be  by  parol; 
but  an  instrument  under  seal  re- 
quires something  equally  high ;  this, 
however,  being  a  purely  technical  rule, 
loses  much  of  its  old  force  in  modern 
times.      See    12    Ark.    148;     1    How. 

(Miss.)  584;  Young  v.  Power,  41 
Miss.  197.  Hinckley  v.  Arey,  27  Me. 
362,  goes  even  farther  for  a  debtor's 
benefit. 

Acceptance    of    a    less    sum    before 
payment  is  due  may  constitute  a  good 


satisfaction  of  the  debt.  Bowker  v. 
Childs,  3  Allen,  434 ;  Brooks  v.  White, 
2  Met.  283.  Where  debt  is  paid  as  to 
principal,  and  the  payment  falls  short 
only  in  interest,  the  rule  of  insuffi- 
ciency of  part  payment  is  not  to  be 
favored.  Johnston  v.  Brannan,  5 
Johns.  268.  But  fraud  and  misrepre- 
sentation may  be  shown  (at  all 
events  in  equity)  to  vitiate  the  ac- 
cord. Stafford  v.  Bacon,  1  Hill,  532; 
Shaw  V.  Clark,  6  Vt.  507.  And  ac- 
cord without  satisfaction  is  not  a 
bar  to  an  action;  for,  in  general,  ac- 
cord should  be  executed  and  not 
executory.  Russell  v.  Lytle,  6  Wend. 
390;  Clark  v.  Bowen,  22  How.  270; 
Molyneaux  v.  Collier,  13  Ga.  406; 
Hall  V.  Smith,  15  Iowa,  584;  Black- 
burn V.  Ormsby,  41  Penn.  St.  97. 
Creditor's  delay  to  sue  until  the  debt 
is  outlawed  may  bar  or  impede  recov- 
ery, but  it  does  not  extinguish  the 
debt.  1  Ala.  708.  Nor  does  death  or 
the  insolvency  of  the  creditor.  Duval 
V.  McLoskey,  1  La.  An.  365.  Nor, 
necessarily,  does  the  release  of  a  debt 
in  terms  by  one's  will.  Hobart  v. 
Stone,  10  Pick.  215.  And  see  U.  S. 
Dig.,  1st  series,  Debtor  and  Creditor, 
8-23. 

9.  Memphis  v.  Brown,  20  Wall.  289. 


542 


ClIAP.  III.] 


DEBTS    IN   GENERAL. 


§    366 


SO  ascertained  bj  mere  arithmetical  calculation ;  and  not  to  claims 
and  demands  in  general,  where  the  sum  which  should  be  paid  is 
unliquidated  and  unascertained  in  amount.'  We  have  seen  that, 
as  to  persons  jointly  indebted,  the  liability  of  one  is  sometimes 
accepted  as  a  substitute  for  that  of  all.^  Where  again  the  debt  is 
in  dispute  as  to  amount  or  just  legal  existence,  a  sum  may  be 
mutually  and  deliberately  agreed  upon  and  accepted  by  way  of 
compromise.^  Undoubtedly,  the  creditor's  acknowledgment  of 
payment  in  full  is  prima  facie  evidence  that  the  whole  has  been 
paid  him;  though  every  mere  receipt  is  open  to  explanation.'* 
And  a  solemn  release  under  seal,  suitably  expressed  in  terms  and 
hona  fide  given,  may  preclude  all  claim  on  the  creditor's  part  that 
more  remained  due.^ 


1.  Wilkinson  v.  Byers,  1  Ad.  &  Ell. 
106;  McDaniels  v.  Lapham,  21  Vt. 
223;  Lamb  v.  Goodwin,  10  Ired.  320; 
Brown  v.  Cambridge,  3  Allen,  474;  96 
U.  S.  430. 

2.  Supra,  §  365,  n.;  Lyth  v.  Ault, 
7  Ex.  669;  Sheeliy  t.  Mandeville,  6 
Cr.  253. 

3.  Palmerton  v.  Huxford,  4  Dcnio, 
166;  Cool  V.  Stone,  4  Iowa,  219; 
Draper  v.  Pierce,  29  Vt.  250.  If  there 
be  a  bond  fide  dispute  as  to  the 
amount  due  from  one  person  to  an- 
other, or  the  amount  be  uncertain  and 
unliquidated,  a  bond  fide  and  volun- 
tary compromise  and  payment  of  a 
certain  agreed  sum  as  a  Satisfaction 
of  tlie  entire  claim  is  valid.  Fire  Ins. 
Asso.  V.  Wickham,  141  U.  S.  5G4.  A 
suit  may  be  compromised  and  pay- 
ment becomes  accord  and  satisfaction. 
Boffinger  v.  Tuyes,  120  U.  S.  198. 
Prepayment  of  part  of  a  claim  may 
by  agreement  afford  consideration  for 
release  of  the  residue.  Fire  Ins.  Ass'n 
V.  Wickham,  141  U.  S.  564.  As  to 
comproni'so  agreements,  see  §  372. 

4.  See  Marshall,  C.  J.,   in  Hender- 


son V.  Moore,  5  Cr.  11.  A  receipt 
given  by  a  third  person  is  not  evi- 
dence of  payment  as  against  a  cred- 
itor who  did  not  authorize.  Ferris 
v.  Boxell,  34  Minn.  262. 

5.  As  a  general  rule  a  payment  of 
less  than  the  whole  of  an  undisputed 
debt  to  a  fixed  amount,  already  pay- 
able, is  not  a  satisfaction  of  tlie  bal- 
ance; even  though  it  were  agreinl  to 
be  received  in  full  of  the  whole  debt. 
The  obligation  of  the  debtor  to  pay 
the  whole  amount  being  complete,  his 
engagement  to  pay  a  part  forms  no 
consideration  for  the  agreement  to  re- 
lease the  balance;  hence  that  agree- 
ment forms  no  bar.  To  render  the 
release  of  balance  obligatory  there 
must  be  something  in  tlie  transaction 
which  can  be  treated  aS  a  new  con- 
sideration. Daniels  v.  Hatch,  1  Zabr. 
391 ;  Fire  Ins.  Ass'n  v.  Wickliam,  141 
U.  S.  564 ;  United  States  v.  Bostwick, 
94  U.  S.  53;  Geiser  v.  Kershner,  4 
Gill  &  J.  405;  Sullivan  v.  Finn,  4 
Greene  (Iowa),  544;  Bailey  v.  Day, 
26  Mo.  88.  Much  less  does  the  agree- 
ment to  receive  the  less  sum  bind  as 


543 


§  367 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


§  367.  Effect  of  Debtor's  Note  or  Check  by  Way  of  Discharge 
of  Debt. 
Whether  the  debtor's  own  check  or  negotiable  note,  given  in 
discharge  of  the  debt,  amounts  to  a  valid  discharge,  is  sometimes 
made  a  question ;  and  upon  this  point  authorities  differ  somewhat 
in  this  country,  though  by  the  better  opinion  the  intent  of  the 
transaction  depends  upon  the  facts.  A  good  check  which  has  been 
taken  in  payment  will  generally  have  the  effect  of  cancelling  the 
debt;  though,  if  the  check  prove  worthless,  or  is  dishonored  by 
the  bank,  there  is  no  payment ;  and  in  general  'the  presumption  is 
that  any  check  is  regarded  originally  not  as  payment  per  se,  but  as 
a  means  of  procuring  at  once  the  money.^     But  as  to  a  promissory 


agreement  before  the  payment  in  part, 
&c.,  is  actually  made.  Smith  v. 
Keels,  15  Rich.  L.  318;  Palmer  v. 
Yager,  20  Wis.  91.  We  observe,  how- 
ever, that  the  cases  which  follow  this 
general  rule  generally  present  as  facts, 
8.nd  often  so  state  as  principle,  a 
parol  satisfaction  of  this  sort;  and 
semble  if  a  release  in  full  under  seal 
were  given,  this  would  import  such 
consideration  that  creditor  could  not 
sue  for  residue.  See  Bohr  v.  Ander- 
son, 51  Md.  205;  Fitzsimmons  v. 
Ogden,  7  Cr.  2.  But  by  this  is  meant 
a  genuine  release  in  terms.  For  an 
instrument  under  seal  which  purports 
upon  its  face  to  be  no  accord  and 
satisfaction  is  no  release  under  seal. 
Young  V.  Jones,  64  Me.  563. 

Sanford,  J.,  says:  "The  reason 
given  for  the  rule  is,  that  the  cred- 
itor's agreement  is  without  consider- 
ation. The  rule,  however,  supposes 
the  part  performance  of  the  original 
obligation,  the  payment  of  part  at 
the  time  and  in  the  manner  originally 
stipulated  for  the  payment  of  the 
whole;  from  which  payment  of  a  part 
rather  than  the  whole,  no  benefit  can 


accrue  to  the  creditor,  and  no  injury 
to  the  debtor."  "  But  when  a  new 
duty,"  he  continues,  "  is  undertaken 
by  the  debtor  which  is,  or  may  be 
burdensome  to  him  or  beneficial  to  the 
creditor,  a  new  consideration  arises 
out  of  such  undertaking  and  sustains 
the  agreement  of  the  creditor;  as 
when  the  debtor  undertakes  to  pay 
and  pays  part,  at  an  earlier  day,  or 
at  another  place,  or  in  another  arti- 
cle, than  required  by  the  original  ob- 
ligation." Rose  V.  Hall,  26  Conn.  392. 
See  also  Jones  v.  Bullitt,  2  Litt.  (Ky.) 
49,  where  something  else  in  lieu  of 
the  debt  given  was  held  binding; 
Swain  v.  Frazier,  35  N.  J.  Eq.  326. 

6.  Downey  v.  Hicks,  14  How.  240. 
See  Bright.  Fed.  Dig.  "Debtor  and 
Creditor,"  244;  Barnard  v.  Graves, 
16  Pick.  41;  Smith  Lead.  Cas.  Am. 
cd.  459,  n.  Whether  the  check  was 
given  and  received  in  absolute  dis- 
charge of  the  debt  depends  on  the 
evidence.  National  Bank  v.  Levy,  17 
R.  I.  746.  Payment  by  a  worthless 
check,  or  on  a  bank  where  the  debtor 
has  no  money,  is  not  payment.  Fleig 
V.  Sleet,  43  Ohio  St.  53.  1  N.  E.  24; 


544 


CHAP.  III.]  DEBTS    IN   GENERAL.  §    367 

note  it  is  quite  different;  for  a  man's  note  is  generally  taken  not 
in  pa^Tnent  but  as  a  postponement  of  payment  until  the  note  falls 
due;  unless,  indeed,  by  indorsement  or  otherwise,  the  debtor  en- 
larges the  creditor's  security.  The  rule  in  some  States  is,  that 
where  one  indebted  gives  his  note  for  the  debt,  the  creditor  prima 
facie  accepts  it  in  satisfaction  and  discharge  of  that  debt ;  but 
that  this  is  a  presumption  of  fact  only,  and  may  be  rebutted.'' 
Yet  by  the  common-law  rule  it  appears  that  the  note  so  given 
would  not  operate  to  discharge  the  original  obligation  unless  such 
mutual  intention  affii-matively  appear.^  Distinctions  of  this  sort 
as  to  presumption  are  quite  fine,  and  every  case  doubtless  stands 
upon  its  own  merits  after  all;  the  real  intention  of  the  parties 
being,  in  any  event,  and  under  the  particular  circumstances,  open 
to  explanation.^  And,  we  might  add,  there  is  usually  an  advan- 
tage to  the  creditor  in  taking  a  debtor's  own  note  in  pa}Tnent  of  a 
mere  debt,  since  the  evidence  that  so  much  is  actually  due  is  more 
easily  established  in  case  a  suit  becomes  necessary;  and  it  may  be 
presumed  to  fix  the  amount  actually  due.' 

Where  a  check  for  less  than  the  amount  due  is  sent  by  the 
debtor  as  in  express  satisfaction,  and  kept  and  collected  by  the 

VVoodburn  v.  Woodbum,  115  111.  427,  8.  See  Kimball  v.  The  Anna  Kim- 

14  N.  E.  58.     And  see  Bolton  v.  Sims,  ball,  3   Wall.  37;   s.  c,  2  ClifiF.  4;   1 

138  Ga.  73,  74  S.  E.  770;   Fowler  v.  Salk.  124;  Downey  v.  Hicks,  14  How. 

Bushby,   69   Misc.    891,   125   N.   Y.    S.  249.     The  holder  of  a  check  or  nego- 

890.     But  any  creditor,  it  would  ap-  tiable  instrument,  who  takes  it  for  » 

pear,   ought   as  the   payor's   agent   to  pre-existing  debt,  is  a  holder  for  value. 

present    a    check    for    payment    with  Currie  v.  Miss..  L.  R.  10  Ex.  l.')3. 

reasonable  diligence,  or  else  bear  the  9.  See  Saloman   v.   Pioneer   Co.,   21 

loss  of  the  bank's  failu^-e.     See  Peavy  Fla.  374;   Wiles  v.  Robinson,  80  Mo. 

V.  Hovey,  16  Neb.  416,  20  N.  W.  272.  47;  Keel  v.  Larkin,  72  Ala.  4?3. 

7.  See  Hudson  v.   Bradley.  2   Cliff.  1.  See  Bishop  v.  Welsh,  35  Tnd.  521. 

130;  Jaffrey  V.  Cornish,  10  N.  H.  505;  And    .=!ee    Merchants'    Nat.    Bank    ▼. 

Hart  V.  Boiler,  15  S.  <Sl  R.  162;  Fowler  Bentel.    166   Cal.    473.    137    Pnc.    25: 

V.  Bush,  21  Pick.  230;  Fowler  v.  Lud-  Cranston  v.   West  Coast  Ins.   Co..   63 

wig,  34  Maine,  455;  Melledge  v.  Bos-  Ore.    427,    128    Par.    427;     Lewis    v. 

ton  Iron  Co.,  5  CuSh.  170;  Kinman  v.  Gehlon,  136  App.  Div.  86S.  122  N.  Y. 

Cannefax,    34    Mo.    147;    Draper    v.  S.  89  (immediate  payment  waived). 
Hitt,  43  Vt.  439. 

35  545 


§  368  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

creditor,   a  complete   accord   and  satisfaction  cannot  be  legally 
concluded,  but  the  intent  is  still  a  question  of  fact.^ 

§  368.  The  Same  Subject;  Effect  of  Giving  a  Higher  Security, 
etc. 
The  supposition  that  a  discharge  and  satisfaction  of  the  original 
debt  was  contemplated  becomes  still  more  reasonable  whenever  the 
creditor  has  accepted  from  the  debtor  a  higher  security  or  obliga- 
tion for  the  lower  security  or  obligation.  Hence  it  is  usual  to 
consider  that  a  bond  or  other  sealed  instrument,  given  as  an  obli- 
gation for  a  debt,  extinguishes  a  simple-contract  liability  therefor ; 
the  legal  obligation  of  the  inferior  instrument  being  thus  regarded 
as  blotted  out.^  And  where  judgment  is  given  on  a  bond  or  un- 
sealed contract,  the  debt  by  bond  or  contract  is  extinguished,  or 
merges  in  the  higher  debt  by  judgment.**  Yet,  however  strongly 
this  doctrine  is  asserted,  there  is  a  disposition  to  slip  from  under 
it  when  it  bears  down  heavily ;  for,  after  all,  courts  are  solicitous 
of  ascertaining,  in  all  such  instances,  the  genuine  intention  of  the 
parties,  and  giving  that  intention  eifect ;  ^  and  furthermore,  as 
we  have  seen,  much  of  the  priority  advantage  which  our  earlier 
law  gave  to  certain  obligations  has  become  obsolete. 

If  the  higher  security  given  be  not  between  the  same  but  dif- 
ferent persons, —  if,  for  instance,  the  bond  of  a  third  person  or  a 
judgment  against  him  be  taken, —  the  presumption  is  in  favor  of 
regarding  this  as  a  mere  collateral  or  conditional  payment ;  though 
here  it  may  be  shown,  by  evidence,  that  the  acceptance  thereof  was 
intended  to  amount  to  a  full  and  entire  extinguishment  and  satis- 

2.  Day    v.    McLea,    22    Q.    B.    610.  4.  See    Butler   v.    Miller,    1    Denio, 
Here   the   creditor's   response   showed  407;  Early  v.  Rogers,  16  How.  599. 
that  he  kept  the  check  in  part  pay-  5.  Cases  supra;  Maddin  v.  Edmond- 
ment  only.     But  cf.  §  371a,  post.  son,  10  Mo.  643 ;  Yates  v.  Donaldson. 

3.  Curson  v.  Monteiro,  2  Johns.  5  Md.  389;  Taylor  v.  Bank  of  Alex- 
308;  Pleasants  v.  Meng,  1  Dall.  380;  andria,  5  Leigh,  471;  Brown  v. 
Jones  V.  Johnson.  3  W.  &  S.  276;  Dunckel,  46  Mich.  29;  Chalmers  v. 
Dodge  V.  Emerson,  131  Mass.  467.  TurnipSeed,   21    S.   C.    126;    Pelzer   v. 

Steadman,  22  S.  C.  279. 

546 


CHAP.  III.]  DEBTS    IN    GENERAL.  §    369 

faction  of  the  original  debt.^  Here,  again,  the  question  of  inten- 
tion becomes  material  to  the  issue.  And  this  regard  which  is  paid 
to  the  intention  of  parties  may  further  be  illustrated  by  the  well- 
established  English  rule,  that  if  a  deed  admits  a  simple-contract 
debt,  and  no  more,  the  debt  remains  a  simple-contract  debt;  but 
that  if  the  deed  not  only  admits  the  debt,  but  contains  further 
covenant  that,  if  it  is  not  paid  before  a  certain  time,  the  maker  of 
the  deed  will  pay  it,  or  words  to  that  effect,  the  deed  makes  the 
debt  a  specialty  debt.^ 

§  369.  General  Rule  as  to  Accepting  Note  or  Obligation  of 
Third  Person,  etc.,  in  Payment. 
In  general,  the  note  or  other  mercantile  obligation  of  a  third 
person  may  be  offered  and  accepted  to  discharge  one's  debt.  And 
this,  in  various  instances,  would  be  much  like  receiving  payment 
in  a  commodity.^  Acceptance  of  any  collateral  thing,  if  of  legal 
value,  as  in  bond  fide  satisfaction  of  a  previous  debt,  is  a  good 
accord,  and  one  security  may  sometimes  be  pleaded  in  bar  of 
another  by  way  of  accord.^  And  the  taking  up  of  one  note  or 
security  witli  the  substitution  of  another  extinguishes  presumably 

6.  See  Yates'  v.  Aston,  4  Q.  B.  182;  Sanders  v.  Branch  Bank,  13  Ala.  353; 
Bell  V.  Banks,  3  M.  &  Gr.  258 ;  Bank  U.  S.  Dig.,  1st  series.  Debtor  and 
of  Columbia  v.  Patterson,  7  Cr.  29^.  Creditor,  100,  101- ;  Goodrich  v.  Stan- 
But  sec  Bray  v.  Bates,  9  Met.  237;  1  ley,  24  Conn.  613.  As  to  paying  by 
Smith  Lead.  Cas.  161.  See  Davis  v.  worthless  negotiable  paper,  see  Wright 
Anable,  2  Hill  (N.  Y.),  339;  Baker  v.  Lawton,  37  Conn.  167;  Moiitictllo 
V.  Baker,  4  Dutch.  13;  Langdon  v.  v.  Grant,  104  Ind.  168.  Collateral 
Paul,  20  Vt.  217.  As  to  taking  a  consideration,  moving  from  a  third 
lower  security  in  place  of  a  higher,  person,  to  take  no  advantage  may 
see  Dudley  v.  Barrett,  66  W.  Va.  363,  afford  the  basis  of  a  valid  accord  and 
66  S.  E.  509.  .satisfaction.      Booth    v.    Campl»ell,    15 

7.  See  Saunders  v.   Milsome,  L.   R.  Md.   569.     Accord  is  not  readily   pre- 

2  Eq.  573;  Isaacson  v.  Harwood,  L.  R.  sumed  where  the   security   taken   was 

3  Ch.  225.  not   only    that   of   a   difTereiit    person 

8.  The  creditor's  sale  of  such  a  but  for  a  different  sum.  Davidson  v. 
mercantile  obligation  will  generally  Kelly,  1  Md.  492.  As  to  n^eiving 
preclude  a  suit  on  the  original  debt.  gold  in  payment  when  gold  was  at  a 
Donnelly  v.  District,  119  U.  S.  339.  premium,  see  Patterson  v.  Currier,  106 

9.  Lee  v.  Oppenheimer,  32  Me.  253;  Mass.  410. 

547 


§  369 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


the  first  note,  discharging  the  first  indorser  or  surety,  if  there  be 
one.'  The  intervention  of  a  third  person's  obligation,  whether 
the  security  be  higher  or  not,  may  by  mutual  agreement  afPord 
accord  and  satisfaction,  and  may  even  furnish  good  consideration 
for  relinquishing  part  of  the  debt.^ 

But  the  mere  taking  of  collateral  security  for  a  debt  does  not 
per  se  and  without  agreement  amount  even  to  an  extension  of 
time  for  payment  of  the  original  debt ;  ^  it  is  at  all  events  not  a 
satisfaction.'^  ISTor  does  taking  the  note  or  other  obligation  of  a 
third  person  amount  to  payment  at  all,  in  any  such  sense  as  to 
exclude  evidence  to  the  contrary;  for  mutual  intention  remains 
still  the  controlling  test.^  And  if  the  third  party's  obligation 
thus  taken  is  a  check  or  a  note  payable  presently,  conditional 
rather  than  absolute  payment  should  be  presumed  from  the  trans- 
action ;  and  unless  the  money  be  forthcoming,  the  debtor  remains 
liable  as  before.^ 


1.  Hill  V.  Bostick,  10  Yerg.  410; 
Weston  V.  Wiley,  78  Ind.  54;  Brown 
V.  Dunckel,  46  Mich.  29. 

2.  Keeler  v.  Salisbury,  27  Barb. 
485;  Gunn  v.  McAden,  2  Ired.  Eq.  79; 
Leavitt  v.  Morrow,  6  Ohio  St.  71; 
Fort  V.  Barnett,  23  Tex.  460;  Bowker 
V.  Harris,  30  Vt.  424;  Colburn  v. 
Gould,  1  N.  H.  279. 

See,  further,  Grubbe  v.  Lahay,  156 
Wis.  29,  145  N.  W.  207,  51  L.  E.  A. 
N.  s.  703,  n. 

As  to  payment  made  under  a  mis- 
take of  fact,  see  Deisch  v.  Wooten- 
Agee  Co.,  95  Ark.  279 ;  Endioott- John- 
son Co.  V.  Simpson,  206  Mass.  14,  91 
N.  E.  102 ;  Monroe  Nat.  Bank  v.  Cat- 
lin,  82  Conn.  227,  72  Atl.  3. 

3.  Cary  v.  White,  52  N.  Y.  138. 

So  far  as  the  debtor's  original  ob- 
ligation to  pay  is  concerned,  the  sur- 
render of  his  matured  note  for  a  new 


note  in  renewal  or  extension,  raises 
no  presumption  that  the  renewal  or 
extension  note  shall  operate  in  pay- 
ment of  the  debt.  Racine  Bank  v. 
Case,  63  Wis.  504;  Reeder  v.  Nay, 
95  Ind.   164. 

4.  Whiteher  v.  Dexter,  61  N.  H.  91. 

5.  Preceding  section;  Brigham  v. 
Lally,  130  Mass.  485;  Grant  v. 
Monticello,  71  Ind.  58;  McGuire  v. 
Bidwell,  64  Tex.  43.  If  right  of 
creditor  to  demand  payment  be  sus- 
pended by  a  third  person's  promise, 
the  suspension  ceases  (i.  e.  right  re- 
vives) on  default  of  such  third  per- 
son. Washington,  &c.,  Bank  v. 
Farmers'  Bank,  4  Johns.  Ch.  62. 

6.  Shepherd  v.  Busch,  154  Penn. 
St.  149;  26  Atl.  363;  Fleig  v.  Sleet, 
43  Ohio  St.  53.  See  Aldin  v.  Cam- 
den Co.,  107  Me.  508,  78  Atl.  977 
(collateral  converted  by  creditor). 


548 


CHAP.  III.]  DEBTS    IN   GENERAL.  §    370a 

^  370.     Effect  of  Designating  a  Place  of  Payment. 

If  a  bank  be  specially  designated  in  a  bond  or  promissory  note 
as  the  place  of  payment,  the  stipulation  is  imported  that  its  holder 
will  have  it  at  the  bank  when  due,  and  that  the  obligor  will  have 
there  the  funds  to  pay  it.  And  if  the  debtor  be  at  the  bank,  at 
the  maturity  of  the  bond  or  note,  with  the  necessary  funds,  he  so 
far  satisfies  the  contract  that  he  cannot  be  made  responsible  for 
damages  growing  out  of  subsequent  delays.''  But  payment  made 
at  a  different  place  from  that  where  payment  was  due  is  valid.^ 

§  370a.     Accord  and  Satisfaction,  Account  Stated,  etc. 

By  "  accord  and  satisfaction  "  is  meant  that  a  new  agreement 
is  substituted  by  the  parties  in  place  of  a  pre-existing  one  over 
which  there  was  controversy;  and  its  effect  is  to  extinguish  the 
antecedent  liability.^  There  must  be  a  satisfaction  as  well  as  an 
accord  to  complete  such  a  transaction ;  and  where  there  has  been 
neither  dispute  nor  concession,  but  one  pays  and  the  other  accepts 
the  amount  admissibly  due  originally,  there  is  no  accord  and  satis- 
faction between  the  parties.'  An  account  stated  is  an  agreement 
between  parties  who  have  had  money  dealings  that  all  the  items 
set  forth  are  true,  and  that  the  balance  struck  is  correct;    thereby 

7.  Ward  v.   Smith,   7   Wall.   447.  205  N.  Y.  33,  98  N.  E.  203 ;  Baugh  v. 

8.  Jones  v.   Perkins,   29   Miss.   139.  Fist,  84  Kan.  740.  ll.j  Pac.  551. 

9.  B.  &  W.  Engineering  Co.  v.  1.  Wilder  v.  Millard,  93  Neb.  595, 
Beam,  23  Cal.  App.  164,  137  Pac.  141  N.  W.  156:  Md.  Steel  Co.  v. 
624;  Continental  Gin  Co.  v.  Arnold,  United  States,  48  Ct.  CI.  50;  Eichel- 
153  Pac.  160  (Okla.  1914)  ;  Gentry  v.  berger  v.  Mann,  115  Va.  774,  80  S.  E. 
Fife,  155  Pac.  246  (Okla.  1914);  Re-  595  (there  should  be  no  fraud  or 
liance  Ins.  Co.  v.  Garth,  192  Ala.  91,  mistake,  but  a  bond  fide  mutual  un- 
68  So.  871 ;  Babcoek  v.  Huntoon,  37  derstanding)  ;  Scott  v.  Parkview  Co., 
R.  I.  526,  93  Atl.  9-11  (a  considera-  241  Mo.  112,  145  S.  W.  48.  Of. 
tion)  ;  Western  Ry.  of  Ala.  v.  Foshee,  Houlehan  v.  Kennebec  Co..  108  Me. 
183  Ala.  182,  63  So.  500  (a  com-  397,  81  Atl.  44!?;  I^each  v.  Cowan, 
promise);  Williams  v.  Uzzell,  108  125  Tenn.  182.  140  S.  W.  1070;  Bell 
Ark.  241,  156  S.  W.  843  (satisfaction  v.  Pitman,  143  Ky.  521,  136  S.  W. 
need  not  be  in  money)  ;  Sanders  v.  1026,  35  L.  R.  A.  N.  s.  820,  n. ;  Fuller 
Standard  Wheel  Co.,  151  Ky.  257,  v.  Smith,  107  Me.  161,  77  Atl.  706 
151  S.  W.  674;  Manse  v.  Hossington,  (implied). 

549 


§  371 


THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 


expressing  or  implying  a  promise  to  pay  and  accept  that  balance 

as  in  full.^ 

§  371.     Application  of  a  Partial  Payment. 

Another  question  of  perplexity  which  comes  up  in  connection 
with  the  payment  of  debts  is  concerning  the  application  of  a  partial 
payment  which  is  voluntarily  made  by  the  debtor.  In  general, 
when  a  less  sum  is  paid  to  the  creditor  than  the  whole  amount  of 
his  demand,  it  is  lawful  for  the  debtor  to  make  the  payment  as 
going  towards  such  portion  of  the  total  indebtedness  as  he  pleases, 
and  the  appropriation  should  be  regarded  accordingly.  But  if 
the  debtor  make  no  special  appropriation  of  his  payment,  the 
creditor  may,  within  a  reasonable  time  and  before  the  relations  of 
the  parties  have  changed  essentially,  elect  to  take  it  as  on  account 
of  such  portion  as  may  please  himself.''  Where  neither  debtor  nor 
creditor  makes  an  appropriation  of  the  payment,  the  court  will 
do  it  on  principles  of  equity  and  justice  for  them  both.'*  The 
intention  of  the  debtor  to  appropriate  a  partial  payment  in  this 
manner  may  be  indicated  as  well  by  the  circumst-ances  of  the  case 


2.  Dean  v.  Conkey,  180  111.  App. 
162;  Godfrey  v.  Hughes,  114  Ark. 
312,  169  S.  W.  958 ;  Gardner  v.  Wat- 
son, 170  Cal.  570,  150  Pac.  994; 
Merritt  v.  Meisenheimer,  84  Wash. 
174,  146  Pac.  370 ;  Thomasma  v.  Car- 
penter, 175  Mich.  428,  141  N.  W. 
559;  White  Coal  Co.  v.  Crescent  Coal 
Co.,  254  111.  368,  98  N.  E.  669,  42 
L.  R.  A.  N.  s.  369,  n.  See  Farrar  v. 
Pillsbury,  217  Mass.  330,  104  N.  E. 
737;  Pudas  V.  Mattola,  173  Mich. 
189,  138  N.  W.  1052,  45  L.  R.  A. 
N.  S.  534,  n. ;  Kent  v.  Wilson,  149 
App.  Div.  841,  134  N.  Y.  S.  206; 
Lyell  V.  Walbach,  111  Md.  610,  75 
Atl.  339;  Jasper  Trust  Co.  v.  Lamp- 
kin,  162  Ala.  388,  50  So.  337,  24 
L.  R.  A.  X.  s.  1237,  n. 


3.  Roakes  v.  Bailey,  55  Vt.  542'; 
Souten  V.  Rowan,  59  N.  H.  215; 
Phila.  V.  Kelly,  166  Penn.  St.  207. 

4.  Alexandria  v.  Patten,  4  Cr.  317; 
Wms.  Pcrs.  Prop.,  17th  Eng.  ed. 
259:  Hubbard,  J.,  in  Parker  v. 
Green,  8  Met.  144;  Devaynes  v. 
Noble,  1  Mer.  608 ;  Brewer  v.  Knapp, 
1  Pick.  337;  Goodman  v.  Oshkosh,  45 
Wis.  355;  Haynes  v.  Nice,  100  Mass. 
327;  Philpott  v.  Jones,  2  Ad.  &  El>. 
41 ;  McDaniel  v.  Barnes,  5  Bush.  183 ; 
Buster  v.  Holland,  27  W.  Va.  510. 
A  creditor  receiving  money  with  di- 
rections to  apply  part  to  another 
creditor's  debt  cannot  keep  all  to 
himself.  Hall  v.  Marston,  17  Mass. 
575. 


550 


CHAP.  III.]  DEBTS    IN    GENERAL.  §    371 

as  by  an  express  direction;  and  the  same  is  true  likewise  of  the 
creditor's  assent ;  and  hence  the  discretionary  power  of  the  court 
in  controversies  of  this  character  is  never  to  be  arbitrarily  exer- 
cised.^ 

In  justice,  if  the  intent  of  parties  be  not  clear,  the  court  will 
therefore  apply  a  payment,  where  the  securities  are  unequal,  to 
that  debt  for  which  the  security  is  the  most  precarious ;  and  if  one 
debt  is  secured  but  the  other  is  not,  to  the  debt  which  is  not 
secured.^  Where,  again,  the  debt  bears  interest,  a  partial  pay- 
ment will  be  applied  in  keeping  down  the  interest  rather  than  by 
way  of  extinguishing  the  principal;  and  as  between  an  interest- 
bearing  debt  and  a  debt  bearing  no  interest  the  former  should  be 
preferred  in  appropriation.  So  should  payment  be  presumably 
intended  of  a  debt  due  rather  than  of  one  not  due ;  of  earlier 
items  in  an  account  current  rather  than  of  later  ones ;  of  a  legal 
debt  rather  than  an  illegal  debt ;  and  of  a  several  debt  rather  than 
a  joint  debt.'' 

Where  an  appropriation  or  application  of  pa.)Tnent  has  once 
been  made,  it  cannot  be  altered  without  consent  of  the  parties.^ 

5.  Tayloe    v.    Sandiford,    7    Wheat.  W.   1038    (several  notes  due)  ;   Amer- 

13.  iean  Woolen  Co.  v.  Maageb,  86  Conn. 

Payment  of  only  part  of  a  clear  234,  85  At!.  583. 
and  liquidattKi  debt  i.s  not  a  satis-  6.  Field  v.  Holland,  6  Cr.  8;  Back- 
faction  of  the  whole  per  se.  Brady  liouse  v.  Patton,  5  Pot.  160;  Merri- 
V.  Ins.  Co.,  180  Mo.  App.  214,  167  S.  man  v.  Ward,  7  John.  &  H.  371. 
W.  1171;  cf.  Cunningham  v.  Irwin,  7.  lb.;  Wms.  Pera.  Prop.  115; 
183  Mich.  629,  148  N.  W.  786;  Gol-  Bower  v.  Marriss,  1  Cr.  &  Phil.  351, 
owtiz  V.  Hendlin,  150  N.  Y.  S.  641  355;  McDaniel  v.  Barnes,  5  Bush, 
(App.  Term,  1915)  (receipt  in  full  183;  Spraguo  v.  Hazenwinkle,  53  111. 
given)  ;  Jensen  v.  Wilslep,  36  Nev.  419;  King  v.  Andrews,  30  Ind.  429; 
37,  132  Pac.   16.  Hill  v.  Rol)I)ins,  22  Mich.  475;  Taylor 

As  to  appropriating  payment,  see  v.  Co.  Com'rs,  105  Mass.  225;  Ham- 
Cleveland  Nat.  Bank  v.  Amos,  37  sey  v.  Warner,  97  Mass.  8;  Leef  v. 
Okla.  674,  133  Pac.  204  (ratification  Goodwin,  Taney,  460;  Howard  v 
of  debtor's  act)  ;  J.  R.  Watkins  Fletcher,  59  N.  H.  151. 
Medical  Co.  v.  Hamm,  89  Kan.  138,  8.  Sw  Bright.  Ft>d.  Dig.  "Debtor 
130  Pac.  650;  Bondy  v.  Hardina,  216  and  Creditor."  245,  246.  But  a  cr(>d- 
Mass.  44,  102  N.  E.  935;  Milwaukw  itor's  election  to  appropriate  may 
Store  V.  Katz,  153   Wis.  492,   140  N.  change,  so  long  as  his   intention   has 

551 


§  371 


THE  LAW  OF  PERSONAL  PEOPEKTY. 


[PAKT  III. 


One  great  difficulty  found  in  all  controversies  over  the  appro- 
priation of  a  partial  payment,  is  in  determining  within  what  time 
the  privilege  of  election  must  be  exercised  by  a  debtor  or  creditor. 
In  general,  the  period  allowed  is  a  reasonable  time;  but  such  a 
statement  indicates  no  precise  limit;  and  this  only  remains  cer- 
tain, that  after  a  controversy  has  arisen  between  the  parties,  the 
power  to  appropriate  a  past  payment  is  gone  from  both,  and  the 
law  must  determine  the  appropriation  for  them.^ 


not  been  communicated  to  the  debtor. 
Simson  v.  Ingham,  2  B.  &  C.  65,  6 
Gill,  59. 

Government  may  apply  the  partial 
payments  of  its  defaulting  officers 
with  the  same  reference  to  its  in- 
terests as  a  private  creditor  would. 
Jones  V.  United  States,  7   How.   681. 

9.  United  States  v.  Kirkpatrick,  9 
Wheat.  720. 

The  subject  of  payment,  and  the 
appropriation  of  payments,  finds  in- 
cidental consideration  in  vol.  ii.  post, 
in  connection  with  the  subject  of 
sales.  And  see  Benj.  Sales,  §  746 
et  seq.  The  result  as  between  buyer 
and  seller  is  substantially  as  stated 
here  in  the  text.  Presumptions  may 
be  overcome  by  proof  of  the  facts. 
Thus,  where  a  debtor  has  directed 
payment  to  be  applied  to  the  satis- 
faction of  an  invalid  or  even  illegal 
claim,  he  cannot  afterwards  require 
a  different  appropriation.  Hubbell 
V.  Flint,  15  Gray,  550;  Dorsey  v. 
Wayman,  6  GUI,  59.  Contra,  as  to 
illegal  claims.  Kidder  v.  Norris,  18 
N.  H.  532;  Bancroft  v.  Dumas,  21 
Vt.  456.  By  express  agreement,  part 
payments  may  be  applicable  to  in- 
stalments not  yet  due.  Shaw  v. 
Pratt,  22  Pick.  305.  But  the  creditor 
alone  is  not  allowed  such  a  discre- 
tion.     Bobe  V.  Stickney,  36  Ala.  482. 


A  creditor  with  the  right  to  elect 
may  apply,  of  course,  as  a  court 
would  have  applied,  conformably  to 
the  text  above.  See  7  Allen,  270; 
Saunders  v.  McCarthy,  8  Allen,  42. 
See  also  Plummer  v.  Erskine,  58  Me. 
59*;  Mueller  v.  Wiebracht,  47  Mo. 
468;  Cardinell  v.  O'Dowd,  43  Cal. 
586.  General  payments  may  be  ap- 
plied by  a  creditor  to  such  debts  as 
are  already  barred  by  statutes  of 
limitations  or  are  obnoxious  to  the 
Statute  of  Frauds.  Haynes  v.  Nice, 
100  Mass.  327;  Ramsay  v.  Warner, 
97  Mass.  8.  An  agent  with  a  de- 
mand for  himself  and  also  acting  for 
a  principal  with  a  demand,  must,  if 
he  blends  the  two  accounts,  apply 
payment  ratably  to  both  demands. 
Barrett  v.  Lewis,  2  Pick.  123.  And 
money  received  under  instructions  to 
apply  in  a  particular  manner  is  re- 
ceived in  trust  accordingly.  Libby 
V.  Hopkins,  104  U.  S.  303.  And 
see  Ketchum  v.  St.  Louis,  101  U.  S- 
306.  The  rule  that  a  debtor  may 
appropriate  as  he  pleases  applies 
only  to  voluntary  payments,  not  to 
those  made  by  process  of  law.  Black- 
stone  Bank  v.  Hill,  10  Pick.  129. 
Liens  are  not  to  be  thus  OA'erridden. 
Baldwin  v.  Flash,  59  Miss.  61. 

By  the  Roman  law,  payment  could 
be  made  by  any  one  in  discharge  of 


552 


CHAP.  III.]  DEBTS    IN    GEIs'EKAL.  §    372 

§  371a.     Conditional  Payment  in  a  Dispute. 

In  case  of  a  dispute  over  the  amount  due,  a  conditional  tender 
as  in  full  satisfaction  cannot  be  treated  as  merely  a  partial  one  by 
the  creditor;  though  it  would  be  otherwise  with  a  simple  tender 
of  payment.^  And  hence  payment  by  check  of  part  only  of  what 
the  creditor  claimed  with  such  special  written  words  as  "  in  full  " 
or  their  equivalent,  requires  the  creditor  who  still  disputes  the  true 
amount  to  return  instead  of  retaining  and  cashing  it;  since  in 
the  latter  case  there  would  be  virtually  an  accepted  accord  and 
satisfaction  on  his  part.^ 

§  372.     Composition  or  Extension  Agreement. 

It  was  once  thought  that  the  case  where  a  debtor  induced  a 
number  of  his  creditors  to  accept  a  compromise  amounting  to  less 
than  their  respective  demands  was  one  of  nudum  pactum;  but 
the  later  rule  is,  as  already  suggested,^  that  if  such  a  compro- 
mise—  or  rather  a  composition  agreement  —  be  bond  fide  entered 
into,  each  creditor  acting  on  the  faith  of  the  engagement  of  the 
others,  it  will  bind  them  all;  since  each  has  the  undertaking  of 
the  rest  as  consideration  for  his  own."^     And  the  same  may  be 

the  debtor.      But  as   to  the   common  tie  Blue  School,  110  Mo.  415,  86  Atl. 

law,  qu.;  and  the  inclination  appears  838;   Rose  v.  American  Co.,  43  N.  J. 

to  be  to  the  contrary  where  payment  L.  707,  85  Atl.  354. 

is  made  by  a  stranger  to  the  debtor  2.  Lapp-GifFord  v.  Musx?oy  Co.,  166 

without  the  latter's  knowledge.     Cook  Cal.  25,  134  Pac.  89;   Cohn  v.  Arkin, 

V.  Lister,  13  C.  B.  n.  s.  543 ;  Walter  178  111.  App.  306 ;  Arasler  v.  MfClure, 

V.    James,    L.    R.    6    Ex.    724;    Benj.  238  Penn.  409,  86  Atl.  294 ;  Worcester 

Sales,  §   756.      Otherwise,  as  to  ex-  Color  Co.  v.  Henry  Woods  Sons  Ca, 

tinguishment    by    a    third    person    at  209  Mass.   105,   95   N.   E.   392    (cred- 

the   debtor's   request.      Moran   v.   Ab-  iter's  erasure  of  words)  ;   Aydlett  v. 

bey,   63   Cal.   56.      No  one  can  make  Brown,  153  N.  C.   334.  69  S.  E.  243. 

another   his   debtor    without   the   lat-  Cf.  Jordy  v.  Maxwell,  62  Fla.  236,  56 

ter's  express  or  implied  assent.   Alton  So.  946;   Caravia  v.  Levy,  119  N.  Y. 

V.    Mulledy,    21    111.    76;    Watkins   v.  S.    160    (Sup.    App.    Term,    l<no.    an 

Richmond  College,  41  Mo.  302.  undisputed   claim)  ;    Nixon   v.   Kiddy, 

1.  Western  Ry.  v.  Fosher,  183  Ala.  66  W.  Va.  355,  66  S.  E.  500. 

182,     62     So.     500;     §     370a    supra;  3.  Supra,  §  366. 

Sparks  v.    Spaulding   Co.,   158   Iowa,  4.  Cumber   v.   Wajiie,    in    1    Smith 

491,  139  N.  W.  1083;  Chapin  v.  Lit-  Lead.  Cas.  443;  U.  S.  Dig.  Ist  series, 

553 


§  372  THE  LAW  OF  PERSONAL  PEOPEETY.       [PAET  III. 

said  of  an  agreement  for  extension  of  time.^  But  engagements  of 
this  sort  are  to  be  strictly  construed;  and  not  only  is  the  debtor 
bound  to  fulfil  his  own  stipulations,  but  each  creditor  has  the  right 
to  make  his  signature  expressly  conditional,  and  to  insist  that  such 
condition  be  carried  out.  Those  who  sign  on  the  faith  of  other 
names  are  released  if  those  names  cannot  be  obtained ;  while  on 
the  other  hand,  one  creditor  cannot  induce  others  to  sign  because 
he  has  done  so,  and  then  withdraw  and  leave  them  bound.  The 
debtor  should  be  in  embarrassed  circumstances,  and  should  duly 
have  performed  or  tendered  the  terms  of  the  composition,  in  order 
to  render  it  enforceable  by  suit.^ 

A  secret  understanding,  by  which  one  creditor  is  to  derive  undue 
advantage  from  the  debtor,  in  consideration  of  signing,  beyond 
the  just  terms  expressed  in  the  composition  agreement,  may  render 
the  latter  voidable  as  a  fraud  upon  the  other  creditors ;  yet  this 
case  should  be  distinguished  from  that  where  each  creditor  makes 
his  own  bargain  and  gets  the  best  terms  he  can.^  False  material 
representations  by  the  debtor  may  be  shown  to  vitiate  the  contract 
as  to  creditors  ;  ^  but  not  fraud  of  which  the  creditor  was  cognizant 

Debtor   and    Creditor,    633-714.       See  255.      A   composition   may   consist   in 

Brown    v.    Spofford,    95    U.    S.    474;  acts,  such  as  surrendering  debts  and 

Cleaveland  v.   Ricbardson,   132  U.   S.  taking    composition    notes.       Fellows 

318.  V.   Stevens,   24  Wend.   294. 

5.  Goode  V.  Cheeseman,  2  B.  &  Ad.  And  as  to  an  extension  agreement, 
328.  see    Loomis    v.    Wainwright,    21    Vt. 

6.  Alchin  v.  Hopkins,  1  Bing.  N.  C.  520 ;  Palmer  v.  Williams,  13  Gray, 
99;  Reay  v.  Richardson,  2  C.  M.  &  338.  An  agreement  to  forbear  to 
R.  422 ;  Cutler  V.  Reynolds,  8  B.  sue,  if  not  expressed  to  be  for  a 
Monr.  59'6.  That  consideration  is  stated  time,  is  presumed  to  intend  a 
sufficient,  one  creditor  on  strength  of  reasonable  time.  Hakes  v.  Hotch- 
another,  unless  the  condition  be  that  kiss,  23  Vt.  231. 

all   creditors  shall  come   into  the  ar-  Concerning    what    is    novation    or 

rangement,  see  Devon  v.  Ham,  17  Ind.  substitution,   see   Bouv.    Diet.;    U.    S. 

472;   Daniels  v.  Hatch,  1  Zabr.  391;  Dig.   1st  series.  Debtor  and  Creditor. 

Doughty    V.    Savage,    28    Conn.    146.  48-58. 

That    such    condition    must    be    com-  7.  Clarke  v.  White,  12  Pet.  173. 

plied  with,  however,  if  expressed,  see  8.  Jackson  v.  Hodges,  24  Md.  468 : 

ib.     And  see  Gifford  v.  Allen,  3  Met.  Seving  v.  Gale,  28  Ind.  486. 

554 


CHAP.  III.]  DEBTS    IN    GENERAL.  §    374 

at  the  time  of  the  composition.'  And  at  all  times  it  should  be 
remembered  that  a  debtor  who  is  unable  to  effect  a  compromise  of 
his  debts  with  his  creditors  may  usually  take  advantage  of  the 
bankrupt  or  insolvent  laws ;  and  that  a  single  creditor  refusing  to 
accede  to  the  proposed  composition  may  force  him  into  legal  insol- 
vency, and  thus  render  the  agreement  with  the  other  creditors 
worthless.^ 

§  373.     Demands  and  Claims. 

Reference  should  here  be  added  to  "  demands  "  and  "  claims," 
—  words  which,  though  often  lightly  used  as  synonymous  with 
"  debts,"  take  in  reality  a  much  wider  sweep.  For  we  are  to 
remember  that  the  right  to  sue  and  recover  money  may  grow  out 
of  a  wrong  suffered ;  not,  as  in  debts  proper,  out  of  a  contract 
alone.^  Our  preceding  discussion  indicates  the  legal  principles 
which  apply  to  the  settlement  of  all  such  money  rights. 

§  374.  Rules  of  Set-off;  Recoupment,  etc.,  in  Modern  Practice. 
In  modern  practice,  litigation  is  frequently  simplified  by  the 
introduction  of  rules  which  permit  a  person  sued  upon  some  debt, 
claim,  or  demand,  to  avail  himself  in  defence  of  what  is  known 
as  the  right  of  "  set-off,"  "  recoupment,"  or  "  counter-claim ;  "  the 
effect  being  that  the  party  sued  may  balance  off  his  own  demands 
against  those  of  the  party  who  sues  him,  and  suffer  judgment  for 
the  difference  only.^ 

9.  Clarke  v.  Whito,  12  Pet.  178.  used   in  the  text,   if  not  sui  grnn-is. 

1.  See  Wetberell,  n.  to  Wms.  Pers.      lb.      See  §§  354,  355. 

Prop.  3d  Am.  ed.  116;  2  Kent,  389.  3.  For    distinctions    between    "  set- 

2.  See  Lane  County  v.  Orop^on.  7  off,"  "recoupment,"  and  "counter- 
Wall.  80;  Haprar  v.  Reclamation  claim,"  see  treatise  of  Waterman, 
Dist.,  Ill  U.  S.  701.  Semble,  a  tax  2d  od.  1.  426.  476.  608.  And  see 
is   included    under    the    larfjcr   terms  Sedgwick  on  Damages,  c.  17;   172  111. 

App.  410;   214  Fed.  841. 


555 


CHAPTER  IV 


DEBTS    SECURED    BY    LIEN 


§  375.     Various  Securities  for  Debt  Enumerated. 

Keeping  the  general  definition  of  a  debt  in  view,  let  us  now 
examine  in  order  the  various  securities  for  a  debt ;  with  this  gen- 
eral observation  at  the  outset,  that  while  the  name  usually  applied 
to  each  species  of  property  is  the  name  of  the  security  alone,  the 
property  in  fact  consists  of  that  incorporeal  thing  called  a  debt, 
and  a  security  besides  by  way  of  better  enforcing  its  payment. 
*^  There  are,"  to  use  the  words  of  an  eminent  English  judge  with 
reference  to  personal  property,  "  three  kinds  of  security:  the  first, 
a  simple  lien;  the  second,  a  mortgage  passing  the  property  out 
and  out ;  the  third,  a  security  intermediate  between  a  lien  and  a 
mortgage, —  viz.,  a  pledge, —  where  by  contract  a  deposit  of  goods 
is  made  a  security  for  a  debt  and  the  right  to  the  property  vests 
in  the  pledgee  so  far  as  is  necessary  to  secure  the  debt."  ^ 

We  shall  consider  in  this  and  the  two  following  chapters  the 
lien,  the  pledge,  and  the  mortgage  accordingly;  thus  adopting 
judicial  indications  and  the  most  natural  order  of  progression. 

§  376.     What  is  a  Lien. 

A  lien,  in  general  language,  may  be  defined  as  that  hold  or  claim 
which  one  person  has  upon  the  property  of  another  as  a  security 
for  some  debt  or  demand  due  him.  The  right  of  a  person  to  hold 
property  by  lien  lasts  in  theory  until  the  debt  or  demand  so 
secured  has  been  satisfied ;  it  is  not  incompatible  with  a  right  on 
his  part  to  sue  for  the  same  debt  or  demand ;  but  the  lien  consti- 
tutes a  collateral  security,  more  available  often  than  the  debt  itself, 
and  certainly  a  ready  means  of  enforcing  payment,  so  long  as  the 
property  held  by  lien  is  worth  anything.^     The  goods,  while  they 

1.  See    Willes,    J.,    in    Halliday    v.  2.  Bouv.    Diet.    "Lien;"    Somes   v. 

Holgate,  L.  R.  3  Ex.  302.  British  Empire  Shipping  Co.,  8  H.  L. 

556 


CHAP.  IV.]  DEBTS    SECUEED    BY    LIEN.  §    377 

continue  in  possession  of  a  person  entitled  to  a  lien,  cannot  be 
seized  in  execution  for  the  real  owner's  debt.^  And  a  lien  is  found 
available  even  where  the  debt  for  which  the  creditor  claims  to  hold 
the  goods  is  of  more  than  six  years'  standing,  and  the  remedy  by 
action  at  law  is  barred  by  the  Statute  of  Limitations.  But  the 
title  to  property  held  by  him,  so  far  as  the  common  law  recognizes 
it,  and  irrespective  of  all  statute  remedies,  is  quite  imperfect ;  for 
the  mere  right  of  lien  is  not  understood  to  carry  with  it  any  right 
of  sale  to  secure  indemnity. 

And  hence  we  say  that  there  is  a  progression  from  liens  to 
pledges,  in  the  matter  of  title ;  for  the  contract  of  pledge  carries 
an  implied  understanding,  at  least,  that  the  security  shall  be  made 
effectual  to  discharge  the  obligation;  while  in  the  case  of  a  lien 
nothing  is  given,  unless  under  special  circumstances,  but  the  right 
of  retaining  or  detaining  the  property  which  serves  as  security."* 
Whenever,  indeed,  the  sum  for  which  the  lien  attaches  is  paid  up, 
the  lien  is  gone.  A  lien,  too,  attaches  as  something  incidental  to 
the  debt  or  demand ;  and  usually  by  mere  act  of  the  law  without 
any  act  of  the  party.^  Yet  so  many  kinds  of  liens  exist,  besides 
the  mere  common-law  lien,  that,  as  we  shall  see  in  the  course  of 
this  chapter,  the  word  "  lien  "  has  acquired  quite  an  extensive  and 
rather  a  vague  legal  significance. 

§  377.     Various  Kinds  of  Liens  Stated. 

There  are  many  kinds  of  liens  recognized  at  law,  some  of  which 
attach  to  real  estate  alone,  some  to  certain  kinds  of  personal  prop- 
erty alone,  and  some  to  property  in  general.  And,  in  a  large  and 
rather  indefinite  sense,  we  are  accustomed  to  speak  of  the  equitable 
lien,  a  creature  of  equity;  of  the  maritime  lien,  which  constitutes 
an  important  feature  of  the  jurisprudence  of  shipping;  of  the 
statutory  lien,  a  designation  applied  to  liens  either  expressly  con- 

Cas.    338;    Oakes   v.    Moore,    24    Me.  4.  Spears    v.    Hartly.    3    Esp.    81; 

214;  Montagu  Liens,  1.  Hijjfjins  v.  Scott.  2  B.  &  Ad.  413. 

3.  Lcgg  V.  Evans,  6  M.  &  W.  36;  5.  Story  Bailm.  §  311;  HoH  N.  P. 

Smith  Merc.  Law,  553.  383:  Doano  v.  Russell.  3  Gray.  382; 

2  Kent  Com.  642. 

557 


§  379  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

ferred  or  largely  regulated  by  statute;  besides  the  common-law 
lien,  which  is  the  primitive  lien  in  its  simplest  form, —  that  lien 
which  consists  in  a  mere  legal  right  to  retain  possession  until  the 
debt  or  charge  is  paid.  For  as  to  these  equitable,  maritime,  and 
statutory  liens,  they  often  seem  to  be  more  nearly  synonymous  with 
preferred  or  privileged  claims,  whose  payment  is  charged  upon 
the  property,  with  adequate  means  for  its  enforcement. 

§  378.     Common-Law  Lien;   Particular  and  General  Lien. 

To  confine  ourselves  more  particularly,  for  the  present,  to  the 
common-law  lien,  we  observe  that  there  are  two  leading  species  of 
liens  known  to  the  law ;  namely,  particular  liens  and  general  liens. 
A  particular  lien  on  another's  property  is  the  right  to  retain  it  for 
a  debt  which  arises  on  account  of  labor  employed  or  expense  be- 
stowed upon  that  identical  property.  The  right  rests  on  prin- 
ciples of  natural  justice  and  sound  policy;  and  it  not  only  pre- 
vents circuity  of  action,  but  goes  far  towards  obviating  the  neces- 
sity of  any  suit  at  all  in  matters  which  must  often  be  too  trivial 
and  annoying  to  bear  litigation ;  thus  positively  favoring  the  trade 
of  the  poor  man,  though  confined  at  this  day  to  no  class  of  business 
exclusively.  Particular  liens  have  therefore  long  been  decidedly 
favored  in  law. 

I^Tot  so,  however,  with  the  general  lien,  which  is  a  right  to  retain 
another's  property  for  a  general  balance  of  account.^  Of  course, 
where  a  general  lien  exists,  a  particular  one  is  by  necessary  impli- 
cation included. 

§  379.     Who  May  be  Entitled  to  a  Particular  Lien. 

Chancellor  Kent  tells  us  that  where  a  person,  from  the  nature 
of  his  occupation,  is  under  an  obligation,  according  to  his  means, 
to  receive  and  be  at  trouble  and  expense  about  the  personal  prop- 

6.  See     3     Kent     Cora.     634;      per      34   Me.   214;   Bank  of  Washington   v. 
Heath,  J.,  3  B.  &  P.  494;  Hammonds      Nock,    9    Wall.    382;    Lickbarrow    v. 
V.    Barclay,    2    East,   227;    Wilson    v.      Mason,  6  East,  21.  n. 
Guyton,  8  Gill,  213;  Oakes  v.  Moore, 

558 


CHAP.  IV.]  DEBTS    SECUEED    BY    LIEN.  §    379 

ertj  of  another,  he  has  a  particular  lien  upon  it;  and  that  our  law 
has  given  this  privilege  to  persons  concerned  in  certain  trades  aud 
occupations  which  are  necessary  for  the  accommodation  of  the 
public.  Upon  this  ground,  he  adds,  common  carriers,  innkeepers, 
and  farriers  had  a  particular  lien  at  the  common  law;  for  they 
were  obliged  to  serve  the  public  to  the  utmost  extent  and  ability 
of  their  employment,  and  if  they  refused  without  adequate  reason 
were  liable  to  an  action.^ 

Now,  examining  this  right  of  lien  in  the  light  of  remuneration 
for  the  obligations  imposed  by  law  upon  the  lien-claimant,  as  thus 
suggested,  we  find  that  there  are  limits  worthy  of  notice.  Take 
the  case  of  an  innkeeper,  for  instance.  Many  of  the  decisions 
under  this  head  turn  upon  the  distinction  taken  between  innkeep- 
ers and  keepers  of  lodging  or  boarding  houses,  in  respect  of  lia- 
bility for  the  goods  of  the  guest;  and  while,  in  the  former  in- 
stance, a  very  strict  rule  of  responsibility  has  been  enforced  from 
the  earliest  times,  there  seems  little,  if  an^^hing,  short  of  actual 
ordinary  negligence,  so  to  speak,  for  which  in  the  latter  instance 
one  is  made  -answerable.^  ISTot  to  follow  out  this  distinction,  we 
conclude  that,  by  strict  reasoning,  the  innkeeper's  right  of  lien  on 
the  goods  of  his  guest  does  not,  at  the  common  law,  extend  to 
boarding-house  or  lodging-house  keepers.  But  a  similar  right  is 
expressly  conferred  on  the  latter  class  of  persons  by  the  statutes  of 
iSTew  York  and  other  States.^  This  lien  of  an  innkeeper  extends 
only  to  the  goods  or  property  of  his  guest,  which  he  rei'eivod  on 
the  faith  of  the  innkeeping  relation.^     And  he  cannot  detain  his 

7.  2  Kent  Com.  634;  Lane  v.  Cot-  9.  Sco  Preston  v.  Nealc,  12  Cray, 
ton,  12  Mod.  484;  Carlisle  v.  Quat-  222;  N.  Y.  Laws  1860,  p.  771;  2 
tlebaum,   2   Bailey,   452.  Kent     Com.     592-594;     Story    Bailm. 

8.  Holder  v.  Soulby,  8  C.  B.  N.  s.  §§  478.  481;  Schoul.  Bailm.  §  329: 
252;  Dansey  v.  Ricliardson,  3  Ell.  Cross  v.  Wilkins,  43  N.  H.  332; 
&  B.  144;  Berkshire  Woollen  Co.  v.  Nichols  v.  Holliday.  27  Wi.s.  406. 
Proctor,  7  Ciish.  423;  Manninjj  v.  The  precise  lanpuafre  of  a  local  .stat- 
Wells,  9  Humph.  746;  Sibley  v.  Aid-  ute  is  material  on  this  point.  Mills 
rich,  33  N.  H.  553;  Chamberlain  v.  v.  Shirley,  110  Mass.  158. 
Masterson.  26  Ala.  371.  And  see  1.  Schoul.  Bailm.  §§  326-328.  and 
Schoul.  Bailm.  §§  273-329.  casea  cited. 

559 


§  379         THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III, 

guest  or  strip  Mm  of  his  clothes  in  order  to  secure  payment  of  his 
bill ;  for  the  lien  does  not  extend  to  the  person  of  his  guest,  and 
stripping  a  man  of  his  clothes  amounts  virtually  to  imprisonment.^ 
Next  we  come  to  the  carrier's  lien.  That  common  carriers  have 
a  Ken  on  the  goods  they  carry  is  a  familiar  principle ;  not  confined 
to  such  persons  as  in  former  days  managed  a  petty  business  of  this 
sort,  but  extended,  with  the  modern  development  of  trade  and 
commerce,  to  that  immense  transportation  business  which  is  done 
in  modem  times  by  railways  and  express  companies  on  land  and 
by  ships  and  steam-  vessels  by  water.  For  in  these  erases  the  lia- 
bility imposed  by  law  is  to  deliver  safely,  excepting  perils  which 
occur  by  act  of  God  and  a  public  enemy;  to  which  exceptions  we 
may  add  act  of  customer  and  act  of  public  authority.^  The  lien 
of  a  common  carrier  covers  the  goods  he  carries ;  and  unless  he 
has  made  a  special  contract  to  deliver  them  up  before  he  has  been 
paid,  he  is  not  obliged  to  do  so."*  The  carrier's  lien  covers  his 
advances  to  others  for  freight  and  storage  on  the  goods ;  but  does 
not  extend  to  former  freight  unpaid  him,  nor  to  other  indebtedness 
of  his  customer,^  nor  to  overcharges,  nor  to  acts  performed  entirely 
outside  the  scope  of  the  carriage  contract.^  The  common  carrier 
of  passengers  has  also  a  lien  upon  the  passenger's  baggage  for  his 
fare,  though  not  upon  the  person  of  the  passenger.''  Here,  too, 
we  find  that  the  common-law  lien  affords  some  recompense  for  the 
extraordinary  liability  of  the  lien-claimant. 

2.  Sun'bolf  V.  A-lford,  2  M.  &  W.  6.  Steamboat  Virginia  v.  Kraft,  25 
248.  A  statute  exempting  certain  Mo.  76;  Richardson  v.  Rich,  104 
property  from  execution  does  not  Mass.  156.  And  see  Schoul.  Bailm. 
abrogate  an  innkeeper's  lien.  Swan  §§  542-550,  where  this  subject  is  ex- 
V.  Bournes,  47  Iowa,  501.  amined  at  length.     The  lien  extends 

3.  Schoul.  Bailm.,  §  405  et  seq.  sometimes  to  extraordinary  expenses 

4.  2  Kent  Com.  611,  634-642;  Story  incurred  in  the  transit  with  respect 
Bailm.  §  588,  8th  ed. ;  Schoul.  Bailm.  to  the  property.  And  see  L.  R.  6 
§§  542-550;  3  Ld.  Raym.  752;  2  Q.  B,  776;  Hingston  v.  Wandt,  1  Q. 
Redf.  Railw.  3d  ed.   156  et  seq.  B.   D.   367. 

5.  lb.;  Bissel  V.  Price,  16  111.  408;  7.  Wolf  v.  Summers,  2  Campb. 
Briggs  V.  Boston,  &c.,  R.  R.  Co.,  6  631;  McDaniels  v.  Robinson,  26  Vt. 
Allen,  246;  Adams  v.  Clark,  9  Cush.  316;  Story  Bailm.  §  604;  Schoul. 
S15;  1  Grant  Cas.  139. 

560 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    380 

§  380.     The  Same  Subject. 

But,  however  this  particular  lien  may  have  originated,  it  is 
found  in  modern  times  projected  far  beyond  that  class  of  persons 
who  at  the  common  law  had  to  receive  the  goods  offered  because 
of  the  public  nature  of  the  employment,  without  freedom  to  dis- 
criminate. The  general  rule  now  is,  that  ever}'  bailee  for  hire, 
who  by  his  labor  and  skill  has  imparted  an  additional  value  to  the 
goods,  has  a  lien  upon  the  property  for  his  reasonable  charges.* 
This  includes  all  persons  who  take  property  in  the  way  of  their 
trade  or  occupation  to  bestow  labor  or  expense  upon  it:  as,  for 
instance,  tailors,  dyers,  millers,  lard  renderers,  wharfingers,  and 
warehousemen,  to  whom  may  be  added  auctioneers ;  though  none 
of  these  are  obliged  to  accept  employment  from  any  one  that  offers 
it.  Nor  is  the  lien  a  privilege  for  regular  occupations  of  hired 
bailment  only,  but  it  is  inferable  commonly  at  this  day  from  the 
relation  of  hired  service  about  a  thing  wherever  that  relation  is 
created.^  And  the  lien  extends  to  the  whole  of  one  entire  work 
upon  one  entire  subject.^  It  is  even  held  that  one  who  trains  and 
keeps  a  race-horse  has  a  lien ;  for  by  his  instruction  he  has 
wrought  an  essential  improvement  in  the  animal.^  Yet  neither 
the  keeper  of  a  livery-stable  nor  a  cattle-kecpor  has,  as  such,  a 
common-law  lien  on  an  animal  delivered  to  him  for  keeping,  with- 
out a  special  agreement  to  that  effect ;  though  this  exception  as  to 
agistors,  so  called,  is  a  discreditable  one  to  our  law;  and  in  fact 
in  modern  times  a  lien  is  quite  generally  given  such  persons  by 
statute  in  the  various  States.^     At  common  law,  however,  a  lien 

Bailm.   §   693;   Ramsden   v.  Boston  A  Book    6,    N.    Y.    Rpts..    Bender's    ed., 

Albany  R.  R.  Co.,  104  Mass.  117.  note.  p.  47(). 

8.  2  Kent  Com.  536,  627,  635;  1.  lb.;  Morgan  v.  Congdon.  4 
Grinnell    v.    Cook,    3    Hill     (N.    Y.)  Comst.  551. 

485;  Green  v.  Farmer,  4  Burr.  2214;  2.  Forth  v.  Simpson.  13  Q.  B.  6S0; 

Close    V.    Waterliouse,    6    East,    523;  58  N.  H.  64. 

Hanna  v.  PholpS,  7  Ind.  21;   Schonl.  3.  Wallace  v.  VVoodprnto.  1   O.  4   P. 

Bailm.   §§   122-127.  575;    Crimiell    v.    Cook,    3   Hill.    485; 

9.  Schoul.  Bailm.  §  122;  Story  Richards  v.  Symonds.  10  Jur.  6.  See 
Bailm.  §  440.  Liens  on  personal  2  Kent  Com.  636.  As  to  tlie  hired 
property    of    repairers    and    agisters,  bailee's    lien,    see    Schoul.    Bailm     §§ 

36  561 


§  380  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

would  attach  only  when  a  chattel  has  been  actually  improved  by 
the  labor  of  the  mechanic;  and  therefore  a  garage-keeper  has  no 
lien  for  the  maintenance  and  care  of  an  automobile  where  this 
simply  consists  in  storage  and  incidental  repairing  to  keep  the 
car  up  and  not  to  improve  it."*  The  injustice  of  this  situation  has 
resulted  in  the  enactment  of  statutes  in  some  States  giving  a  lien 
to  garage-keepers.^  This  common-law  lien  is  the  right  of  the  re- 
sponsible bailee  who  performs  the  service  for  the  bailor  and 
receives  the  thing  into  custody ;  it  cannot  be  claimed  by  the  bailee's 
sub-agent,  laborer,  or  other  person  in  privity  with  him  alone.^ 

Some  of  the  cases  decided  seem  to  turn  upon  custom ;  and  the 
business  usage  of  a  locality  might  carry  the  rule  of  particular 
liens  even  further  than  the  courts  have  as  yet  clearly  sanctioned  its 
application,  so  desirable  and  so  reasonable  is  this  privilege  found 
to  be.  Doubtless,  moreover,  the  mutual  agreement  of  parties  may 
in  these  days  create  such  a  lien.  But  the  rule  has  its-  limits,  not- 
withstanding.^ It  was  formerly  thought  that  the  lien  for  labor 
and  skill  imparted  was  inconsistent  with  a  special  stipulation 
beforehand  concerning  the  price ;  but  this  is  no  longer  law ;  and 
the  regulation  of  price  does  not  affect  this  right  of  lien,  unless, 
indeed,  the  special  agreement  be  so  expressed  as  to  be  inconsistent 
with  the  supposition  that  a  lien  was  intended ;  aS  in  the  case 
where  some  future  time  of  payment  is  fixed.^     For  a  particular 

122-127,    at   length,    and    caSes    cited.  7.  Goodrich    v.    Willard,     7    Gray, 

Possibly    the    expense    naturally    in-  183;   Miller  v.  Marston,  35  Me.   153; 

volved     in     keeping     an     animal     by  McCoy  v.  Hock,  37  Iowa,  436.      Thus, 

virtue  of  a  lien,  where  the  right  to  while  one  who  runs  a  saw-mill  has  a 

sell  did  not  follow,  was  an  argument  lien  on  the  lumber  for  sawing  it  into 

against   presuming  this   lien   to   have  boards,     another     who     removed     the 

existed.  timber   from    some    person's    land,   at 

4.  Hatton  v.  Car  Maintenance  Co.,  an  agreed  price  and  for  the  purpose 
30  T.  L.  R.  275.  of  having  it  sawed,  may  have  no  lien 

5.  Mass    St.    1913,    c.    300;    N.    Y.  at  all.      Oakes  v.  Moore,  24  Me.  214; 
Cons.  Laws,  Lien  Law,  §  184.  Morgan    v.    Congdon,    4    Comst.    551. 

6.  Hollingsworth  v.  Dow,   19  Pick.  And  see  next  section. 

228;   Jacobs  v.  Knapp,   50  N.  H.   71.  8.  2     Kent     Com.     635;     Blake     v. 

Statute  may  confer  such  right.  See  Nicholson,  3  Maule  &  S.  168;  Bur- 
Vane  V,  Newcombe,  132  U.  S.  220.  diet  v.  Murray,  3  Vt.  302. 

562 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    381 

lien  may  be  created  or  destroyed  at  pleasure  by  agreement  of  the 
parties,  and  it  is  inconsistent  with  business  dealings  clearly  upon 
credit. 

§  381.  Whether  a  Particular  Lien  May  Exist,  Irrespective  of 
Contract. 

Particular  liens  may  not  only  be  created  by  express  contract, 
but  they  are  even  implied  where,  from  the  circumstances  connected 
with  a  particular  transaction  or  from  the  peculiar  relation  of  the 
parties,  it  is  fair  to  give  the  law  that  operation,  inasmuch  as  com- 
pensation with  reference  to  the  thing,  was  fair  to  bestow.^  And, 
hence,  although  the  finder  of  lost  property  on  land  has  no  right  at 
common  law  corresponding  to  what  in  maritime  law  we  denomi- 
nate "  salvage,"  and  cannot  claim  a  lien  for  taking  care  of  lost 
property  for  the  loser,  yet  if  the  loser  promise  a  reward  in  express 
language  either  to  a  particular  person,  or  generally  to  any  one 
who  will  return  it,  the  finder  has  a  lien  upon  the  property  for  his 
reward.  Yet,  where  there  is  no  clear  promise  of  a  reward  on  the 
loser's  part,  the  finder  must  give  up  the  property,  suing  after- 
wards, if  he  so  choose,  for  his  reasonable  recompense.'  For  the 
salvage  of  vessels  compensation  is  granted  irrespective  of  contract 
or  an  owner's  consent,  and  there  is  a  lien  of  the  maritime  kind.^ 

A  lien  can  never  arise,  however,  from  one's  own  wrong,  beyond 
an  estoppel ;  as,  for  instance,  upon  certificates  of  stock  held 
through  a  breach  of  trust.^  Nor  can  an  owner  in  general  be 
deprived  of  his  property  without  his  knowledge  and  assent  person- 
ally or  through  his  agent.'*     Upon  the  authority  of  a  dictum  o{ 

9.  See   Wentworth   v.   Day,   3    Met.  3.  Randel  v.  Brown,  2  How.  406. 

352.  4.  There  must,  as  a  rule,  be  privity 

1.  2  Kent  Com.  636;  Nicholson  v.  or  contraot  relation,  express  or  ini- 
Chapman,  2  H.  Bl.  254;  Wentworth  plied,  Ix^w^n  the  bailee  and  bailor, 
V.  Day,  3  Met.  352;  Wilson  v.  Guy-  in  order  to  enforce  a  lion  against  the 
ton,  8  Gill,  213.  That  a  finder,  as  latter.  Gross  v.  Eiden,  53  Wi.s.  543. 
such,  has  no  lien,  though  entitliHi  to  And  see  Oakes  v.  Moore.  24  Me.  214; 
remuneration,  see  Preston  v.  Neale,  Morgan  v.  Congdon,  4  Comst.  551 ; 
12  Gray,  222.  Small  v.  Robinson.  69  Me.  425. 

2.  §§  329,  330. 

563 


§    381  THE    LAW    OF    PERSONAL    TROPERTY.  f  PART  IIL 

Lord  Chief  Justice  Holt,  however,  it  was  once  held  that  a  carrier 
who  receives  goods  from  a  wrong-doer  or  thief  may  detain  them 
against  the  true  owner  until  the  carriage  is  paid ;  the  assumption 
being,  of  course,  that  the  carrier  is  free  from  all  guilty  connivance.^ 
In  some  parts  of  our  country  this  latter  doctrine  is  doubtless 
repudiated ;  for  it  is  held  in  several  important  cases  that  even  an 
innocent  carrier,  receiving  goods  from  a  wrong-doer,  has  no  lien 
thereon  against  the  rightful  owner  for  freight;  not  even  for 
freight  paid  by  him  to  a  previous  carrier  whom  the  owner  had 
directed  to  carry  them,  nor  indeed  such  right  to  recompense  at  all.^ 
This  might  appear  at  first  sight  inconsistent  with  the  doctrine 
favored  by  some  of  the  "  innkeeper  "  cases ;  and  certainly  there  is 
an  English  decision  sustaining  the  innkeeper's  right  of  lien  on  a 
horse  which  a  guest  puts  into  his  stable,  whether  the  animal  be 
the  property  of  the  guest  or  of  some  third  person  from  whom  it 
was  stolen ;  so  long,  of  course,  as  the  innkeeper  acts  innocently  in 
the  matter.''  But  this  distinction  may  appear,  on  reflection,  to 
aid  the  invesitigation :  that,  in  this  latter  instance,  the  property  is 
benefited  by  the  expense  put  upon  it ;  while  in  the  case  of  a  car- 
rier who  diverts  property  from  the  true  owner,  however  innocently, 
there  is  enough  hinderance  occasioned  the  owner  by  the  wrongful 
transportation  to  a  distance  of  the  goods,  without  his  being  com- 
pelled to  pay  for  their  freight  besides. 

A  lien  which  might  not  be  asserted  against  a  non-assenting  true 
owner  might  nevertheless  be  good  as  against  the  person  who  left 
the  thing ;   for  the  latter  ought  not  to  assert  his  own  wrong.^     So, 

5.  See  2  Ld.  Raym.  866,  citing  case  able  against  the  owner.  Gilson  v. 
of  the  Exeter  carrier.  Gwinn,   107  Mass.  126. 

6.  Clark  v.  Lowell,  &c.,  R.,  9  Gray,  7.  Yorke  v.  Grenaugh,  2  Ld.  Raym. 
231;  Stevens  v.  Boston  &  Wor.  R.,  866.  And  see  Snead  v.  Watkins,  37 
8  Gray,  262;  Waugh  v.  Denham,  16  E.  L.  &  Eq.  384;  Threfall  v.  Bor- 
Irish  C.  L.  405 ;  Schoul.  Bailm.,  §  544.  wick,  L.  R.  7  Q.  B.  711;  Domestic 
See  King  v.  Richards,  6  Whart.  418.  Sewing  Machine  Co.  v.  Watters,  50 
Nor  can  one  who  has  carried  a  thing  Ga.  573;  Johnson  v.  Hill,  3  Starkie, 
for  the  sole  convenience  of  the  mere  172. 

hirer  thereof,  and  at  his  request,  ac-  8.  Schoul.  Bailm.,  §  544. 

quire  a  lien  upon  the  property  avail- 

564 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEX.  §    382 

too,  it  should  prevail  against  arij  wrongful  dispossessor  of  the 
carrier,^  or  even  where  the  owner  was  himself  at  fault  in  the 
bailment.' 

§  382.     General  Lien ;    Who  May  Acquire. 

A  general  lien  differs  essentially  from  a  particular  lien  in  this: 
that  while  the  latter  is  a  right  which  grows  out  of  expense  or  ser- 
vices bestowed  upon  the  particular  property,  the  former  is  a  right 
to  retain  certain  property  of  another  on  account  of  some  general 
balance  due  from  the  owner.  A  general  lien,  therefore,  carries 
the  preference  of  creditors  so  far  as  to  interfere  materially  with 
equal  opportunities  for  attaching  and  the  equal  distribution  of  an 
insolvent's  effects;  hence  it  receives  no  great  favor  at  the  law.^ 
The  very  suggestion  of  a  general  balance  leads  to  an  inquiry 
whether  the  lien  covers  a  general  balance  on  all  dealings  between 
the  parties,  or  only  a  general  balance  on  the  work  done  in  that 
particular  course  of  business ;  a  question  which  we  do  not  find 
decisively  answered,  though  reason  suggests  that  the  latter  is 
always  the  preferable  interpretation  in  case  of  doubt.  Thus,  it 
has  been  ruled  that,  while  a  policy  broker  may  have  a  general  lien 
for  his  policy  business,  the  lien  cannot  extend  to  other  debts  due 
him  from  the  owner  of  the  propert3^^  Custom  has  much  to  do 
in  establishing  the  right  to  a  general  lien ;  and  upon  such  custom 
as  justifies  the  inference  of  a  mutual  agreement,  or  else  upon 
express  contract,  a  general  lien  should  always  be  based.'*  Hence 
it  is  that  calico  printers,  fullers,  and  perhaps  dyers,  have  a  gen- 
eral lien  by  the  English  decisions;  while  in  that  (•oiiiitrv  a  wharf- 
inger is  allowed  not  only  a  lien  on  particular  goods  deposited  at  his 
wharf,  but  by  the  general  usage  of  his  trade  the  riglit  to  n't;iin 

9.  Ames  v.   Palmer,   42  Me.   197.  3.  M'Kenzio  v.  Novius.  22  Me.  138  ; 

1.  Briggs  V.  Boston  R.,  C,  Allen,  Olive  v.  Smith.  .5  Taunt.  57.  And 
246.  see  Woldon  v.  Gould.  3  Esp.  268. 

2.  2  Kent  Com.  636;  Rushfortli  v.  4.  Jarvis  v.  Ropers.  15  Mass.  389: 
Hadfield,   6   East,  519;    s.  c.   7   East,  Story  Agency,  §  355. 

224;    Houghton   v.   MattheTvs,    3   Bos. 
&  P.   494. 

565 


§  383  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

them  for  such  general  balance  of  his  account  as  may  be  due  from 
the  owner.  ^ 

Insurance  brokers  are  certainly,  both  in  English  and  American 
courts,  allowed  a  general  lien.^  Clerks  of  courts,  too,  have  a 
general  lien  on  the  papers  in  their  hands,  for  their  fees.^  Bank- 
ers have  a  general  lien  on  the  securities  of  their  customers  which 
come  incidentally  to  their  hands  in  course  of  their  general  business, 
for  their  general  balance ;  though  this  is  a  right,  as  in  other  cases, 
subject  to  regulation  by  statute  or  charter  or  usage  ;^  and  our 
national  banks  have,  as  it  is  held,  no  lien  upon  the  stock  for  their 
loans  to  a  stockholder.^  A  usage  between  two  banks  makes  a  lien 
on  a  balance  which  has  been  suffered  to  remain  upon  the  faith  of 
their  mutual  dealings ;  the  rule  not  being  confined  necessarily  to 
the  advance  of  money  by  the  bank.' 

§  383.     General  Lien  of  Attorneys  and  Factors. 

The  kinds  of  general  lien  with  which  we  are  most  familiar  are 
those  of  attorneys  and  factors.     It  is  well  settled,  both  in  England 

5.  Weldon  v.  Gould,  3  Esp.  268 ;  of  its  business  as  such,  or  where  the 
Saville  V.  Barchard,  4  Esp.  53  ;  Spears  circumstances  of  its  possession  (as 
V.  Hartly,  3  Esp.  81.  in   case   of   a  particular   pledge)    are 

6.  M'Kenzie  v.  Nevius,  22  Me.  138;  inconsistent  with  such  general  lien. 
Olive  V.  Smith,  5  Taunt.  57;  Spring  Reynes  v.  Dumont,  130  U.  S.  354. 
V.  South  Carolina  Ins.  Co.,  8  Wheat.  But  semble,  if  deposited  on  hire  for 
268;  Castling  V.  Aubert,  2  East,  325;  a  special  purpose,  a  particular  lien 
Story  Agency,  §  379.  would   be   created   accordingly.      Spe- 

7.  Farewell  v.  Coker,  2  P.  Wms.  cial  contract  may,  of  course,  exclude 
460  ;  Taylor  v.  Lewis,  3  Atk.  727.  as  well  as  confer  a  general  lien.    Story 

8.  a  Kent  Com.  641;  Barnett  v.  Agency,  §  381-;  post,  §  384. 
Brandos,  5  M.  &  Gr.  630;  Davis  v.  9.  Bank  v.  Lanier,  11  Wall.  369. 
Bowsher,  5  T.  R.  488;  Story  Agency,  1.  Bank  of  Metropolis  v.  New  Eng- 
§  380.  And  see  Case  v.  Bank,  100  land  Bank,  1  How.  234.  A  check 
U.  S.  446.  A  general  banker  has  no  drawn  upon  a  bank  for  more  than 
implied  lien  upon  securities  deposited  the  amount  of  the  drawer's  funds  on 
with  him  for  gratuitous  safe  keeping  deposit  creates  no  lien  in  favor  of  the 
only.  Leese  v.  Martin,  L.  R.  17  Eq.  payee  upon  the  actual  balance,  un- 
224;  Brandao  v.  Barnett,  12  CI.  &  I.  til  the  bank  has  agreed  to  pay  it  pro 
787.  Nor  where  securities  are  acci-  tanto.  Dana  v.  Third  Nat.  Bank,  13 
dentally    in    possession    of    the   bank,  Allen,  445. 

or  not  in  its  possession  in  the  course 

566 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    383 

and  this  country,  that  attorneys  and  solicitors  have  a  general  lien, 
originating  in  common  law,  upon  the  papers  of  their  clients  in 
their  possession  for  the  general  balance  of  their  professional  ac- 
counts.^ And  besides  this  lien  on  papers,  they  have  a  lien  on  the 
moneys  recovered  in  a  particular  action;  this,  however,  being 
more  readily  presumed  a  particular  lien,  while  that  upon  the 
papers  is  a  general  lien.  Yet  the  attorney's  particular  lien  on 
the  moneys  collected  in  a  suit  receives  a  pretty  liberal  construc- 
tion in  the  later  cases ;  and  it  is  allowed  to  protect  not  only  fees 
and  disbursements  in  that  suit,  but  also  in  any  suit  or  proceeding 
brought  to  recover  other  moneys  covered  by  the  same  retainer.-' 
A  lien  on  the  judgment  procured  by  an  attorney  is  also  recognized 
on  broad  equitable  principle  without  requiring  any  strict  posses- 
sion."* Whatever  be  the  fate  of  a  suit,  the  client  cannot  get  back 
the  papers  without  paying  or  securing  what  is  due  his  attorney, 
not  only  in  respect  of  that  business  for  which  he  left  them,  but 
for  all  professional  services  remaining  unpaid.  It  would,  of 
course,  be  unreasonable  to  compel  a  client  to  continue  to  employ 
an  attorney  who  proves  unworthy;    and,  in  fact,  neither  is  he 

2.  Wilkins  v.  Carmichael,  1  Doug.  lisli  bar,  is  practically  abolished  in 
104;  Lickbarrow  v.  Mason,  6  East,  nearly  all  the  States,  and  every  law- 
21,  n. ;  Dennett  v.  Cutts,  11  N.  H.  yer  in  charge  of  a  case  acts  both  as 
163;  2  Kent  Com.  641;  7  Vin.  Abr.  solicitor  and  counsel.  See  Hutchin- 
74;  Ex  parte  Sterling,  16  Vcs.  258;  son  v.  Howard,  15  Vt.  544;  In  n- 
In    re  Paschal,   10   Wall.    483;    Bala-  Paschal,  10  Wall.  483. 

baugh  V.  Frazer,  19  Penn.  St.  95.  Where  the  attorney  i.s  paid  or  well 
See  Story  Agency,  9th  ed.,  §  383;  In  secured  otherwise  for  his  claim,  as 
re  Knapp,  85  N.  Y.  284,  and  cases  by  payment  into  court,  he  cannot 
cited.  As  to  lien  where  employment  t'lnharrasH  fiirtlior  the  client  by  de- 
is  by  the  State,  see  Lane  v.  Ilallum,  taining  important  papers.  Galland, 
38  Ark.  385;  Compton  v.  State,  38  Re,  L.  R.  31  Ch.  D.  290.  See  in  de- 
Ark.  601.  tail  as  to  attorney's  lien,  Jones  Liens, 

3.  See   2   Kent  Com.   641;    Pope  v.  §  113  r*  scq. 

Armstrong,    3    Sm.    &   M.    214.      And  4.  This    appears    analogous    to    a 

see  In  re  Knapp,  85  N.  Y.  284.     In  maritime    or    equitable    lien.       Some 

thi.s  country,  it  may  be  observed,  the  States    recognize    it    in    practice   and 

distinction    between    attorney    or    so-  some  do  not.     Jones  Liens,  §   153  et 

licitor    and    counsel,    which    has    been  seq. 
so  scdulouslj'  maintained  at  the  Eng- 

567 


§  383 


THF  LAW  OF  PEBSONAL  PROPEETT. 


[PAET  III. 


obliged  to  do  so,  nor  is  an  attorney  bound  to  conduct  the  suit  for 
whicb  he  is  engaged  after  he  has  seen  fit  to  terminate  his  engage- 
ment for  reasonable  cause  and  upon  reasonable  notice ;  but,  for  all 
that,  the  attorney  may  recover  for  his  costs,  services,  and  expenses 
for  the  period  during  which  he  was  employed.^  No  collusive 
settlement  made  between  clients  can  deprive  the  attorney  of  his 
lien ;  nor  can  the  losing  party  in  a  suit  settle  safely  with  the  win- 
ning party  without  regarding  this  lien,  as  he  is  frequently  tempted 
to  do.^ 

A  factor,  unlike  a  broker  selling  in  the  name  of  his  principal  ^ 
and  without  possession  of  the  property,  buys  and  sells  either  in 
his  own  or  his  principal's  name;  and  factors  have  not  only  a 
particular  lien  (as  all  do  who  have  a  general  lien  besides),  but  a 
general  lien  also  for  the  balance  of  their  general  account,^  upon 


5.  2  Kent  Com.  641,  n. ;  Rowson 
V.  Earle,  1  Moody  &  M.  538;  In  re 
Paschal,  10  Wall.  483. 

6.  Ormerod  v.  Tate,  1  East,  464. 
The  attorney's  lien  is  not  confined  to 
moneys  recovered  for  his  client  by 
judgment;  nor  by  the  fact  that  the 
moneys  were  received  on  behalf  of 
an  estate  where  his  client  was  execu- 
tor. In  re  Knapp,  85  N.  Y.  284. 
The  attorney's  lien  extends  to  a  gen- 
eral balance  of  accounts  for  pro- 
fessional services.  In  the  Matter  of 
H.,  an  attorney,  87  N.  Y.  521 ;  Ward 
V.  Craig,  87  N.  Y.  550;  Jackson  v. 
Clopton,  66  Ala.  29.  As  to  the  case 
of  a  set-ofi"  of  one  execution  against 
another  between  the  same  parties,  see 
Ocean  Ins.  Co.  v.  Rider,  22  Pick.  210. 
The  attorney's  lien  for  costs  in  a 
suit  extends  perhaps  to  judgments  re- 
covered by  him.  See  Vaughan  v. 
Davies,  2  H.  Bl.  440,  where  qualifi- 
cations are  stated;  Rooney  v.  Second 
Avenue  R.  R.  Co.,  18  N.  Y.  368. 
And  see  Casey  v.  March,  30  Tex.  180 ; 


Forsythe  v.  Beveridge,  52  111.  268. 
But  an  attorney  has  no  such  lien  in 
a  cause  before  judgment  as  to  pre- 
vent his  client  from  settling  the  ac- 
tion with  the  opposite  party.  Sim- 
mons V.  Almy,  103  Mass.  33;  Wright 
v.  Wright,  70  N.  Y.  96.  Nor  does 
his  lien  upon  papers  protect  their 
non- production  at  a  trial.  Fowler  v. 
Fowler,  29'  W.  R.  800. 

See  further,  for  a  liberal  construc- 
tion of  the  attorney's  lien.  Bowling 
V.  Eggemann,  47  Mich.  171;  Porter 
V.  Hanson,  36  Ark.  591.  Counsel  or 
associate  counsel  fees  may  thus  be 
protected  by  the  attorney.  Jackson  v. 
Clopton,  66  Ala.  29.  This  lien  may 
extend  to  the  proceeds  of  real  estate, 
as  under  an  execution  sale  to  satisfy 
a  judgment. 

7.  A  broker  has  no  right  of  general 
lien.  See  Barry  v.  Hoogeworff,  46 
Md.  59. 

8.  See,  particularly,  as  to  the  fac- 
tor's general  lien,  Story  Agency,  9th 
ed.,   §   377   et  seq.      See  also   Jones 


568 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    384 

all  the  goods  of  the  debtor  which  remain  in  their  hands  in  this 
capacity.  The  lien  extends  even  to  the  price  of  the  goods  which 
one  has  sold  as  factor,  though  he  has  parted  with  their  possession ; 
and  he  may  enforce  payment  from  the  buyer  himself  against  the 
principal.^  It  may  extend  to  all  sums  for  which  he  has  become 
liable  for  his  principal  as  surety  or  otherwise;  by  virtue  of  his 
relation.^  The  doctrine  of  lien  applies  as  well  to  purchasing  as 
to  selling  factors.  And  usually  the  factor's  lien  is  good  even  as 
against  attaching  creditors ;  while  if  he  has  sold  part  of  the  goods, 
he  is  entitled  to  a  lien  upon  the  residue  for  his  expenses,  advances, 
and  commissions.^  But  the  general  lien,  in  such  a  case,  applies 
only  to  goods  received  by  a  factor  as  such ;  and  to  give  him  a  lien 
upon  goods  consigned  to  and  not  actually  received  by  him,  the 
consignment  ought  to  be  to  him  in  terms,  and  he  should  have  made 
advances  or  given  acceptances  on  the  faith  of  it.^  The  modem 
business  of  brokers  is  not  so  strictly  limited  as  formerly ;  and,  at 
all  events,  a  broker  has  a  specific  lien  for  his  charges  when  he  has 
such  possession  of  the  property  that  he  can  exercise  the  right.'* 

§  384.     General  Lien  by  Express  Agreement. 

A  general  lien,   like  a  particular  lien,  may  arise  by  express 

Liens,    §    418    et    seq.       Commission  Knapp    v.    Alvord.     10    Paige.     205; 

merchants    who     have     advanced     on  Brander  v.  Phillips,  16  Pet.  129.     See 

goods  of  a  principal  insured  by  them  Houghton  v.   Matthe\\-s.   3   Bos.   4   P. 

have  a  lien  on   the  insurance  money  485. 

in    case    of    accidental    fire.     Johnson  A   factor's    particular    lien    for   ad- 

V.    Campbell,    120    Mas.«;.    449.      And  vances    is   often    recognized    by    local 

see  Brown  v.  Coombs,  63  N.  Y.  598 ;  statute.     Fourth  Nat'l  Bank  v.  Amer- 

Burrus  v.  Kyle,  56  Ga.  24;  Chaffraix  ican  Mills  Co.,  137  U.  S.  334. 

V.  Harper,  26   La.  Ann.   22.     A  lien  1.  Story  Agency,  §  376;  Hidden  v. 

cannot    be    asserted    by    a    factor    by  Waldo,   55   N.  Y.   294 ;    Hammond    v. 

way    of    fraudulent   preference   under  Barclay,  2  East,  227. 

bankrupt  act.     Nudd  v.  Burrows,  91  2.  Bryce  v.  Brooks.  26  Wend.  367; 

U.  S.  426;  Copeland  v.  Stein,  8  T.  R.  Sewell   v.   Nichols.   34   Me.   582.     But 

199.  see  Gray  v.   Bledsm-.   13  La.   489. 

9.  Story    Agency,    §§    34,    377:     2  3.  See  Davis  v.  Bradley.  28  Vt.  118. 

Kent    Com.    640,    and    eases    cited;  4.  Barry  v.   Boninger,   46   Md.   59; 

Dixon    V.    Stansfield,    10    C.    B.    398;  Jones,  §  420. 

569 


§  384  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

agreement  of  the  parties.^  A  familiar  instance  of  this  rule  is 
afforded  in  the  case  where  one  entitled  to  a  particular  lien  gives 
notice  that  he  will  receive  no  goods  for  the  purpose  of  his  business, 
except  on  condition  that  his  lien  shall  include  both  charges  on  the 
particular  goods  and  for  the  general  balance  of  his  account ;  which 
notice,  being  brought  to  the  knowledge  of  parties  dealing  with  him 
afterwards,  will  affect  their  liabilities  accordingly.^  Carriers  and 
innkeepers  frequently  try  to  limit  their  own  responsibilities  and 
sometimes  to  increase  their  lien  security  by  general  notice;  but 
the  courts  are  not  readily  disposed,  in  the  latter  instance  at  least, 
to  concede  to  their  wishes.^  As  to  cases  of  lien  by  express  con- 
tract, it  may  be  generally  observed  that  direct  words  or  stipula- 
tions inconsistent  with  any  other  understanding  of  the  parties 
suffice  for  creating  it ;  but  every  lien  which  is  founded  upon  agree- 
ment must  be  in  just  conformity  to  the  agreement,  and  is  not  to  be 
extended  further  by  construction.^ 

A  general  lien  by  custom  or  business  usage,  such  as  we  have 
above  noticed,  appears,  when  closely  examined,  to  be  in  truth  that 
of  an  implied  contract  founded  upon  the  custom.  And  so  free 
are  parties  to  regulate  this  subject  by  an  express  contract,  whether 
the  effect  be  to  control  a  business  usage  or  not,  that  they  may 
either  create  a  lien  or  exclude  the  lien  which  otherwise  would 
operate.  The  mere  existence  of  a  special  agreement  will  not,  how- 
ever, of  itself  exclude  the  right  of  lien ;  but  if  any  of  its  terms  be 
inconsistent  with  this  right,  it  will  do  so.^  Parties  have  lawful 
power  to  deal  as  they  please  with  their  own  property,  and  it  only 
remains  for  them  to  make  their  mutual  understanding  plain  in 

5.  See  supra,   §   830.  8-  Cases     supra;     also.     Bank     of 

6.  See  Kirkraan  v.  Shaweross,  6  T.  Washington  v.  Nock.  9  Wall.  373 ; 
R.  14;  Gladstone  v.  Birley,  2  Mer.  Raitt  v.  Mitchell,  4  Campb.  146;  Ecc 
401.  parte    Langston,    17    Ves.    231;    Car- 

7.  2  Kent  Com.  637,  commenting  michael  v.  Arms,  51  Ind.  App.  689. 
on    Oppenheim   v.    Russell,    3    Bos.    &  100  N.  E.  502. 

P.  42;  Rushforth  v.  Hadfield,  7  East,  9.  Smith   Merc.   Law,   8th   ed.   555, 

224;    Ang.    Carriers,    §    357    et   seq.;      556;   Chase  v.   Westmore,   5  M.  &  S. 
Schoul.     Bailm.,     §     548;     Adams     v.       180. 
Clark,  9  Cush.  215. 

570 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    385 

any  particular  case.  But  it  may  be  added  that  the  words  "  lien," 
"  pledge,"  and  "  mortgage,"  are  often  used  carelessly  and  inter- 
changeably with  reference  to  personal  property;  and  some  have 
thought  that,  properly  speaking,  this  lien  by  contract,  as  we  call 
it,  is  rather  to  bo  presumed  as  in  the  nature  of  an  agreement  for 
a  pledge,  than  as  intended  for  a  mere  lien.' 

§  385.  Lien,  How  Made  and  Kept  Sure ;  Possession  Necessary. 
Having  thus  considered  the  various  kind  of  liens  known  to  the 
common  law,  we  next  inquire  what  steps  are  necessary  to  make 
and  keep  the  lien  strong  and  sure.  In  every  case,  then,  a  delivery 
of  the  property  is  essential,  in  order  that  there  may  be  a  lion  upon 
it;  by  which  is  meant  that  the  goods  must  have  come  into  the 
rightful  possession  of  the  lien-claimant  or  his  agent.^  It  is  true 
that  this  possession  by  the  lien-claimant  may  be  actual  or  con- 
structive; but  the  right  of  lien  is  the  right  to  retain  what  one 
already  has  in  his  keeping,  and  where  there  is  no  possession  there 
can  be  no  lien.  Furthermore,  this  possession  of  the  goods  must 
have  been  rightfully  obtained ;  for  a  creditor  cannot  wrongfully 
seize  upon  his  debtor's  goods,  and  then  claim  to  hold  them  by  virtue 
of  a  lien ;  nor,  if  an  agent  delivers  the  property  without  due 
authority  from  his  principal,  can  a  lien  thereby  arise."'  But  lions 
may  undoubtedly  be  acquired  through  the  acts  of  agents  acting 
within  the  scope  of  their  employment.'*  And  it  is  held  that  an 
excessive  claim  for  a  proper  kind  of  lien  —  there  being  nothing 
improper  claimed  except  the  amount  —  "will  not  invalidate  the 
lien  as  to  the  amount  justly  duo.^ 

1.  See  Sir  Wm.  Grant  in  Gladstone  P.  485 ;  2  Kent  Com.  038 ;  3  T.  R. 
V.  Birley,  2  Mcr.  404;  Gibbs,  C.  J.,  110;  M'Combie  v.  Davies,  7  East.  5; 
in   Wilson  v.  Heather,   5   Taunt.   642.      Kolloek  v.  Jackson,  r-,  Ga.  153. 

But    the    indiscriminate    use    of    the  3.  See  2  Kent  Com.  G3S.  639 :  Story 

term    "  lien "    is    too   strongly    estab-  Aprency,   §   361 ;    M'Combie  v.   Davies, 

lished,  for  trying  thus  to  restrain  the  7  East,  .'5. 

word  to  a  right  arising  by  mere  opera-  4.  Tb. 

of  law.     Story  Agency,   §   356;    4  M.  5.  Allen    v.    Smith.    12    C.   B.    \.   s. 

&  W.  278.  638;    Busfield    v.    Wheeler,    14    Allen, 

2.  Houghton  v.  Matthews,  3  Bos.  &  139. 

571 


§    385  THE    LAW    OF    PEKSOiNAl.    PROPEKTY.  [PAET  III. 

But  if  possession  is  thus  essential  to  the  creation  of  a  lieu,  it  is 
no  less  necessary  to  its  continued  existence.  And  whenever  the 
partj  voluntarily  parts  with  the  possession  of  the  goods  on  which 
he  has  a  lien,  the  lien  is  lost  and  cannot  be  reasserted  on  merely 
regaining  them.^  So  strict  is  this  rule  and  the  requirement  that 
the  lien-claimant  shall  consistently  maintain  that  character,  that 
if  the  lien-claimant  cause  the  goods  to  be  taken  in  execution  in  his 
own  suit  and  buy  them  in  afterwards,  the  nature  of  his  possession 
is  so  changed  that  the  lien  is  lost,  although  the  property  never  left 
his  premises.''  The  question  what  amounts  to  a  complete  divest- 
ment of  possession  in  such  cases  depends  mainly  upon  the  inten- 
tion of  such  divestment  of  possession,  for  it  is  voluntary  and  not 
involuntary  relinquishment  which  puts  an  end  to  the  lien ;  though 
wrongful  acts  of  the  possessor  might  operate  to  the  same  end  upon 
his  parting  with  possession.^  Moreover,  one  may,  by  words  and 
behavior,  be  estopped  from  asserting  a  lien  as  against  third  parties 
whose  action  he  has  thereby  influenced,  even  where  the  disposses- 
sion may  not  be  complete  as  against  the  debtor  alone.^     But  if 

6.  Perkins  v.  Boardman,  14  Gray,  procurement  of  a  false  and  fraudu- 
481;   Sch.  Bailm.,  §§  123,  327,  545.  lent  delivery.     Bigelow  v.   Heaton,   6 

7.  Jacobs  V.  Latour,  5  Bing.  130.  Hill,  43;  The  Bird  of  Paradise,  5 
See  2  Kent.  Com.  639;  Smith  Merc.  Wall.  545;  Mors  Le  Blanch  v.  Wil- 
Law,  8tb  ed.  559;  Spring  v.  South  son,  L.  R.  8  C.  P.  227.  Relinquish- 
Carolina  Ins.  Co.,  8  Wheat.  268 ;  ment  of  the  carrier's  lien  is  not  read- 
Stickney  v.  Allen,  10  Gray,  352.  ily  presumed,  but  it  may  be   shown. 

8.  Schoul.  Bailm.,  §§  123,  545;  58  Schoul.  Bailm.,  §§  545,  546;  Angell 
Penn.  St.  414;  Davis  v.  Bigler,  62  Carriers,  §  374.  The  lien  is  not  nec- 
Penn.  St.  242 ;  Robinson  v.  Larrabee,  essarily  relinquished  by  taking  spe- 
63  Me.  116;  Tucker  v.  Taylor,  53  cial  security  for  payment  of  the  debt. 
Ind.  93.  An  innkeeper's  lien  is  not  Angus  v.  McLachlan,  48  L.  T.  N.  s. 
lost  merely  by  his  guest's  occasional  863. 

absence.      Allen   v.    Smith,    12   C.   B.  9.  Blackman  v.  Pierce,  23  Cal.  508 ; 

N.   s.  638.     Nor  because  of  his  being  Weeks  v.   Goode,   6  C.  B.  N.   s.   367; 

fraudulently    dispossessed    of    the   ef-  Roger  v.  Weir,  34  N".  Y.  4&3;  Schoul. 

fects.       Manning    v.     Hollenbeck,    27  Bailm.,    §    123.      Where    merchandise 

Wis.  202.     Cf.  Perkins  v.  Boardman,  of   a    particular   kind    is    stored,   and 

14  Gray,  481.     And  see  Angus  v.  Mc-  portions   are   from   time   to   time   de- 

Lachlan,  48  L.  T.  n.  s.  863.     A  com-  livered  without  the  payment  of  stor- 

mon  carrier's  lien  is  not  lost  by  the  age  dues,  the  warehouseman  has  usu- 

572 


CHAP,  IV.]  DEBTS    SECURED    BY    LIEN.  §    386 

the  assignment  or  delivery  of  the  property  on  which  the  lien  once 
fastened  be  merely  for  the  lien-claimant's  benefit,  or  by  way  of 
pledge  or  security  to  the  extent  of  -his  lien,  and  with  notice  of  its 
existence,  his  possession  still  continues  and  his  lien  as  well.'  Nor 
is  the  lien  accruing  to  a  partnership  necessarily  lost  by  the  disso- 
lution of  the  firm.^ 

§  386.     Waiver,  Extinguishment,  or  Exclusion  of  Lien. 

We  have  seen  that  the  right  of  lien  may  be  excluded  at  the  out- 
set by  special  agreement  of  the  parties.  It  may  likewise  be  waived 
by  the  subsequent  agreement  of  the  parties.  Cases  of  this  latter 
sort  frequently  arise  in  connection  with  the  fact  of  non-possession : 
as,  for  instance,  where  the  lien-claimant  gives  credit  by  extending 
the  time  of  payment,  or  t^kes  distinct  -and  independent  security 
for  the  debt ;  for  in  the  one  case  he  manifests  an  intention  to  rely 
upon  the  personal  credit  of  the  owner  of  the  goods,  and  in  the  other 
to  allow  the  security  to  be  substituted  for  the  lien.^  In  general,  a 
special  agreement  made  at  any  time,  which  is  inconsistent  with 
the  lien,  or  from  which  its  waiver  may  be  fairly  inferred,  has  the 

ally    a    lien    upon    the    portion    left  agent  of  the  vendee  who  presents  it; 

for  the  storage  of  the  whole;   and  a  circumstances    and    mercantile    usage 

like    principle     ia    often    applied    to  still  regulating  the  case.     Pearson  v. 

goods   upon  which   labor   is  expended  Dawson,    1    Ell.    B.    &    Ell.    448.      A 

by  a  tradesman ;  the  rule  as  to  sales  bailee  for  hire  may  lose  his  lien  on  a 

being    that    whenever,    in    accordance  horse   by   allowing   the   possession    to 

with  the  intention  of  the  parties,  as  part,  though   the  horse  be  still   kept 

legally    manifested,    the    property    in  in  his  stable.     Perkins  v.  Boardman, 

the   part  of   the   goods   not  delivered  14   Gray,  481. 

does  not  pass  to  a  vendee,  a  vendor's  1.  M'Combie  v.  Davies.  7  East.  5; 

right  of   lien  for  the  whole   price    is  2     Kent.     Com.     639;     Urquhart     v. 

reserved      on      the      part      retained.  M'lver,   4  Johns.   103. 

Schmidt    v.     Webb,    9     Wend.     268;  2.  Busfield    v.    Wheeler.    14    AllcD, 

Parks  V.  Hall,  2  Pick.  213;  Blake  v.  139. 

Nicholson,   3   M.   &  S.   167.     But  the  3.  Gilman  v.  Brown,  1  Mason.  191; 

acceptance   of    a   delivery-order    by    a  Cowell    v.    Simpson.    16    Ves.    27.^;    2 

warehouseman          may          sometimes  Kent.  Com.   638;   Cowper  v.  Green.  7 

amount  to  a  loss  of  his  lien,  on  the  M.  &  W.  633;   Story  Ageucy,  §§  366. 

ground  that  he  thereby  becomes  the  367. 

573 


§  386 


THE  LAW  OF  PERSONAL  PKOPERTY. 


[part  III. 


effect  of  extinguishing  the  lien."*  And  even  the  mere  admissions 
of  the  lien-claimant  are  sometimes  used  against  him ;  or  his  omis- 
sion to  seasonably  announce  a  claim  on  that  ground,  while  claim- 
ing the  goods  on  some  other  ground,  may  be  construed  into  a 
waiver.^  But  the  agreement  which  dispenses  with  a  lien  ought, 
at  least,  to  be  clearly  inconsistent  with  its  continued  existence.^ 
False  and  fraudulent  dispossession  of  the  lien-claimant  does  not 
defeat  the  latter's  claim  if  he  is  prompt  to  repudiate/  Of  course, 
with  or  without  the  lien  as  security,  the  debtor  may  be  treated  by 
his  creditor  as  personally  liable  for  what  is  owing.^ 

Cases  might  arise  where  a  lien  would  revive  after  the  party 
acquiring  it  parted  possession  without  intending  to  abandon  his 
lien;  but  in  general,  if  the  property  be  assigned  bond  fide  for 
valuable  consideration  while  out  of  the  possession  of  the  person 
acquiring  the  lien,  and  afterwards  return  into  his  hands,  the  lien 
does  not  revive  as  against  the  assignee.^  Non-possession  is  a  fact 
more  unfavorable  to  the  lien-claimant  as  against  bond  fide  third 


4.  lb.  And  see  Weeks  v.  Goode,  6 
C.  B.  N.  s.  367 ;  Lambard  v.  Pike,  33 
Me.  141 ;  Robinson  v.  Larrabee,  63 
Me.  116;  Tucker  v.  Taylor,  53  Ind. 
93;  Hale  v.  Barrett,  26  111.  195; 
Story  V.  Flournoy,  55  Ga.  56.  The 
silence  of  a  written  contract  respect- 
ing lien  can  have  no  such  effect. 
Woodruff  V.  Wicker,  15  N.  Y.  Supr. 
613. 

5.  Weeks  v.  Goode,  6  C.  B.  n.  s. 
367. 

6.  Outcalt  V.  Burling,  1  Dutch.  443 ; 
Spaulding  v.  Adams,  32  Me.  211. 
Neither  the  delivery  of  the  goods  to 
the  creditor's  agent,  nor  the  giving 
of  a  bond  by  a  garnishee  in  attach- 
ment with  condition  for  safe-keeping 
and  delivery,  amounts  to  a  waiver  of 
lien.  Nor  does  a  mere  right  of  set- 
off to  an  amount  equal  to  that  for 
■wliicih  the  lien  is  claimed  destroy  the 


lien ;  for  here  the  situation  is  that  of 
two  parties  with  equal  demands,  one 
of  whom  has  his  demand  secured 
collaterally,  while  the  other  has  not. 
Pinnock  v.  Harrison^  3  M.  &  W.  532 ; 
Clark  v.  Fell,  4  B.  &  Ad.  404. 

7.  Bigelow  V.  Heaton,  6  Hill  (N. 
Y. )  43.  But  as  to  the  intervening 
rights  of  bond  fide  third  parties  for 
value  without  notice,  he  may  some- 
times be  hindered  in  his  lien  by  non- 
possession.  A  sale  of  the  goods  to  a 
third  person  by  the  owner,  without 
the  knowledge  of  the  lien-claimant, 
will  not  defeat  the  rights  of  the  lat- 
ter.    Bayley  v.  Merrill,  10  Allen,  360. 

8.  Tucker  v.  Taylor,  53  Ind.  93; 
Garrard  v.  Moody,  48  Ga.  96;  24 
111.  99. 

9.  Godin  v.  London  Assurance  Co., 
1  Burr.  489;  Spring  v.  South  Caro- 
lina Ins.  Co.,  8  Wheat.  268. 


574 


CHAP.  IV.] 


DEBTS    SECURED    BY    LIEN. 


§  387 


parties  for  value  acquiring  rights  without  notice  of  the  lien,  than 
merely  as  between  himself  and  his  own  debtor.'  We  may  add 
that  concealed  liens  are  never  to  be  favored.^ 

§  387.     Method  of  Enforcing  a  Lien. 

The  method  of  enforcing  a  conmion-law  lien  is  quite  imperfect ; 
and  here  we  find  a  right  without  its  full  corresponding  remedy. 
Chancellor  Kent  says  that  a  lien  is,  in  many  respects,  like  a  dis- 
tress at  common  law,  and  gives  the  party  detaining  the  chattel  the 
right  to  hold  it  by  way  of  pledge  or  security  for  the  debt,  and  not 
to  sell  it.^  The  difficulty  of  applying  an  adequate  remedy  is 
obvious,  therefore,  in  cases  where  the  property  detained  becomes 
a  constant  expense  to  the  keeper.  Thus,  an  innkeeper  detaining 
his  guest's  horse  must  constantly  feed  the  horse  to  keep  his  lien 
alive ;  while  he  has  to  await  the  results  of  a  long  and  tedious  pro- 
ceeding in  the  nature  of  a  bill  of  chancery  before  he  can  get  the 
lien  enforced,  if,  indeed,  it  is  enforceable  in  equity  at  all.'*     The 


1.  See  Haak  v.  Linderman,  64 
Penn.  St.  499. 

2.  See  Hanna  v.  Phelps,  7  Ind.  21. 
From  what  has  been  said,  it  will  be 
readily  understood  why  a  common 
carrier  who  has  once  completely  and 
unconditionally  delivered  the  goods 
loses  his  lien.  Boggs  v.  Martin,  13 
B.  Monr.  243.  See  Schoul.  Bailm., 
§§  546,  549.  And,  since  he  is  bound 
to  deliver  the  goods  safely,  circuity 
of  action  is  now  quite  commonly 
avoided  by  permitting  the  owner  to 
deduct,  as  against  the  charges  for 
which  the  carrier's  lien  is  given,  any 
damage  done  the  goods  for  which  the 
carrier  is  liable.  Humphreys  v.  Reed, 
6  Whart.  435;  2  Redf.  Railw.,  3d  ed. 
156.  Into  the  mutual  rights  and 
liabilities  of  parties  concerned  in  rail- 
way transportation  it  is  not  our  pur- 
pose here  to  enter;  but  the  uSual 
mode.?  of  waiving  liens  apply  here  as 

57i 


to  carriers  and  bailees  generally, 
though  with  mucli  favor  in  the  former 
instance.  We  find  liens  sometimes 
created  upon  railway  shares  for  the 
owner's  indebtedness  to  the  company ; 
also  liens  upon  cars  and  rolling- 
stock,  and  liens  of  contractors  and 
material-men;  which  often  give  rise 
to  intricate  questions  in  connection 
with  the  subject  of  railway  mortgages 
and  the  riglits  of  bondholders.  See 
Jones  Railway  Securities,  passim; 
United  States  v.  New  Orleans  R.  R.. 
12  Wall.  362;  Schoul.  Bailm..  §§546. 
547. 

3.  2  Kent  Com.  6»2;  1  Holt.  N.  P. 
383;  Ix)vett  v.  Brown.  40  N.  H.  88; 
Schoul.  Bailm.,  §  126. 

4.  lb.  Sve  Fox  v.  McGregor ,  11 
Barb.  41;  Stephenson  v.  Pricv.  30 
Tex.  715.  The  juri.sdiction  of  equity 
to  enforce  a  comnion-luw  lien  ha-s 
been  denied  ;  notwithstanding  there  is 


§  387  THE  LAW  OF  PERSONAL  PROPEKTY.       [PAKT  III. 

same  principle  as  concerns  the  enforcement  of  a  lien  applies-  to 
common  carriers  as  to  other  lien  creditors ;  and  they  have  no 
common-law  right  to  sell  the  goods  on  which  their  transportation 
charges  remain  unpaid. 

But  the  modem  tendency  of  legislation  is  towards  increasing 
the  efficacy  of  remedies,  so  as  to  make  them  more  nearly  commen- 
surate with  those  rights  which  the  law  means  to  confer;  in  this 
respect  assimilating  them  more  to  a  pledge  security.  Thus,  in 
some  States  an  innkeeper  is  allowed,  by  statute,  to  sell  the  prop- 
erty at  public  sale  at  so  many  days  after  demand.  A  power  of 
selling  for  the  satisfaction  of  liens,  and  for  the  cost  or  expenses  of 
carriage,  storage,  or  labor  bestowed  on  the  goods,  is  likewise  given 
to  commission  merchants,  factors,  and  common  carriers,  by  our 
local  legislation;  and  a  summary  and  cheap  judicial  process,  after 
demand,  for  the  prompt  satisfaction  of  other  lien  charges,  is  some- 
times prescribed.^  But  few  States  have  as  yet  enacted  compre- 
hensive provisions  on  this  subject;  the  aim  being  rather  to  aid 
certain  classes  of  lien-claimants.  And  again,  independently  of 
legislation,  the  express  contract  of  the  parties,  or  possibly  some 
reasonable  and  well  understood  business  usage  so  prevalent  as  to 
manifest  an  implied  contract  between  them,  might  enlarge  the 
remedies  of  the  lien-claimants ;  for  as  reasonable  and  well-known 
custom  or  express  contract  may  confer  a  lien,  so  also  may  reason- 
able custom  or,  better  still,  express  contract  be  allowed  to  dictate 
to  some  extent  the  method  of  its  enforcement.  But  wherever  the 
remedy  is  thus  enlarged,  the  courts  are  disposed  to  regard  the 
bailor's  interests  sedulously,  so  as  to  require,  by  way  of  just  pre- 
caution, a  reasonable  demand  and  notice  to  be  given  before  a  sale 
to  satisfy  the  lien  can  be  made ;  ^  and  the  sale,  being  in  derogation 

no  adequate  remedy  at  law,  and  even  5.  See  Young  v.  Kimball,  23  Penn. 

detention    under    the    lien    works    in-  St.  193;  Purd.  Dig.  536,  Suppl.  1314; 

convenience.      Jones    Liens,    §    1038 ;  Wms.   Pers.   Prop.,   3d  Am.  ed.,  with 

Thames  Iron   Works  Co.,  Be,  1  J.   &  Wetherell's   note,    28-31:    Mass.    Pub. 

H.   93.     Aliter,   Black  v.   Brennan,   5  Sts.     (1882),    c.    96;    Schoul.    Bailm., 

Dana,  310;  Cairo  R.  R.  Co.  v.  Fack-  §  550. 

ney,  78  111.  116.  6.  Pothonier    v.    Dawson,    1    Holt, 

576 


CHAP.  IV.] 


DEBTS    SECUEEU    BY    LIEN. 


§  387 


of  common  law,   should  be  fair   and   bond  fide   and   upon   due 
formality.'' 


N.  P.  383;  Brown  v.  M'Grau,  14  Pet. 
479;  SchouL  Bailm.,  §  126;  Whitney 
V.  Wyman,  24  Md.  131;  Marfield  v. 
Goodhue,  3  Comst.  62;  Parker  v. 
Braneker,  22  Pick.  40;  Frothingham 
V.  Everton,  12  N.  H.  239.  And  see 
2  Kent  Com.  642,  Comstock's  n. ; 
Story  Agency,  §  74. 

The  American  doctrine  as  con- 
cerns the  lien  of  factors  appears  to 
be  that  the  consignor  of  goods  has 
BO  right,  by  any  orders  given  after 
advances  have  been  made  or  liabilities 
incurred,  to  suspend  or  control  the 
factor's  right  of  sale,  except  as  to 
the  surplus  of  the  consignment,  be- 
yond these  advances  or  liabilities. 
Brown  v.  M'Grau,  14  Pet.  479.  Yet 
the  rule,  as  announced  in  England, 
is  that  a  factor  has  no  right  to  sell 
the  goods  contrary  to  the  order  of 
his  principal,  though  the  latter  has 
neglected  on  request  to  pay  the  ad- 
vances. Smart  v.  Sandars,  5  C.  B. 
895.  In  some  American  cases  the 
right  to  sell  contrary  to  orders  is 
limited  to  cases  where,  if  tlie  facor 
sold  under  his  principal's  orders,  his 
own  security  would  be  impaired. 
Field  v.  Farrington,  10  Wall.  141; 
Weed  v.  Adams,  37  Conn.  378. 

While  the  contract  between  the 
parties  may  frequently  regulate  the 
rights  and  remedies,  so  far  as  con- 
cerns advances  made  and  liabilities 
incurred  on  account  of  a  consignment 
of  goods,  yet  we  may  well  question 
whether  any  person  has  a  right  by 
common  law  to  add  to  his  lien  upon 
a  chattel  his  charge  for  keeping  it  till 
the   debt    is   paid.      That   he   has    no 


such  right  was  distinctly  announced 
in  a  leading  English  case  some  time 
ago;  though,  as  the  circumstances 
were  not  in  this  ease  of  the  strongest 
kind,  it  is  possible  that  the  principle 
was  understood  to  apply  to  charges 
in  the  keeping  which  arc  for  the  lien- 
daimant's  peculiar  benefit,  and  not 
for  the  benefit  of  the  person  whose 
chattel  is  in  his  possession.  Somes 
v.  British  Empire  Shipping  Co.,  8 
H.  L.  Cas.  338;  s.  c.  1  Ell.  B.  &  L. 
353.  American  statutes,  as  we  have 
just  see,  frequently  change  the  rule 
in  this  respect.  And  where  mer- 
chandise is  consigned  to  a  commission 
merchant  who  makes  advances  on 
them,  the  legal  presumption  favors 
his  right  to  sell  them  in  the  exercise 
of  a  sound  discretion  and  to  reim- 
burse himself  for  his  advances.  How- 
ard V.  Smith.  56  Mo.  314.  See  Story 
Agency,   9th   cd..   §   371. 

7.  As  to  prioritj'  of  liens,  see 
Jaicks  V.  Oppenheimer.  168  S.  W.  216 
(Mo.  App.  1914,  priority  of  liens)  ; 
Trocon  v.  Scott  Ry.  Co.,  91  Kan.  887 
(equity  rule)  ;  Stoeckle  v.  Rosenheim, 
87  Atl.  1006  (Del.  Ch.  1013)  ;  Stan- 
nard  v.  Orleans  Co..  93  Neb.  389.  140 
N.  W.  636. 

As  to  waiver  of  lien,  see  Celestf 
State  Bank  v.  Puckett.  148  S.  W.  331 
(Tex.  Civ.  App.  1912)  :  American 
Sav.  Bank  v.  Helgesen,  67  Wa.^h.  572: 
Beall  V.  Hudson  Co.,  185  Fed.  179 
(N.  .7.  C.  C.  1911). 

Transfer  of  lien  by  sale,  etc.,  re- 
quires order  of  court  or  permissive 
statute.  In  ro  Varley  Co..  188  Fed. 
761    (Ala.  D.  C.  1911). 


3Y 


577 


§  389  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  III. 

§  388.     Right  of  Owner  of  Goods  to  Discharge  Lien,  etc. 

Wherever  the  holder  by  lien  of  property  makes  illegal  and  im- 
proper charges,  and  the  owner  pays  under  protest  and  gives  notice 
accordingly,  he  may  sue  in  an  action  for  money  had  and  received 
to  recover  it.^  And  in  all  cases,  the  owner  of  the  property,  on 
tendering  satisfaction  of  the  lien,  has  a  right  to  the  property ;  and 
if  the  creditor  refuse  to  restore  it  after  such  a  tender,  he  is 
answerable  in  damages  for  his  misconduct;  nor  is  even  a  formal 
tender  requisite  on  the  owner's  part,  if  the  person  in  possession 
of  the  goods  has  distinctly  signified  his  refusal  to  accept  the 
amount  really  due.^ 

§  389.     Equitable  Liens  Considered. 

So  much,  then,  for  the  common-law  lien,  strictly  so  called. 
But  as  the  word  "  lien  "  is  used  in  a  much  larger  sense,  so  we  find 
other  kinds  of  liens  spoken  of  as  svich  in  the  books.  The  equitable 
lien  is  something  which  courts  of  chancery  constantly  recognize, 
and  the  right  thus  borrowed  from  the  civil  law  has  its  foundation 
in  natural  justice.  By  equitable  liens  we  usually  mean  all  such 
liens  as  exist  in  equity  and  of  which  courts  of  equity  alone  take 
cognizance.  And  a  very  common  kind  is  that  which  exists  between 
vendor  and  vendee;  the  rule  being  that  every  one  who  sells  prop- 
erty has  a  lien  upon  it  for  any  part  of  the  purchase-money  which 
is  unpaid,  against  all  persons  except  a  purchaser  without  notice 
for  valuable  consideration.^  Here  a  sort  of  constructive  trust 
arises  for  securing  the  unpaid  purchase-money,  and  to  the  extent 
of  the  lien  the  purchaser  becomes  a  trustee  for  the  vendor,  and 
the  burden  of  proof  is  upon  the  latter  to  establish  a  waiver  of  this 
Hen.  Even  the  hond  fide  purchaser  without  notice  for  valuable 
consideration  has  only  a  countervailing  equity  to  the  extent  of  his 

8.  Somes  v.  British  Empire  Ship-  1.  Story  Eq.  Jur.,  §  1217;  4  Kent 
ping  Co.,  8  H.  L.  CaS.  338.  Com.    153;     Chapman    v.    Tanner,    1 

9.  Chilton'  v.  Carrington,  16  C.  B.  Vern.  267;  Bayley  v.  Greenleaf,  7 
206;  Jones  v.  Tarleton,  9  M.  A  W.  Wheat.  46;  Patterson  v.  Edwards,  29 
675;    Roberts    v.    Yarboro,    41    Tex.  Miss.  67. 

449;   Schoul.  Bailm.,  §§  125,  552. 

578 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    389 

actual  payments ;  and  if  but  part  of  his  own  purchase-money  has 
been  paid,  the  part  retained  by  the  vendee  is  primarily  chargeable 
with  the  lien.^  But  cases  of  this  sort  usually  arise  with  reference 
to  real  estate,  while  we  are  to  concern  ourselves  in  this  treatise 
with  personal  property.^ 

An  equitable  lien  is  sometimes  acquired  by  the  deposit  of  title- 
deeds;  but  liens  of  this  sort  are  not  in  general  greatly  favored.'* 
To  constitute  an  equitable  lien  on  a  fund,  there  must  in  each  case 
have  been  some  distinct  appropriation  thereof  by  the  debtor:  it  is 
not  enough  that  the  fund  was  created  through  the  efforts  and  out- 
lays of  the  party  claiming  a  lien.^  The  lien  of  solicitors,  attor- 
neys, and  trustees  on  their  respective  funds  is  recognized  in 
equity ;  ^  and  so  is  that  of  joint  tenants  in  certain  cases.  And  the 
usual  way  of  enforcing  a  lion  in  equity  is  by  selling  the  property 
to  which  the  lien  is  attached.^ 

But  this  lien  which  equity  recognizes  is  independent  of  the 
possession  of  property ;  while  liens  at  common  law  require  posses- 
sion, as  we  have  seen,  and  in  fact  consist  rather  in  a  right  to  retain 
possession  than  in  anything  else.  And  hence  it  is  that  the  rights 
of  vendor  and  vendee,  as  concerns  a  lien  for  purchase-money,  are 
found  to  be  so  diiferent  in  the  two  systems.  For  while  property 
which  courts  of  equity  handle  is  made  subject  almost  absolutely 
to  a  just  lien  for  unpaid  purchase-money,  by  way  of  judicial  con- 
struction on  behalf  of  the  vendor,  the  common-law  rule  applicable 
to  chattels  is,  that,  so  long  as  the  vendor  retains  actual  or  con- 
structive possession  of  the  goods,  he  has  a  lion  upon  thoni  for  so 
much  of  the  purchase-money  as  may  remain  unpaid,  but  that  when 

2.  lb.;  Story  Eq.,  §§  1217-1220,  5.  Wright  v.  Ellison.  1  Wall.  16; 
1224,  1232,  1233;  Mackrcth  v.  Sym-  Watson  v.  Duke  of  Wellington.  1 
mens,  15  Ves.  323.                                          Kuss.  &  My.  602. 

3.  See    vol.    2    as    to    the    vendor's  6.  See  supra,  §  383. 

lien  in  sales  of  personal  property.  7.  See    Story    Eq.    Jur.,    §    1217; 

4.  See  Goode  v.  Burton,  1  Wels.  H.  Haymes  v.  Cooper,  33  Bcav.  431 ;  2 
&  G.   189;    4   Kent   Com.   150;    Story      Spence,  803. 

Eq.  Jur.,   §    1020.      There  may  be  a 
pledge  of  title-deeds.     §  395. 

579 


§  390  THE  LAW  OF  PERSONAL  PROPERTY,       [PART  III. 

he  has  once  delivered  them  out  of  his  own  possession  his  lien  is 
gone ;  ^  a  rule  which  we  find  extended,  under  the  most  pressing 
circumstances,  only  so  much  further  as  to  allow  of  what  is  called 
the  right  of  stoppage  in  transitu  after  a  sale, —  a  right  which 
occurs  when  goods  are  sold  wholly  or  partly  on  credit,  and  the 
purchaser  becomes  bankrupt  or  insolvent  before  the  goods  arrive, 
and  before  in  fact  the  delivery  to  him  is  perfected.^  An  equitable 
lien  may  be  lost  or  waived,  and  one  who  might  otherwise  be  enti- 
tled may  forfeit  his  claim  where  guilty  of  laches  in  asserting  it; 
for  substantial  justice  is  the  basis  of  such  rights,  whether  with 
reference  to  the  debtor  or  to  third  parties  interested  in  the  fund.^ 

§  390.     Statutory  Liens;    Mechanic's  Lien  Laws,  etc. 

Statutory  liens  are  now  very  commonly  found ;  and  under  this 
head  are  to  be  particularly  mentioned  the  mechanic's  lien  laws, 
now  so  common  in  every  part  of  this  country,  which  permit  masons, 
mechanics,  and  laborers  generally,  to  enforce  their  demands  for 
work  and  materials  furnished,  by  a  sort  of  summary  procedure 
in  rem,  against  the  buildings  and  land  on  which  the  indebtedness 
accrued.^     Legislation   has    been    likewise    applied,    as   we    have 

8.  See  supra,  §  386.  tractor  the  right  to  have  them  thus 

9.  Hodgson  v.  Loy,  7  T.  R.  440;  applied  when  the  services  are  ren- 
Dixon  V.  Yates,  5  B.  &  Ad.  313;  2  dered.  Dillon  v.  Barnard,  21  Wall. 
Kent  Com.  541 ;  Wms.  Pers.  Prop.,  430.  An  executory  contract  founded 
5th  Eng.  ed.  41.  This  subject  of  in  mere  intention  creates  no  lien, 
stoppage    in    transitu    will    be    more  Cook  v.  Black,  54  Iowa,  693. 

fully  examined  under  Sales,  in  vol.  2,  An   equitable   lien   may   be   created 

part  vi.,   c.   14.  by  advancements  on  the  faith  of  prop- 

1.  Story  Eq.  Jur.,  §  959.  erty,  may  attach  to  property  not   in 

To   create,   for   the   future   services  being,  and  does  not  depend  upon  pos- 

of  a  contractor,  a  lien  upon  partieu-  session   or   express   agreement.      Sieg 

lar  funds  of  his  employer,  there  must  v.  Greene,  227  Fed.  41,  141  C.  C.  A. 

be   not  only   the   express    promise   of  589;   Steagall  Cheairs  Co.  v.  Bethune 

the  employer  to  apply  them  in   pay-  Co.,  181  Ala.  250,  61  So.  274;  West- 

ment    of    such    services,    upon    which  all  v.  Wood,  212  Mass.  540,  99  N.  E. 

the  contractor  relies,  but  some  act  of  325. 

appropriation    on    the    part    of    the  2.  2    Kent    Com.    635,    Comstock's 

employer  relinquishing  control  of  the  n. ;  3  Washb.  Real  Prop.  540 ;  Winder 

funds,  and  conferring  upon   the  con-  v.    Caldwell,   14  How.   434.     And  see 

580 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    391 

already  intimated,  not  only  for  the  purpose  of  extending  to  classes 
of  persons  excluded  by  operation  of  the  common  law  the  right  of 
lien  on  goods  for  their  demands,  but  for  conferring  upon  all  lien- 
creditors  at  the  common  law  a  more  speedy  and  complete  method 
of  enforcing  payment  by  sale  outright  or  through  judicial  inter- 
vention.^ Statutes  conferring  a  lien  should  express  such  an  inten- 
tion in  terms  not  doubtful ;  but  the  statute  remedy  once  given,  the 
repeal  of  the  statute  while  proceedings  under  it  are  pending  does 
not,  as  it  is  held,  impair  the  lien  obligation,  though  it  destroy  the 
remedy.'* 

§  391.     Maritime  Liens  Considered. 

It  remains  for  us  to  speak  of  maritime  liens,  a  topic  which  has 
been  in  a  measure  anticipated  by  what  we  had  to  say  of  ships. 
But  first  it  should  be  remarked  that  in  many  States  statute  pro- 
visions exist  for  securing  the  liens  of  persons  who  repair  domestic 
ships  or  build  ships  and  steamboats ;  a  kind  of  lien  which  in  some 
respects  appears  to  differ  from  those  purely  maritime,  being  in 
truth  statutory,  though  in  others  it  certainly  resembles  them.^  A 
maritime  lien,  like  an  equitable  lien,  does  not,  in  common  par- 
Phillips  (S.  L.)  on  Liens,  a  recent  Tucker  v.  Bryan.  217  Fed.  576,  133 
American  treatise  especially  devoted  C.  C.  A.  428. 
to  this  subject  of  statutory  liens.  5.  2  Kent  Com.  635,  n.;   Steamboat 

8.  Supra,  §  387.  Waverly  v.  Clements.   14  Ohio,  28;   1 

4.  Bangor  v.  Coding,  35  Me.  73 ;  Pars.  Marit.  Law,  lOG,  and  n.  Sec^ 
Cincinnati  v.  Morgan,  3  Wall.  275.  Sheppard  v.  Steele,  43  N.  V.  52;  Ilay- 
J^  laborer's  statutory  lien  is  assign-  ford  v.  Cunningham,  72  Me.  128 ;  69 
able.  Murphy  v.  Adams,  71  Me.  113,  Me.  228;  18  Ilun  (N.  Y.),  56;  Baedor 
end  cases  cited.  Where  chattels,  upon  v.  Carnie,  44  N.  J.  L.  208.  The  pres- 
which  there  is  a  registered  lien,  are  ent  rules  and  decisions  of  the  Unit<»d 
destroyed,  the  lien  does  not  attach  States  Supreme  Court  make  no  dis- 
upon  new  chattels  substituted  for  tinction  between  the  liens  on  a  do- 
them.     3  Lea,  57.  mestic   vessel   given   by   the    State   or 

For  statutory  lien  given  for  sup-  local  law  and  liens  imder  the  general 
plies  furnished  certain  classes  of  cor-  maritime  law.  Canal  Boat  Dan 
porations,  see  Central  Trust  Co.,  Re,  Brown.  9  Ben.  309.  But*a  draft  does 
239  U.  S.  11,  36  S.  Ct.  1.  not  bind  a  vessel   unless  given   for  a 

And  as  to  waiver  of  common-law  debt  which  was  a  lien  upou  her. 
lien     by     statutory     procedure,     see      Woodland,  The,  104  U.  S.  180. 

581 


§  391a        THE  LAW  OF  PERSONAL  PROPEKTY.       [PAKT  IIL 

lanco,  include  or  require  corporeal  or  visible  possession.  In  this 
connection,  then,  the  word  "  lien  "  is  used  with  a  signification 
different  from  that  of  common  law;  and  being  at  least  as  old  as 
the  civil  law,  like  the  equitable  lien,  a  maritime  lien  is  properly 
defined  to  be  a  claim  or  privilege  upon  a  thing  to  be  carried  into 
effect  bj  legal  process ;  and  the  process  universally  recognized  for 
its  enforcement  is  by  admiralty  proceedings  in  rem.  This  claim 
or  privilege,  as  it  has  been  observed,  travels  with  the  thing  into 
whosesoever  possession  it  may  come;  it  is  inchoate  from  the 
moment  the  claim  or  privilege  attaches,  and  when  carried  into 
effect  by  legal  process,  by  a  proceeding  in  rem,  relates  back  to  the 
period  when  it  first  attached/ 

Maritime  liens  are,  in  truth,  those  of  which  courts  of  admiralty 
take  cognizance.  The  principal  kinds  of  maritime  liens  are  liens 
of  material-men,  liens  for  supplies,  liens  for  advances  and  disburse- 
ments, liens  for  freight,  and  liens  for  wages ;  though  the  word 
"  lien  "  in  this  connection  extends  in  judicial  parlance  to  the  sal- 
vage of  goods  at  sea,  and  even  to  damages  through  collision.^  The 
owner  of  the  cargo  has  a  lien,  by  the  law  of  shipping,  upon  the  ship 
for  the  safe  custody  of  his  merchandise  and  its  due  transportation 
and  proper  delivery;  but  this  is  by  virtue  of  the  contract  of 
affreightment,  and  does  not  exist  where  no  definite  undertaking 
to  transport  can  be  shown.^  As  courts  of  equity  constitute  the 
appropriate  tribunal  for  enforcing  all  equitable  liens,  so  do  courts 
of  admiralty  take  cognizance  usually  of  all  maritime  liens. 

§  391a.     The  Same  Subject. 

Of  maritime  liens,  that  for  seamen's  wages  seems  to  be  especially 
favored;    and  they  are  often  preferred  to  those  of  material-men 

6.  See  Harmer  v.  Bell,  7  Moore  P.  Am.  ed.  143.  and  Perkins's  n.;  1  Ld. 
C.   267;   Abb.   Shipping,   6th   ed.   121,      Raym.  393;  supra,  §§  315,  330. 

122 ;  The  Brig  Nestor,  1  Sumner,  73 ;  8.  Schooner  Freeman  v.  Bucking- 
Bright.  Fed.  Dig.  550,  795;  The  Kim-  ham,  18  How.  188;  The  Keokuk,  9 
ball,  3  Wall.  37.  Wall.  517;  The  Maggie  Hammond,  9 

7.  Harmer  v.   Bell,   supra;  Bright.  Wall.  435. 
Fed.    Dig.    797;    Abb.    Shipping,    5th 

582 


CHAP.  IV.]  DEBTS    SECURED    BY    LIEN.  §    391a 

and  others  whose  claims  rest  upon  the  necessities  of  the  vessel' 
As  to  material-men,  the  common-law  rule  is,  that  they  acquire  no 
particular  lien  upon  the  ship  bj  repairing  it  in  a  domestic  port; 
for  which  cause  legislation,  as  we  have  noticed,  has  been  called  in 
to  aid  in  securing  and  enforcing  demands  so  reasonable.^  Yet  in 
a  foreign  port  it  is  otherwise ;  and  sound  policy  enforces  the  doc- 
trine —  beneficial  both  to  the  material-man  who  desires  security 
from  an  utter  stranger,  and  to  the  ship-master  who  must  have 
credit  in  order  to  save  from  ruin  the  valuable  interests  committed 
to  his  keeping  —  that  where  repairs  have  been  made,  or  necessaries 
furnished  to  a  foreign  ship,  or  to  a  ship  in  a  port  of  a  Stat€  to 
which  it  does  not  belong,  the  party  doing  so  has  a  lien  on  the  ship 
for  his  security,  which  may  be  enforced  in  the  admiralty  by  pro- 
ceedings in  rem}  Hence  the  question  always  arises  whether  the 
ship  is  at  its  own  or  another  port,  in  its  own  State  or  a  foreign 
State.  The  creation  and  effect  of  a  lien  must  be  governed  by  the 
law  of  the  place  where  the  ship  is  situated  when  the  lien  arises, 
though  domestic  creditors  are  sometimes  preferred.^  And  the 
same  rule  of  general  maritime  law  applies  to  repairs  and  supplies ; 
though  it  is  manifest  that  while  repairs  could  hardly  fail  to  be 
necessary, —  and  it  is  to  such  repairs  only  that  the  rule  is  meant 
to  apply, —  supplies  might  be  quite  unnecessary  in  the  quality  or 
amount  furnished.  And  so  in  some  of  the  earlier  admiralty  cases 
in  this  country  it  was  ruled  that,  in  order  to  create  a  maritime  lien 
for  supplies  furnished,  there  must  be  a  necessity  for  the  supplies 
and  an  impossibility  to  obtain  them  except  on  the  vessel's  credit; 

9.  See  Bright.  Fed.  Dig.  797,  801.  age,  and  actually  so  used,  constitute 

And  see  supra,  §§  212,  307,  313,  315,  a   lien   in   the   absence  of  evidence   to 

317;   Jones  Liens,  §§   1693-1699.  the   contrary   intent.      The    Patapsco, 

1.  See  section  preceding;  The  Gen-  13  Wall.  329.  Liens  for  advances  of 
eral  Smith,  4  Wheat.  438  ;  The  Grape-  funds  for  the  necessities  of  vessels  in 
shot,  ff  Wall.  129;  The  Two  Ellens,  a  foreign  port  take  priority,  moro- 
L.  R.  3  Ad.  &  Ecc.  345.  over,  over  existing  mortgages  to  crod- 

2.  lb.;  Bright.  Fed.  Dig.  798;  The  itors  at  home.  Tlio  Souder,  17  Wall. 
Lulu,    10    Wall.    192.      Supplies    fur-  666. 

nished  to   a  ship  in   a   foreign   port,  3.  Constant   v.    Klompus,    50    Scot, 

and  necessary  to  be  used  for  the  voy-      Law  Rep.  27. 

583 


§  392  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

but  the  later  decisions  favor  the  lien-creditor  more  liberally,  bj 
setting  up  a  presumption  sufficient  to  support  a  lien  wherever  the 
vessel  is  in  apparent  need  of  repairs  or  supplies  in  the  foreign 
port/ 

The  master's  lien  for  advances  and  disbursements  has  not  been 
favored  as  a  common-law  right,  and  in  England  the  doctrine  has 
been  denied  altogether.^  Of  the  other  kinds  of  maritime  lien, 
that  for  freight  earned  by  the  ship  gives  rise  to  much  controversy, 
and  the  leading  principles  applicable  to  that  topic  we  have  already 
noticed  at  some  length.^  It  appears  to  be  well  settled  that  by  the 
general  maritime  law  there  is  a  lien  on  the  cargo  for  freight, 
whether  shipped  under  a  bill  of  lading  or  a  charter-party,  or  by 
parol ;  for  the  rights  and  responsibilities  of  the  ship-owners  as 
concerns  their  transportation  business  are  very  much  like  those  of 
common  carriers  by  land.^ 

§  392.     The  Same  Snbject. 

A  maritime  lien  may  of  course  be  lost  or  waived ;  and,  like  an 
equitable  lien,  it  will  not  be  upheld,  especially  as  against  hoyid  fide 
third  parties  in  interest,  where  the  party  claiming  it  is  guilty  of 
laches  in  enforcing  his  demand.  The  ship-owner  who  claims 
freight  on  goods  loses  his  lien  therefor,  if  he  delivers,  voluntarily 
and  unconditionally,  possession  of  the  goods  to  the  consignee,  not- 
withstanding maritime  liens  do  not  depend  generally  upon  posses- 
sion ;  and  here  again  he  resembles  a  common  carrier  by  land.^     A 

4.  Cf.  The  Grapeshot  and  The  Lulu,  others.  The  J.  C.  Williams,  15  Fed. 
supra,   and    Pratt   v.    Reed,    19    How.       Rep.   558. 

359.  6.  See  supra,  §§  319-521. 

5.  See  Hamilton  v.  Baker,  14  App.  7.  The  Volunteer,  1  Sum^  cr,  551 ; 
Cas.  209;  reversing  various  decisions  The  Eddy,  5  Wall.  481.  See  McLean 
in  the  lower  courts  as  to  act  1861  v.  Fleming,  L.  R.  2  H.  L.  Sc.  128. 
( 24  Vict.,  c.  10 ) .  Ordinarily  no  lien  Drafts  purporting  to  be  "  recoverable 
exists  in  favor  of  the  master  for  his  against  the  vessel,"  &c.,  on  their  face, 
disbursements  in  the  service  of  the  do  not  bind  the  vessel  unless  the  debt 
ship;  though  there  may  properly  be  itself  was  a  lien  upon  her.  The  Wood- 
one  recognized   in   some   instances   by  land,  104  U.  S.  180. 

way   of    subrogation   to   the   liens   of  8.  The  Kimball,  3  Wall.  37;  supra, 

§  386. 
584 


CHAP.  IV.]  DEBTS    SECUEED    BY    LIEN.  §    393 

reasonable  time  to  enforce  u  lien  by  suit  is  always  allowed ;  which 
appears  to  be  the  limitation  against  bond  fide  third  parties  in 
interest;  and  neither  giving  credit  for  a  fixed  period,  nor  allow- 
ing a  ship  to  sail  without  payment,  nor  commencing  a  suit  in 
personam  instead  of  resorting  at  once  to  admiralty  process  in  rem, 
nor  even  accepting  notes  for  the  sum  due,  necessarily  amounts  to 
a  waiver  of  the  lien.'  And  yet  one  or  more  of  these  circumstances 
might  go  towards  defeating  a  lien  already  acquired;  as,  for  in- 
stance, where  the  rights  of  a  third  person  had  intervened  through 
the  laches  of  the  lien-creditor;  or  notes  were  accepted,  not  with 
an  understanding  that  the  lien  should  continue,  but  as  in  full 
satisfaction  of  the  creditor's  demand.^  The  waiver  of  a  lien  is 
not  readily  inferred,  however,  from  any  contract  ^vtich  fails  in 
being  explicit  to  that  effect;  and  courts  of  admiralty  are,  on  the 
whole,  reluctant  to  deprive  the  lien-creditor  of  his  security,  when 
once  fairly  obtained,  especially  as  between  himself  and  the  debtor 
alone. 

§  393.     Broad  Significance  of  "  Lien  "  in  Judicial  Language. 

As  a  final  illustration  of  the  broad  significance  wliich  the  word 
"  lien  "  has  acquired,  we  may  add  that  courts  often  speak  of  the 
lien  of  an  attachment ;  and  that  judgments  are  likewise  regardetl 
in  the  light  of  a  lien  upon  the  judgment  debtor's  real  estate." 

9.  Mehan  V.  Thompson,  71  Me.  492;       107;    Metoalf's    Yelv.    67    i ;    4    Kent 
Jones  Liens,  §   1808.  C!om.  173;  Ex  parte  Foster,  2  Story, 

1.  See   Bright.    Fed.    Dig.    796-790';       131. 

Pcyroux  v.  Howard,  7  Pet.  324;  The  This  subjeet  may  be  .studied,  in 
Paul  Boggs,  1  Spr.  369;  The  St.  Schouier  Bailments,  §§  122-127,  326, 
Lawrence,  1  Bl.  523;  3  Kent  Com.  542-550,  with  especial  reference  to 
171;  Abb.  Shipping,  143,  662,  and  hired  workmen  upon  a  chattel,  inn- 
Perkins's  n.  Liens  not  enforced  be-  keepers,  and  common  carriers.  And 
fore  the  ship  departs  upon  a  new  as  to  the  lien  of  common  carriers  see 
voyage  are  generally  postponed  to  also  Angell  and  other  writers  on  that 
liens  of  the  later  voyage.  The  Young  special  subject.  For  the  lien  of  fac- 
America,  30  Fed.  789;  The  Proceeds  tors,  attorneys,  and  agents,  generally, 
of  the  Gratitude,  42  Fed.  299.  And  the  latest  ♦•dition  of  Story  Agency. 
Bee  Jones  Liens,  §§   179'9-1812.  §§  351-390,  may  be  read.     Story   and 

2.  Williams    v.    Benedict,    8    How.  other  writers  ou  Equity  Jurisprudence 

585 


§  393a 


THE  LAW  OF  PEKSONAL  PROPERTY. 


[part  III. 


Moreover,  a  pledgee's  security  is  often  somewhat  loosely  stated  as 
a  lien  in  our  modern  reports.  While,  therefore,  we  commonly 
understand  that  a  creditor  whose  debt  is  secured  by  a  lien  on  per- 
sonal property  holds  the  chattel  as  security  for  his  debt,  with  the 
right  of  retaining  possession  until  the  debt  is  paid,  we  also  find 
that,  in  a  larger  sense,  wherever  property  either  real  or  personal 
is  charged  with  the  payment  of  some  debt,  claim,  or  demand, 
every  such  charge,  however  it  may  be  enforced  in  the  courts,  is 
termed  a  lien  upon  the  property,  as  being  in  the  nature  of  a 
privileged  claim. 

§  393a.     Lien  Statutes  Constitutional. 

Local  statutes  which  extend  the  right  of  lien  in  certain  cases  are 
not  readily  to  be  considered  unconstitutional,  as  depriving  one  of 
his  property  "  without  due  process  of  law."  ^  But  not  unfre- 
quently  a  statute  gives  a  new  right  of  "  hold  "  or  detainer  without 
a  corresponding  remedy ;  and,  of  course,  one's  lien  right  must  be 
bond  fide  acquired  and  not  sought  as  a  cover  for  fraud  upon  a 
debtor's  general  creditors.'* 


consider  the  equitable  lien;  while 
works  on  Shipping  (see  e.  1,  supra, 
note  at  end)   treat  of  maritime  liens. 

Mr.  Leonard  A.  Jon««  (1888),  (3d 
ed.,  1'914),  has  published  a  compre- 
hensive work  of  two  volumes'  on  the 
subject  of  liens,  in  which  this  whole 
subject  may  be  studied  in  detail. 

3.  Monthly  Installment  Co.  v.  Skel- 
lett,  124  Minn.  144,  144  N.  W.  750; 
Olson  V.  Idora  Co.,  28  Ida.  504,  155 
Pac.  291.  And  see  as  to  judgments 
enforcing  liens  against  property  only. 


Gray  v.   Graziani,   165  Ky.   771,   178 
S.  W.  1070. 

4.  A  statute  lien  is  not  to  be  ex- 
tended by  inference.  Hull  v.  Ander- 
son, 86  S.  E.  257  (Ga.  App.  1915). 
See  Edwards  v.  Mayes,  136  S.  W. 
510  (Tex.  Civ.  App.  1911),  (equitable 
lien  under  special  circumstances) . 
But  cf.  Central  Trust  Co.  v.  Lueders, 
239  U.  S.  11,  36  S.  Ct.  1,  which 
favors  a  liberal  construction  in  cer- 
tain cases. 


586 


CHAPTER  V 


DEBTS    SECUEED    BY    PLEDGE;      COLLATERAL    SECITKITT 

§  394.     What  is  a  Pledge  or  Pawn ;    Collateral  Security. 

The  topic  of  pledge  or  pawn  is  usually  eonsitlered  under  the 
general  head  of  bailments,  by  common-law  writers,  though  it  is 
mostly  connected  with  debts  or  loans,  and  like  bailment  title  itself 
constitutes  part  of  the  law  of  personal  property.  From  debts 
secured  by  lien  we  advance  a  step  when  we  come  to  those  which 
have  the  more  ample  common-law  security  furnished  by  a  pledge 
of  chattels.  A  debt  frequently  arises  in  these  days  from  the  loan 
of  money ;  and  when  the  loan  is  accompanied,  as  we  frequently 
find  it,  by  a  pledge  of  some  other  kind  of  incorporeal  personal 
property,  for  the  purpose  of  assuring  more  completely  the  per- 
formance of  the  principal  engagement,  it  is  usually  in  these  days 
called  among  business  men,  though  not  with  logical  exactness,  a 
loan  on  collateral  security.  Thus,  a  man  borrows  one  thousand 
dollars,  for  which  he  gives  his  promissory  note,  and  also  deposits 
with  the  lender,  by  way  of  collateral  security,  certificates  of  stock, 
or  the  promissory  note  of  a  third  person;  and  in  consequence,  for 
repayment  of  this  loan  with  interest,  the  capitalist  avails  himself 
not  only  of  the  borrower's  credit,  but  of  the  property  deposited 
with  him  in  addition.' 

1.  The  law  of  pledge,  together  with  ago,    in    other    conn oct ions,    rame    to 

the    history    and    modern    growth    of  signify   a   security   given    in   addition 

such     transactions,     may     be     found  to    the     principal     security.       Where 

treated     at     length     in     the    writer's  one  borrows  money  on  mortgage  and 

volume   on   Bailments.      Only  a   brief  deposits    bonds,    there    may    arise    a 

summary    of    that    law    can    be    at-  strict     loan     on     collateral     security, 

tempted    within    the    limits    of    the  But  the  colloquial  use  of  these  words 

present  chapter.     See  Schoul.  Bailm.,  is  not  so  precise.     See  16  Ch.  D.  211, 

part  iv.,  c.  4.     "Collateral  security"  217;  Chamlx>rsburg  Tns.  Co.  v.  Smith, 

or  "collateral"  alone  are  mercantile  11   Penn.  St.   120.     Giving  one's  sim- 

expressions    which     have    no    precise  plo    promissory    note    for    the    loan, 

legal     significance.      As    a     chancery  and    bonds,    stock,    &c.,    as    security, 

phrase,     "  collateral    security "     long  might    to    many    seem    a    proper    in- 

587 


§  394  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

A  pledge  or  pawn^  then,  consists  in  the  bailment  of  personal 
property  as  security  for  some  debt  or  engagement;  and  by  bail- 
ment we  denote  a  delivery  upon  the  understanding  (or  at  least  a 
rightful  possession  under  the  obligation)  that  the  property  shall 
be  held  according  to  the  special  purpose  of  the  delivery  or  taking, 
and  restored  or  delivered  over  when  that  purpose  is  fully  accom- 
plished.^ This  pawn  or  pledge  corresponds  to  the  pignus  of  the 
civil  law  where  the  thing  was  delivered  to  the  creditor;  while  if 
this  possession  remained  with  the  debtor,  although  the  property 
was  pledged  as  security,  the  civil  law  called  it  hypotheca;  though 
some  have  considered  that  the  difference  between  pignus  and 
hypotheca  was  one  of  sound  only.''  Like  our  pledge,  the  pignus 
seems  to  have  been  confined  to  personal  property."*  In  our  lan- 
guage the  terms  "  pawn  "  and  "  pledge  "  seem  to  be  interchange- 
able, and  are  used  indifferently  by  law-writers ;  yet  out  of  regard 
to  the  well-known  business  of  pawnbrokers,  which  never  was 
thought  to  be  of  an  elevated  character,  we  often  find  that  the  word 
"  pawn "  is  confined  in  parlance  to  those  petty  transactions  con- 
cerning things  corporeal  which  characterize  this  particular  busi- 
ness ;  while  persons  who  deal  in  those  moneyed  or  incorporeal 
securities  which  a  mercantile  community  favors,  generally  apply 
the  comprehensive  term  "  pledge  "  in  preference,  or  else  character- 
ize the  loan  as  one  upon  collateral  security.  For  pledge  trans- 
actions are  found  altogether  too  convenient  in  the  modern  business 

stance    under    the    same    head;     and  Jones   thinks   the   term   a   convenient 

hence,    perhaps,    the    true    origin    of  one   to   designate   a   pledge   of    incor- 

this    mercantile   use   of    such    words.  poreal      personal      property.        Jones 

But  there  is  practically  no  such  rigid  Pledge,  §   1. 

construction    applied,   even    from    the  2.  Story  Bailm.,  §§  7,  286 :  2  Kent 

bench;    and    semble,    unless   tlie   note  Com.    577;    Bouv.    Diet.    "Bailment," 

given  for   tlie  loan  were  indorsed,   it  "Pledge;"  2   Swell's   Bl.   Com.    452; 

could  not  fairly  of  itself  be  called  "a  Schoul.  Bailm.,  §§  13,  162. 

principal    security."      As    an    expres-  3.  2  Kent  Com.  577.     See  Dig.  lib. 

sion  not  confined  to  strict  pledge,  by  20,  tit.  1,  cited  in  Story  Bailm.,  §  286; 

way   of   contrast  with    chattel    mort-  Pothier  de  Nant.  art.  Prelim,  n.   3; 

gage,  &c.,  "collateral  security"  seems  Schoul.  Bailm.,  §  166. 

sometimes    to    be    preferred    ini    the  4.  lb. 
oourts  for   its  very  vagueness.     Mr. 

588 


CHAP,  v.]        DEBTS  SECURED  BY  PLEDGE,  ETC.  §  395 

world  to  be  confined  to  mean  lenders  and  small  borrowers ;  and 
pledge  rather  than  pawn  is  the  favored  generic  term  of  the  trans- 
action. 

§  395.     What  Things  May  be  the  Subject  of  Pledge. 

What  things  may  bo  the  subject  of  pledge  ?  As  we  have  already 
intimated,  the  transaction  is  confined  to  personal  property;  and 
of  personal  property,  all  kinds  which  are  visible  and  tangible  may 
be  pledged,  and,  besides,  as  modem  cases  fully  establish,  the 
various  incorporeal  species,  so  far  at  least  as  concerns  those  which 
are  evinced  by  instruments  in  writing,  which  writing  may  itself 
be  delivered.  In  old  times  the  business  of  loaning  on  pledge  or 
pawn  was  chiefly  in  the  hands  of  the  Jewish  pawnbrokers ;  and  in 
the  leading  case  of  Coggs  v.  Bernard  we  find  Lord  Holt  laying 
down  the  law  with  particular  reference  to  jewels,  wearing  apparel, 
and  domestic  animals.^  But  in  these  days  no  such  narrow  appli- 
cation of  principles  would  be  deemed  suitable ;  and  bills  and  notes, 
government  and  municipal  securities  of  various  kinds,  coupon 
bonds,  shares  of  stock,  title-deeds,  savings-bank  books,  judgments, 
chattel  or  real  estate  mortgages,  insurance  policies,  leases,  and 
patent  rights,  are  constantly  interchanged  in  our  business  com- 
munity for  the  purpose  of  pledge.^  It  is  the  giving  in  pledge  of 
incorporeal  property  of  various  kinds  with  their  various  incidents, 
by  some  voucher  or  muniment  of  title,  that  so  greatly  obscures  the 

5.  2  Ld.  Raym.  917.  deposit  of  deeds,   but   a   mortpajre  of 

6.  See   Morris   Canal   Co.   v.   Lewis,       real     estate     likewise,     which     before 

1  Beasl.  667;  Donald  v.  Suckling,  foreclosure  is  personal  property.  Je- 
L.  R.  1  Q.  B.  585;  Wilson  v.  Little,      rome  v.   McCarter,   94  U.   S.   734;    9 

2  Comst.  443;  Story  Bailm.,  9th  ed.,  Bosw.  322;  Dewey  v.  Bowman.  8  C:il. 
§290;  2  Kent  Com.  577,  578,  and  n. ;  145;  English  v.  McElroy.  62  Ga.  413. 
Houser  v.  Kemp,  3  Penn.  St.  208;  A  pledge  may  be  made  of  rails  laid 
Swift  V.  Tyson,  16  Pet.  1 ;  Talty  v.  down  by  agre<'ment  for  a  temporary 
Freedman's  Savings  Co.,  93  U.  S.  purpose  upon  another's  land,  as  well 
321.  For  late  decisions  as  to  these  as  of  the  railway  rolling  stock,  sine* 
various  kinds  of  personal  property,  tliey  are  all  personal  property, 
see  Sehoul.  Bailm.,  §§  17a,  173.  Not  Woodward  v.  Exposition  R.,  39  La. 
only   are   leases  thus  reckoned  by  a  Ann.  566,  §  131. 

589 


§  395  THE  LAW  OF  PERSONAL  PROPEKTY.       [PAET  III. 

law  of  the  present  day.  Chattels  incapable  of  delivery  cannot, 
logically  speaking,  be  the  subject-matter  of  pledge;  but  since 
choses  in  action  or  money  rights  may  at  least  be  assigned,  delivery 
of  the  muniment  or  voucher  obviates  all  practical  difficulty.^ 

Chattels  of  any  kind,  which  are  available  in  the  holder's  hands, 
may  in  this  manner  be  delivered  as  security  for  a  debt ;  provided 
they  be  in  existence  at  the  time  of  the  pledge  transaction.^  But  a 
technical  objection  arises  where  the  attempt  is  made  to  make  prop- 
erty not  in  existence  the  subject  of  a  pledge;  since  the  present 
pledge  of  property  to  be  hereafter  acquired  gives  no  immediate 
delivery  of  possession  to  the  pledgee,  and  is  rather  an  hypotheca- 
tion than  a  strict  pledge.  Modern  decisions  on  this  point  appear 
to  leave  the  subject  in  some  uncertainty.  But  the  tendency  of 
the  courts  is  to  uphold  an  agreement  to  pledge  after-acquired 
property  as  between  parties  and  those  taking  with  notice  or  volun- 
teers in  equity  provided  it  is  specified  with  reasonable  certainty.^ 
But  just  as  equity  sustains  the  sale  and  transfer  by  assignment  of 
expectant  and  reversionary  interests,  so  is  the  judicial  disposition 
strong  in  many  States  to  sustain  a  pledge  transaction  where  not  a 
mere  possibility  but  a  potential  actual  interest  is  given  in  security.^ 
And  thus  has  a  pledgor's  interest  been  gained  not  only  in  the 
principal  thing  pledged,  but  in  certain  accessions  thereto  besides. 
If  a  pledge  contract  undertakes  to  put  in  security  that  which,  as  a 
subject-matter,  is  not  actually  in  existence,  there  can  be  no  imme 

7.  Talty  v.  Freedman's  Savings  Co.,  9.  First  National  Bank  of  Omaha 
9^  U.  S.  321;  Schoul.  Bailm.,  §  173;  v.  Day,  150  la.  696.  130  N.  W. 
supra,  §§  72-76,  as  to  assignment.  800;  Walker  v.  Brown,  165  U.  S. 
Under  mercantile  usage  of  the  pres-  654,  17  S.  St.  453;  McGarvey  v. 
ent  day,  the  pledge  of  a  bill  of  lading  Prince,  32  S.  D.  417,  143,  N.  W.  380; 
of  goods  in  transit  by  land  or  water  Holroyd  v.  Marshall,  10  H.  L.  Cases, 
effects  a  pledge  of  the  goods.  Schoul.  IQ'l;  McCaffrey  v.  Woodin,  65  N.  Y. 
Bailm.,  §   173;   Hathaway  v.  Haynes,  459. 

124     Mass.     311;     Marine     Bank     v.  1.  Schoul.     Bailm.,     §§     174,     175; 

Fiske,  71  N".  Y.   353.     The  pledge  of  Bellows  v.  Wells,  36  Vt.  599 ;  Goode- 

goods  in  a  warehouse  may  be  similarly  now   v.   Dunn,   21    Me.    86;    Jones   v. 

affected    under    a    warehouse    receipt.  Richardson,    10    Met.    481 ;    Helm.    v. 

Schoul.  Bailm.,  §  173.  Meyer,  30  La.  Ann.  943. 

8.  See  Schoul.  Bailm.,  §§  174,  175. 

590 


CHAP,  v.]  DEBTS    SECUEED    BY    PLEDGE,    ETC.  §    396 

diate  bailment  to  the  pledgee,  technically  speaking,  for  there  is 
nothing  to  deliver;  and  non-existence  excludes  attachment  by  the 
pledgor's  creditors  none  the  less.  But  we  may  perhaps  correctly 
assume  that  the  pledge  contract  of  after-acquired  chattels  or 
chattels  by  accession,  so  far  as  courts  sustain  the  arrangement, 
gives  the  pledgee  a  right  strong  as  to  the  pledgor  himself,  because 
of  their  mutual  agreement,  but  which  as  against  third  parties  he 
must  perfect  when  opportunity  offers,  and  so  that  actual  or  con- 
structive delivery  and  acceptance  shall  follow  the  accession  or 
production  of  the  new  thing,  before  adverse  rights  can  bond  fide 
attach  thereto.^ 

It  is  laid  down  justly  as  a  doctrine  borrowed  from  the  Roman 
law,  that,  by  the  pledge  of  a  thing,  not  only  the  thing  itself  passes, 
but  the  natural  increase  thereof  as  accessory;  thus,  if  a  flock  of 
sheep  are  pledged,  the  young  afterwards  bom  during  the  continu- 
ance of  the  bailment  become  pledged  also.^  In  like  manner  divi- 
dends or  interest  payments,  the  natural  and  obvious  increment  of 
stock  or  interest-bearing  securities,  become  pledged,  as  soon  as  due, 
by  inference  from  the  pledge  contract.'*  A  number  of  things  per- 
sonal of  various  kinds  may  of  course  be  given  in  pledge  security 
together  for  the  same  debt  or  engagement. 

§  396.     The  Same  Subject. 

But  there  are  some  things  which  are  generally  forbidden  to  be 
the  subjects  of  pledge;    as,  for  instance,  the  pensions,  bounties, 

2.  See,  as  to  a  brickmaker's  agree-  gets    possession    before    other    rights 

mont    with    lessees    of    a    brick   yard,  can  int^Tvene. 

Macomber    v.    Parker,    14    Pick.    497.  3.  1   Doniat.  b.  3,  tit.   1,  §   1,  arts 

Also  Smithurst  v.  Edmunds.  14  N.  J.  7-10;    Story   Confl.  Laws,   §   292:   La 

Eq.  408,  the  caSe  of  added  furniture  Code      (1825),     art.     3135;      Schoul 

to  be  security  for  a  landlord's  rent;  Bailm.,  §   176;   Story  Bailm.,   §   292 

Ayers  v.  Banking  Co.,  L.  R.  3  P.  C.  Some  local  American  statutes  are  ex 

548.     And  see  Schoul.  Bailm.,  §§  174,  plicit    on    this    point,    following    the 

175.      But  as  to  a  crop  growing,  see  civil  law. 

Schoul.    Bailm.,    §    175;    Gittings    v.  4.  Schoul.    Bailm..    §    176;    Swasey 

Nelson,  86  111.  591 ;  Comstock  v.  Com-  v.    N.    C.    R.    R.    Co..    1    Hughes,    17. 

stock,    7    Wis.    159.      Here    the    rule  Express  contract  regulates, 
is  strict  against  a  pledgee,  unless  he 

591 


§  397  THE  LAW  OF  PERSONAL  PROPERTY.       [PABT  HI. 

and  pay  of  soldiers  and  sailors,  and  their  widows,  which  are  pro- 
tected by  the  public  against  the  possible  improvidence  of  this  class 
of  persons.^  And  yet,  as  to  necessaries,  these  can  be  pledged  or 
pawned  at  the  common  law;  and  it  is  no  uncommon  thing  for  a 
person  in  distress  to  take  garments  to  the  pawnbroker  which  ought 
to  be  on  his  own  back ;  a  good  reason  for  the  rule  being,  perhaps, 
that  as  to  any  particular  chattel  it  is  almost  impossible  to  say 
whether  it  is  or  is  not  a  necessary,  in  connection  with  the  mere  act 
of  pledge,  since  questions  of  this  sort  have  reference  to  the  general 
circumstances  and  situation  of  the  pledgor.^  Nor  does  a  statute 
exemption  of  certain  articles  from  attachment  or  execution  sale 
forbid  their  being  pledged  so  as  to  bind  the  pledgor/  Our  national 
banks  cannot  loan  or  discount  on  the  security  of  their  own  stock, 
unless  necessary  to  prevent  loss  on  a  debt  previously  contracted  in 
good  faith.^  And  local  statutes  frequently  interpose  special 
checks  upon  the  right  or  the  method  of  pledging  property,  so  far 
as  interested  third  persons  without  notice  in  particular  are 
concerned.^ 

§  397.     The  Debt  or  Engagement  to  be  Secured. 

As  to  the  debt  or  engagement  secured,  this  may  be  primary  or 
secondary  on  the  pledgor's  part,  absolute  or  conditional,  for  the 
payment  of  money  or  for  any  other  lawful  performance  of  an 
engagement.  The  pledgor  may  be  bound  to  the  debt  or  engage- 
ment as  indorser  or  surety  for  another,  or  as  himself  the  maker  or 
principal.  So,  too,  may  the  security  be  taken  by  the  pledgee  for 
the  repayment  of  money  loaned  (which  is  the  usual  case)  or  so  as 
to  indemnify  him  for  becoming  an  indorser  or  surety   at  the 

5.  See  Story  Bailm.,  §  S&3.  parties    who    may    become    creditors. 

6.  Story  Bailm.  ib.;  M'Oarthy  v.  And  in  some  States  the  pledge  of 
Goold,  1  Ball  &  B.  389;  3  T.  K.  681;  stock  must  be  accompanied,  accord- 
Schoul.  Bailm.,  §  177.  ing  to  statute,  with  a  description  of 

7.  Frost  V.  Shaw,  3  Ohio  St.  470.  the  debt  in  the  instrument  of  trans- 

8.  Bank  v.  Lanier,  11  Wall.  369.  fer;     the    certificate     issued     to    the 

9.  Thus,  by  the  law  of  Louisiana,  pledgee  expressing  on  its  face  that 
registration  of  the  transaction  of  he  holds  as  collateral  security.  See 
pledge  is  required   as   against    third  Mass.   Rev.   Lsws,   c.   109,  §§   37,   38. 

592 


CHAP,  v.]  DEBTS    SECURED    BY    PLEDGE,    ETC.  §    898 

^lodger's  instance.'  In  every  instance  some  lawful  debt  or  en- 
gagement which  is  or  may  be  owing  the  pledgee  constitutes  the 
foundation  of  the  security  upon  which  the  thing  is  given.  The 
object  may  be  to  secure  a  general  or  a  specific  indebtedness,  part 
or  all  of  what  is  owing;  to  protect  what  is  already  outstanding 
from  the  pledgor,  or  so  as  to  include  future  liabilities  as  they  may 
arise  in  favor  of  the  same  pledgee ;  to  cover  obligations  for  a  fixed 
or  for  an  indefinite  period ;  provided  always  that  the  transaction 
be  genuine  as  to  such  intent,  and  not,  as  against  third  parties,  a 
device  for  defrauding  them ;  also  that  it  be  confined  to  the  specific 
debt  or  engagement  mutually  agreed  upon.^ 

§  398.     Who  May  Pledge  or  Receive  in  Pledge, 

Mutual  assent  is  needful  to  a  pledge  contract ;  and  in  such 
transactions  the  usual  rules  of  contract  apply.  The  contract 
should  be  entered  into  by  parties  legally  competent  thereto; 
neither  disqualified,  as  are  insane  persons,  nor,  like  certain  kinds 
of  corporations,  placed  under  statute  disabilities.^  Force  and 
fraud  render  such  contracts  voidable.  Illegality,  as,  for  instance, 
in  securing  a  debt  incurred  for  victuals  used  in  a  debauch,  renders 
the  contract  null;    though  here,  if  the  contract  be  executed  by 

1.  Story  Bailm.,  §  300;  Wilcox  v.  103  111.  633.  ''All  indebtedness  exist- 
Fairhaven  Bank.  7  Allen,  270;  Brick  ing  or  which  may  hereafter  exist" 
V.  Freehold  Co.,  37  N.  J.  L.  307;  may  be  secured  by  one  pledge.  Moors 
Gilson  V.  Martin.  49  Vt.  474 ;  Black-  v.  Washburn,  147  Mass.  344,  34  N.  E. 
wood  V.  Brown,  34  Mich.  4;  Third  182.  As  to  a  pre-<?xisting  indebted- 
Nat.  Bank  v.  Boyd,  44  Md.  47 ;  Schoul.  ness  the  rule  is  not  uniform.  See 
Bailm.,  §  178.  Spencer  v.   Sloan,  108   Ind.   183,  9  N. 

2.  Schoul.  Bailm.,  §  178;  Story  E.  150;  Appeal  of  Liggett  Co.,  Ill 
Bailm.,  §  300;  Stearns  v.  Marsh,  4  Penn.  St.  291,  2  Atl.  684.  Pledge  for 
Denio,  227;  United  States  v.  Hooe,  3  loan  to  estate.  Book  34,  N.  Y.  Rpts., 
Cr.    73;    Berry   v.    Gibbons,    L.    R.    8  Bender  ed..  noU'.  p.  887. 

Ch.    747.      Personal    property    specifi-  3.  Schoul.  Bailm.,  §   179 ;   Bank  v. 

cally    pledged    for    a    particular    loan  Lanier,   13   Wall.   369;   L.   R.   10   Eq. 

cannot,    in   the   absence   of  a   spcK-ial  381.     A  statute  prohibition  may  yet 

agreement,  be  held  by  the  pledgee  for  leave  rights  of  pledge  or  receiving  in 

any  other  advance.     Duncan  v.  Bren-  pledge  sub  modo.     Curtis  v.  Leavitt, 

nan,  83  N.  Y.  487 ;  Fridley  v.  Bowen,  15  N.  Y.  9. 

38  593 


§  398  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

delivery  of  the  pledge,  the  pledgor  may  often  be  the  worse  off  in 
proving  unable,  because  of  his  own  wrong,  to  assert  his  right  as 
owner  against  the  pledgee."* 

It  is  not  essential  to  the  validity  of  the  pledge  contract  that  the 
thing  pledged  should  belong  to  the  pledgor  himself.  As  between 
the  parties  themselves  and  as  against  the  general  public,  that  trans- 
action may  be  upheld  which  some  person  with  a  better  title  might 
successfully  impugn.^  Nor  can  any  pledgor  assert  his  own  wrong- 
ful delivery  of  another's  property  as  a  ground  for  recovering  it 
from  the  pledgee  without  first  discharging  the  pledge  obligation.^ 
Agency,  express  or  implied,  confers  authority;  in  any  case  it  is 
sufficient  that  the  owner  consented  to  have  the  thing  pledged ;  and 
a  transaction  might  amount  constructively  to  a  pledge,  so  that  even 
the  true  owner  could  not  reclaim  the  property  without  discharging 
the  obligation.''  One  who  has  a  limited  title  to  a  thing,  or  a  special 
interest  in  it, —  as,  for  instance,  a  life-owner  or  a  lien-creditor 
under  some  bailment, —  is  allowed  to  pledge  to  the  extent  of  his 
title,  though  not  in  strictness  beyond  it.^  And  it  is  held  that  the 
pledge  of  collaterals  by  one  who  holds  them  from  another  party  is 
not  per  se  a  conversion  as  against  that  party ;  for  if  he  is  prepared 
to  restore  them  at  the  proper  time,  the  original  pledgor  has  no 
cause  for  complaint.^  In  general,  however,  to  create  a  pledge,  the 
pledgee  should  have  possession  and  actual  control  of  the  property.^ 

4.  Taylor  v.  Chester,  L.  R.  9  Q.  B.  8.  Story  Bailm.,  §  295;  Hoare  v. 
309;     Causey    v.    Yeates,    8    Humph.      Parker,  2  T.  R.  376. 

605;    King   v.    Green,    6    Allen,    139;  9.  Shelton  v.  French,  33  Conn.  489 ; 

Schoul.  Bailm.,  §  180.  Schoul.  Bailm.,  §  182. 

5.  Jarvis  v.  Rogers,,  13  Mass.  105;  1.  Corbett  v.  Underwood,  83  111. 
Story  Bailm.,  §  291;  Schoul.  Bailm.,  324.  As  to  the  right  of  a  true  owner 
§  180.  to   receive    property   pledged    without 

6.  Story  Bailm.,  §  291 ;  Goldstein  v.  his  assent,  see  §  406,  post. 

Hort,    30    Cal.    372;    Schoul.    Bailm.,  Concerning    the     right    of    factors 

§  180.    Rights  of  pledgor  and  pledgee.  and  agents  in  certain  cases  to  pledge 

Book    33,   N.    Y.    Rpts.,    Bender   ed.,  the  goods  of  their   principals,   there 

note,  p.  126.  are    numerous    decisions    which    we 

7.  Story  Bailm.,  §  29'!;  Jarvis  v.  need  not  particularly  examine.  The 
Rogers,  1'3  Mass.  105;  Schoul.  Bailm.,  strict  common-law  doctrine  is,  that  a 
§§  180-182.  factor  may  sell,  but  that  he  cannot 

594 


CHAP,  v.] 


DEBTS    SECUKED    BY    PLEDGE,    ETC. 


§  398a 


And  aside  from  the  peculiar  incidents  which  belong  to  negotiable 
instruments,  the  owner  of  stolen  or  misappropriated  chattels 
wrongfully  pledged  may  recover  them  from  even  a  bond  fide 
pledgee  without  refunding  what  the  latter  may  have  loaned  the 
wrong-doer.^ 

§  398a.     Trading  in  Stocks  on  Margin. 

One  common  form  of  pledge  arises  in  this  country  where  a 
customer  trades  on  margin  with  a  stockbroker's  firm ;  and  here 
if  the  broker  purchases  the  stock  for  the  customer  the  relation 
of  pledgee  and  pledgor  arises.^  If  the  stockbroker  then  mingles 
the  stock  with  other  stock  of  his  own  and  pledges  it  for  a  debt  of 
his  own,  this  constitutes  a  conversion,  and  is  a  complete  defence 
to  a  suit  by  the  stockbroker."*  In  many  States  statutes  have  been 
passed  intended  to  limit  in  various  ways  the  rights  of  the  brokers 
in  margin  transactions  by  making  them  illegal  as  wagering 
contracts  and  allowing  the  customer  who  has  been  sold  out  to 
recover  against  the  broker.^ 


pledge,  the  goods  of  his  principal  as 
security  for  his  own  debt,  whether 
by  indorsing  and  delivering  the  bill 
of  lading  or  by  delivery  of  the  goods. 
See  Story  Agency,  §  113,  and  n. ;  2 
Kent  Com.  625-628  and  n. ;  M'Com- 
bie  V.  Davies,  7  East,  5.  But  the 
modern  tendency  is  towards  placing 
factors  upon  the  usual  footing  of 
agents  in  this  respect.  The  English 
Factors'  Act  mitigates  the  rigor  of 
the  common-law  rule,  in  providing 
that  a  pledge  of  goods  by  a  factor, 
for  any  original  loan  or  advance,  or 
any  continuing  advance,  made  on  the 
security  of  the  goods,  shall  be  valid ; 
and  the  tendency  of  legislation  in 
this  country  is  towards  enlarging  the 
rights  of  the  hon&  fide  pledgee  of  any 
person  who  has  possession  of  mer- 
chandise or  a  bill  of  lading  with 
power  to  Bell.     See  Jones  Pledge,  §§ 


327-353;    Fuentis  v.   Montis.    L.   R.    4 

C.  P.  93;  L.  R.  4  Eq.  315;  Newbold 
V.  Wright,  4  Rawle,  195;  Sclioul. 
Bailm.,  §§  181-186;  Carter  v.  Wil- 
merding,  24  N.  Y.  521 ;  Henry  v, 
Philadelphia  Co.,  81  Penn.  St.  76. 
Ordinarily,  in  modern  times,  there 
is  no  substantial  difference  in  effect 
between  a  pledge  by  a  factor  who 
has  a  claim  for  advances  and  by  a 
pledgee.  First  Nat.  Bank  v.  Boyce, 
78  Ky.  42.  As  to  holding  property 
or  recouping  the  pledged  debt  against 
the  owner  in  certain  cases,  see  §  406, 
post. 

2.  Singer  Man.  Co.  v.  Clark,  5  Ex. 

D.  37;  Schoul.  Bailm.,  §  181. 

3.  Richardson   v.    Shaw,   209  U.    S. 
365.  28  S.  Ct.   512. 

4.  Sproul  V.  Sloan,  241  Pa.  284,  88 
Atl.  501.     See  post,  §  409' n. 

5.  See,    for    example,    Mass.    Rev. 
Laws,  c.  90,  §  4. 


59i 


§  399  THE  LAW  OF  PERSONAL  PKOPERTY.       [PART  IH. 

§  399.     Delivery  in  Pledge ;    Retention  of  Possession. 

That  the  pledged  property  should  be  delivered  to  the  pledgee  is 
for  obvious  reasons  a  cardinal  doctrine  in  the  law  of  pledge ;  and 
by  delivery  of  possession  we  mean  such  delivery  as  the  thing  is 
capable  of.  The  method  of  transferring  stock  and  other  species 
of  incorporeal  chattels  is  frequently  regulated  by  statute ;  and  our 
policy  in  this  country  is  in  some  States  to  discountenance  secret 
transfers  by  way  of  collateral  security,  where  the  effect  is  to  mis- 
lead creditors  and  other  third  parties  in  interest,  and  put  their 
interests  at  jeopardy.^  Furthermore,  it  is  essential  to  the  con- 
tract of  pledge  that  this  delivery  should  be  as  security  for  some 
debt  or  engagement.  Until  an  actual  transfer  of  possession  has 
taken  place,  either  of  a  visible  and  tangible  thing,  or  of  a  visible 
and  tangible  voucher  of  title  of  some  incorporeal  right,  there  is,  to 
speak  with  precision,  no  pledge,  no  bailment ;  but  rather  an  execu- 
tory pledge  contract  upon  sufficient  consideration  which  each  of  the 
pledge  parties  may  hold  the  other  bound  to  perform.^  For  under 
a  pledge  contract,  as  we  must  bear  in  mind,  there  is  no  transfer  of 
an  owner's  title,  as  in  the  case  of  sale  or  mortgage ;  nor  is  there 
a  registry  of  some  writing ;  but  the  essence  of  the  pledgee's  prefer- 
ence to  others  acquiring  bond  fide  rights  in  rem  consists  in  an 
apparent  transfer  of  possession  from  the  owner.^ 

An  essential  to  a  complete  delivery  of  the  thing  pledged  is  that 
the  pledgor  should  deliver  that  or  do  that  with  reasonable  expedi- 
tion which  enables  the  pledgee  to  take  and  effectually  control  the 
property.  Thus,  the  transfer  and  delivery  of  a  warehouse  key  or 
of  warehouse  receipts  may  suffice  as  a  constructive  delivery  of  the 
thing  deposited  there.  In  modem  times  advances  are  constantly 
made  by  way  of  pledge  upon  the  transfer  of  bills  of  lading  of 
goods  in  transit  by  land  or  water,  and  such  constructive  delivery 

6.  See   infra,   c.    9,    as    to    Stocks:  7.  Sehoul.     Bailm.,     §§     188.     189; 

Wilson  V.  Little,   2   Comst.   443;   Ex      Story  Bailm..  §   297:   City  Fire  Ib». 
parte  Boulton,  1  De  G.  &  J.  163;  City      Co.  v.  Olmsted,   33   Conn.   476. 
Fire   Ins.   Co.   v.   Olmsted,    33    Conn.  8.  Schoul.  Bailm,,  §  189. 

476;  Nevan  t.  Roup,  8  Clarke  (Iowa), 
207. 

596 


CHAP.  Y.]  DEBTS    SECURED    BY    PLEDGE,    ETC.  §    399 

is  considered  good.^  But  without  such  a  delivery  as  may  satisfy 
the  requirements  of  the  law,  and  particularly  as  regards  rights 
bond  fide  acquired  by  others  without  notice  of  a  pledge,  the  firmly 
established  doctrine  is  that  the  bailment  of  the  thing  does  not  fully 
take  place,  and  the  pledge  rests  in  little  or  nothing  more  than  an 
executory  contract.^  And  delivery,  to  be  eifective,  should  be  fol- 
lowed by  an  acceptance  of  possession.^  Wherever  property  is 
pledged  as  security  for  a  debt,  it  is  immaterial  whether  the  pledgee 
holds  the  property  or  some  third  person  holds  it  for  him.^  Of 
course,  if  the  pledgee  is  already  in  possession  of  the  thing,  there 
need  be  no  formal  delivery  to  him  in  security.'* 

While  a  symbolical  delivery  and  acceptance  in  pledge  is  strongly 
favored  by  modern  authorities,  and  especially  so  with  reference  to 
the  pledge  parties  themselves,  the  pledgee  ought  to  follow  any  such 
constructive  delivery  by  acts  evincing  the  intention  of  pursuing 
his  opportunities  to  make  the  corporeal  transfer  complete ;  for  a 
symbolized  transfer  stands  for  something  which  may  be  made  con- 
clusive.^ And  as  to  bills  of  lading,  he  should  consider  that,  not- 
withstanding the  modern  tendency  of  courts  and  legislatures  to 
treat  them  substantially  as  negotiable  in  many  respects,  they  are 
not  necessarily  negotiable  in  any  such  sense  as  to  make  his  rights 
secure  merely  because  he  has  become  a  bond  fide  holder  of  the 
instrument  on  good  consideration.^  The  element  of  seasonable 
notice  to  the  warehouseman,  or,  in  case  of  various  incorporeal 
instruments  to  the  fundholder  or  fundamental  debtor,  is  an  im- 

9.  Schoul.   Bailra.,   §   190;   Dows  v.  4.  Schoul.  Bailni.,  §  Iffl. 

Nat.   Exchanjre  Bank,   91   U.   S.   618;  5.  Schoul.  Bailm.,  §  190;  Barber  v. 

First  Nat.  Bank  v.  Kelly,   57  N.  Y.  Meyerstein,  L.  R.  4  H.  L.  317.    Where 

34;  Pettit  v.  First  Nat.  Bank,  4  Bush,  bills  of  ladinsr  are  issued  in  duplicate 

334.  or  triplicati*,  the  dan;?er  of  a  pledpee 

1.  2  Kent  Com.  580  and  n. ;  Story  who  does  not  promptly  present  his 
Bailm.,  §  297;  Whitney  v.  Tibbits,  bill  to  the  carrier  is  greater.  Clyn 
17  Wis.  359;  Cartwright  v.  Wil-  v.  East  India  Dock  Co..  7  App.  Cas. 
merding,   24   N.  Y.   521;    Atkinson  v.  59. 

Maling,  2   T.   R.   462.  6.  Shaw   v.    R.    R.    Co.,    101    U.    S- 

2.  Schoul.   Bailm.,   §  189.  557;   c.  8,  post. 

3.  Brown  v.  Warren,  43  N.  H.  430. 

597 


§  400  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

portant  one  to  make  the  pledgee's  security  complete/  There  is 
a  sufficient  delivery  where  a  company  stores  goods  in  its  own 
warehouse  under  the  provisions  of  a  federal  statute  giving  him  a 
right  to  store  them  there  under  federal  supervision  until  the  tax 
is  paid,  and  issues  warehouse  receipts  for  the  goods  which  it 
pledges.^  It  is  the  usual  rule  that  one  cannot  issue  warehouse 
receipts  for  goods  stored  in  his  own  warehouse,  and  then  make  a 
valid  pledge  of  the  receipts ;  as  there  is  no  delivery  of  possession,' 
but  the  court  holds  here  that  the  restrictions  on  transfer  imposed  by 
the  government  are  sufficient  to  take  the  place  of  a  change  of 
possession,  and  therefore  the  pledge  is  good. 

§  400.     The  Same  Subject. 

j^ow,  supposing  the  delivery  of  the  pledge  is  once  completed, 
and  possession  has  vested  in  the  pledgee,  what  will  be  the  effect 
of  his  delivering  the  thing  back  and  parting  with  its  possession? 
It  is  important,  in  such  event,  to  gather  from  the  circumstances 
what  was  the  pledgee's  intention  in  so  doing.  If  he  redelivers  the 
pledge  to  the  pledgor  for  a  temporary  purpose  only,  and  upon  the 
understanding  that  it  shall  be  returned,  or  in  order  that  something 
may  be  substituted  for  it ;  or  if  the  pledgor  wrongfully,  whether 
by  force  or  stratagem,  gets  possession  again  without  the  pledgee's 
acquiescence, —  wherever,  indeed,  as  a  fact,  the  pledgee  has  not 
redelivered  the  pledge  of  his  own  knowledge  and  consent  fully  and 
completely ;  the  pledgee  may  in  such  case  demand  and  recover  the 
pledge  again. ^  This  principle  is  illustrated  in  a  case  where  the 
pledgee  of  a  promissory  note  returned  it  under  an  agreement  that 
the  pledgor  should  return  it  or  another  note.^     N"or  is  property 

7.  Schoul.  Bailm.,   §   194.  v.    Davidson,    13    Gray,    465;    Schoul. 

8.  Taney  v.  Penn.  National  Bank,  Bailm.,  §  193.  The  pledgor  who  gets 
232  U.  S.  174,  34  S.  Ct.  288.  back  the  thing  with  felonious   intent 

9.  Thome  v.  First  National  Bank,  may  be  indicted  for  larceny.  Bruley 
37  Ohio  St.  254;  Yenni  v.  Mc-Namee,  v.  Rose,  57  Iowa,  651. 

45  N.  Y.  614.  2.  Way  v.  Davidson,  12  Gray,  465. 

1.  Walcott  V.  Keith,  2  Fost.  196;  And  see  Hays  v.  Riddle,  1  Sandf.  248. 
Robert  v.  Wyatt,  2  Taunt.  268;  Way 

598 


CHAP 


v.] 


DEBTS    SECURED    BY    PLEDGE,    ETC. 


§    400 


beyond  the  pledgee's  reach,  if  he  gave  it  back  to  the  owner  in 
some  new  character,  as  a  special  bailee  or  agent,  for  example.^ 
So  where  an  automobile  company  delivered  an  automobile  to  a 
creditor  by  way  of  pledge  and  the  creditor  immediately  returned 
it  and  stored  it  in  the  garage  of  the  debtor  for  the  purpose  of 
storage  and  demonstration,  the  creditor  may  sustain  the  pledge 
as  against  the  debtor's  trustee  in  bankruptcy.'*  But  whether, 
under  circumstances  like  these,  the  pledgee  can  follow  the  prop- 
erty into  the  hands  of  a  bond  fide  holder  for  value,  without  notice 
of  the  transaction,  to  whom  the  pledgor  had  meantime  transferred 
it,  is  quite  another  matter;  and  upon  this  point  the  authorities 
are  somewhat  at  conflict.^  However  this  may  be,  the  pledgee  cer- 
tainly loses  the  benefit  of  his  security,  whenever  by  a  complete 
out-and-out  delivery  back  to  the  pledgor  he  voluntarily  places  the 
property  beyond  his  own  reach ;  ^  and  by  wantonly  or  negligently 


3.  Macomber  v.  Parker,  14  Pick, 
437 ;  Thayer  v.  Dwight,  104  Mass. 
254;  7  Cow.  670;  Schoiil.  Bailm.,  § 
193. 

4.  Darragh  v.  Elliotte,  215  Fed. 
340. 

5.  See  Story  Bailm.,  §  299;  Reeves 
V.  Capper,  5  Bing.  N.  C.  136;  Boden- 
hammer  v.  Newsom,  5  Jones,  107; 
Schoul.  Bailm.,  §§   193-199. 

6.  Wliitaker  v.  Sumner,  20  Pick. 
399;  1  Atk.  165;  Day  v.  Swift,  48 
Me.  368;  Black  v.  Bogert,  65  N.  Y. 
601;  Schoul.  Bailm.,  §§  201-203; 
Casey  v.  Caveroc,  96  U.  S.  467. 

Two  leading  conclusions  may  be 
drawn  from  the  modern  precedents 
as  to  pledge  delivcrj'  and  retention 
of  possession.  (1.)  That  in  the 
growing  complexity  of  commercial 
and  mercantile  transactions,  with  so 
many  new  classes  of  incorporeal 
rights  coming  into  the  list  of  things 
personal,  the  disposition  increases  to 
apply  to  all  chattel  transfer  the  test 


of  mutual  intent;  so  that  the  English 
and  American  courts,  while  abating 
little  of  the  theory  that  a  change  of 
possession  must  attend  every  pledge 
transaction,  have  come  to  swerve  very 
far  from  it  in  practice.  (2.)  That, 
with  the  present  laxity  of  construc- 
tion, pledge  delivery  seems  to  com- 
port itself  differently  under  three 
leading  aspects:  (a)  as  between  the 
pledge  parties  themselves;  (b)  as  be- 
tween the  pledge  parties  and  the  pub- 
lic or  the  pledgor's  general  creditors; 
(c)  and  as  between  phxlge  parties 
and  those,  like  a  pledgor's  attaching 
creditors  or  purchasers,  who  acquire 
intervening  rights  in  rem  without 
notice.  In  this  connection,  the  ele- 
ment of  notice  to  the  debtor  or  fund- 
holder  is  further  of  conseqtience.  In 
general,  we  may  add,  the  position  of 
a  pledgee  is  far  less  favorable  for 
maintaining  his  cause  where  he  is 
out  of  full  jwrsonal  control  and  must 
take  the  offensive,  than  where  he  has 


)99 


§  400 


THE  LAW  OF  PERSONAX,  PROPERTY. 


[part  III. 


abandoning  possession  to  any  third  person  and  failing  to  assert  his 
pledge  rights  against  others,  when  it  was  proper  to  do  so,  he  may 
likewise  be  debarred  of  the  advantage  of  a  pledgee.''     The  fact  of 


such  control  and  has  only  to  defend. 
Schoul.  Bailm.,  §§   201,  202. 

7.  Schoul.  Bailm.,  §§  201-203; 
Whitaker  v.  Sumner,  20  Pick.  399; 
Treadwell  v.  Davis,  34  Cal.  601;  5 
Humph.  308.  Cf.  Arendale  v.  Mor- 
gan, 5  Sneed,  703. 

Pledge  of  savings-hank  book  by 
delivery  with  suitable  intention  may 
be  sufficient  as  amounting  to  an 
equitable  assignment.  Taft  v.  Bow- 
ker,  133  Mass.  277.  The  modern 
laxity  of  this  rule  of  assignment,  as 
compared  with  the  old  common  law 
concerning  incorporeal  personalty, 
has  elsewhere  been  noticed  at  length. 
Supra,  §§  72-80.  The  various  kinds 
of  incorporeal  personalty  are  treated 
somewhat  differently  in  different 
States.  Thus,  stock,  in  order  to  be 
fully  protected  as  collateral  security, 
must,  under  some  statutes,  be  trans- 
ferred on  the  books,  and  suitable 
certificates  issued.  But  in  some  other 
States  a  certificate  of  stock  with 
blank  indorsements,  &c.,  affords  sub- 
stantially full  indicia  of  pledge  title. 
See  Cherry  v.  Frost,  7  Lea,  1;  Fac- 
tors' Ins.  Co.  V.  Marine  Co.,  31  La. 
Ann.  149.  Bills  of  lading  give  rise 
to  many  decisions.  See  chapter  8, 
post.  But  it  by  no  means  follows 
that,  because  the  instrument  is  in  a 
sense  negotiable,  all  the  favorable 
consequences  of  possession  as  against 
third  parties  must  ensue.  Shaw  v. 
Merchants'  Bank,  101  U.  S.  557.  And 
see,  as  to  the  effect  of  incomplete  de- 
livery or  failure  of  possession,  Dunn. 
V.  Meserve,  58  N".  H.  429.  Cf.  Holmes 
V.  Bailey,  92  Penn.  St.  57.      Season- 


able notice  to  the  fundholder  or 
debtor  is  an  important  element  in 
completing  a  delivery  and  retention 
of  possession  as  against  third  parties. 
People's  Bank  v.  Gayley,  92  Penn. 
St.  518.  And  such  is  the  rule  in  as- 
signments generally.  Supra,  §§  78, 
79.  So  applied  in  England  where  a 
bond  fide  delivery  was  made  under 
one  bill  of  lading,  where  the  old  cus- 
tom (not  to  be  commended  for 
modern  dealings)  prevailed  of  mak- 
ing out  such  bills  in  triplicate,  and 
the  pledgee  who  took  one  of  the  three 
in  security  failed  to  notify  the  car- 
rier of  his  rights.  Glyn  v.  East  India 
Dock  Co.,  7  App.  Cas.  591;  s.  c.  6 
Q.  B.  D.  475. 

Delivery  is  especially  essential  to 
the  validity  of  a  parol  pledge.  18 
Hun,  187.  And  in  the  case  of  cor- 
poreal property,  as  compared  with 
certain  kinds  of  incorporeal,  the 
necessity  as  against  bona  fide  third 
parties  of  keeping  and  retaining  pos- 
session, and  not  voluntarily  permit- 
ing  the  pledgor  to  take  and  use  the 
thing  as  owner,  is  still  strongly  as- 
serted in  the  latest  cases.  Sieden- 
bach  V.  Riley,  111  N.  Y.  560;  19  N. 
E.  275;  Thompson  v.  Dolliver,  132 
Mass.  103.  Where  a  pledgee  was  in- 
duced by  fraud  to  let  the  pledgor 
have  temporary  possession,  and  the 
latter  pledged  them  elsewhere,  it  was 
recently  held  that  though  the  pledgee 
might  have  compelled  their  return, 
yet  the  transfer  meantime  to  a  bond 
fide  third  party  for  value  obstructed 
his  claim.  Babcock  v.  Lawson.  5 
Q.   B.   D.   384;    Kellogg  v.   Tompson, 


600 


CHAP,  v.]  DEBTS    SECURED    BY    PLEDGE,    ETC.  §    401 

a  redelivery  or  repossession  of  the  pledge  is  not  therefore  con- 
clusive, but  remains  open  to  explanation.^ 

§  401.     Duty  of  Pledgee  as  to  Taking  Care  of  the  Pledge,  etc. 

The  situation  of  the  parties  to  a  pledge,  pending  the  maturity 
of  the  debt  which  it  was  given  to  secure,  is  next  to  be  considered. 
By  reason  of  delivery  the  pledged  property  is  now  in  the  pledgee's 
keeping;  and,  being  in  his  keeping,  he  is  bound  to  exercise  ordi- 
nary care,  as  in  any  bailment  for  mutual  benefit,  and  is  answer- 
able for  negligence  to  a  corresponding  extent.  This  is  the  rule 
of  the  civil  law  and  of  Continental  Europe,  as  well  as  that  of  the 
common  law;  and  by  none  of  those  systems  is  the  pledgee's  lia- 
bility carried  further.^  It  was  observed  in  an  old  case :  "  If  a 
man  bails  me  goods  to  keep,  and  I  put  them  among  my  own,  I 
shall  not  be  charged  if  they  be  stolen."  ^  And  Sir  William  Jones 
thinks  that  a  distinction  should  be  drawn  between  the  taking  of 
the  pledge  by  robbery  and  stealing  or  the  taking  by  stealth;  and 
while  he  admits  that  in  the  former  instance  a  pledgee  is  not 
chargeable,  in  the  latter  instance  he  considers  that  the  responsi- 

142  Mass.  76.      Cf.  Moors  v.  Wjonan,  v.  Dolliver,   132  Mass.   103;   Casey   v. 

146    Mass.    60,    15    N.    E.    104     (as  Caveroc,  96  U'.  S.  467.      By  vigilance 

against  general    creditors,   where   the  and  seasonable  notice  of  his  claim  to 

pledgor  goes  into  insolvency)  ;   [1895]  third  parties  before  they  acquire  ad- 

App.   56.  verse     claims    upon    the    thing,    the 

What     complicates      the      rule     of  pledgee  may   preserve   his   rights   un- 

pledge  delivery  and  retention  of  pos-  impaired,  even   though   not   retaining 

session   greatly   is   the  doctrine,   now  strict     personal     possession     thereof. 

well    established,    that    the    agent    to  Palmtag    v.    Doutrick,    59    Cal.    154; 

keep    and    hold     possession    for    the  Carrington  v.  Ward,  71  N.  Y.  360. 

pledgee  may   be  the   pledgor  himself.  8.  Macoinber    v.    Parker,    14    Pick. 

Martin   v.  Reid,  11   C.   B.  N.   s.  730;  497;  Reeves  v.  Capper,  5  Bing.  N.  C. 

Parshall    v.    Eggert,    54    N.    Y.    18.  136;     Cooper    v.     Ray,     47     Til.     53; 

But  this  doctrine  must  be  understood  Schoul.  Bailm..   §§  204,  205. 

aa  subject  to  limitations   with   refer-  9.  2  Kent  Com.   578;   2  Ld.   Raym. 

ence  to  third  persons  misled  in  cen-  916;   Dig.  13,  6,  5,  2;  Story  Bailm., 

sequence    and    attaching    or    making  §   332. 

!>o»i<i /«Ze  advances  without  knowledge  1.  Year    Book,    29    lib.    assis.    28; 

of     the     pledgee'si     rights.        Schoul.  Bro.  Abr.  Bailment,  pi.  7. 
Bailm.,    §    193.       And    see   Thompson 

601 


§  401  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

bilitj  exists.^  These  are  false  tests  upon  any  true  conception  of 
bailment  law,  and  the  views  of  Judge  Story  and  Chancellor  Kent 
on  this  point  are  decidedly  preferable;  being  in  effect,  that  theft 
per  se  establishes  neither  responsibility  nor  irresponsibility  in  the 
bailee;  and  that  the  true  question  in  any  case  of  this  sort,  as  in 
other  bailments  of  the  same  class,  is  whether,  in  view  of  all  the 
circumstances,  there  was  culpable  negligence,  or,  in  other  words, 
the  failure  on  the  pledgee's  part  to  exercise  due  or  ordinary  care.'' 
It  certainly  appears  quite  reasonable,  if  a  loss  occurs,  to  presume 
against  the  pledgee,  and  to  require  of  him  an  explanation  at  least 
of  his  failure  to  produce  in  safety,  on  accomplishment  of  the 
pledge  undertaking,  the  property  which  had  been  so  exclusively 
within  his  own  keeping;  but  the  explanation  once  given,  and  the 
facts  making  it  appear  that  the  pledgee  exercised  ordinary  care, 
he  is  no  longer  to  be  treated  as  liable  for  the  loss."*  So,  too,  if  the 
pledge  be  lost  by  casualty,  or  unavoidable  accident,  or  by  superior 
force,  or  if  it  perishes  from  some  intrinsic  defect  or  weakness,  or 
naturally,  and  the  loss  from  such  cause  be  duly  made  to  appear, 
and  no  act  was  done  or  omitted  to  be  done  inconsistent  with  the 
pledgee's  duty,  so  that  he  did  not  contribute  to  or  proximately 
cause  the  loss,  the  pledgee  is  not  answerable.^ 

2.  Jones  Bailm.   75.  dered    the    pledgee    liable    under    the 

3.  See  Story  Bailm.,  §§  334-338;   1      usual  bailment  rule. 

Co.   Inst.   Sffa,   which  is  criticised   in  4.  See  ib.      Story  and  Kent  differ 

part  by  Story;  2  Kent  Com.  580.  581;  somewhat  on   the  que&tion   of  a  pre- 

Schoul,  Bailm.,  §§  204,  205,  and  cases  sumption  of  carelessness.     As  to  civil 

cited;   Abbett  v.   Frederick,   56   How.  law  rule,  see  Pothier  Traite  du  Con- 

Pr.   68    (a  good  case  in  point).      A  trat    de    Nantissement,    n.    31.      See, 

pledgee  who  damaged  a  pledge  is  lia-  also,  Schoul.  Bailm.,  §  205. 

ble  therefor,   like  any   one   else  who  5.  Pothier,    supra;    Story    Bailm., 

has  a  special  property  in  goods  with  §  339;  2  Ld.  Raym.  909;  2  Kent  Com. 

a   lien    and    fails    to   exercise   proper  579;    Scott   v.   Crews,   2   S.    C.    N.   s. 

diligence;    but    he    does    not    thereby  522;  Erie  Bank  v.  Smith  &  Randolph, 

forfeit   the   security   nor   the   secured  3   Brewst.   9;    Schoul.  Bailm.,   §   204; 

debt.     Thompson  v.  Patrick,  4  Watts,  Girard    Fire    Ins.    Co.    v.    Marr,    46 

414.     See   Ouderkirk  v.   Central  Nat.  Penn.   St.    504;    Petty   v.   Overall,   42 

Bank,  119  N.  Y.  263,  4  N.  Y.  S.  734,  Ala.  145. 

where    want    of    ordinary    care    ren-  Ordinary     care     or     diligence     be- 

602 


CHAP,  v.] 


DEBTS    SECURED    BY    PLEDGE,    ETC. 


§  401 


The  nature  of  the  suit  might  cause  a  difference  in  the  method 
of  proof  requisite  to  shift  the  responsibility  from  the  pledgee's 
shoulders,  and  in  any  case  the  presumption  might  shift  from  either 
party  to  the  other,  or  back  again ;  and  we  may  well  remember  that 
whether  ordinary  care  was  exercised  is  a  question  of  fact,  and 
that  the  want  of  it  may  be  shown  by  acts  of  omission  as  well  as  of 
commission ;  at  the  same  time  bearing  in  mind  that  any  one  who 
sues  another  for  negligence  has  the  general  burden  of  proving  it.^ 

It  may  be  added  that,  in  employing  his  own  agents  about  the 
pledge,  the  pledgee  is  answerable  like  other  bailees,  within  the 
usual  rules  of  principal  and  agent,  for  their  negligence/  And 
doubtless  every  pledgee  is  bound  to  observe  good  faith  and  honor 
towards  the  thing  entrusted  to  his  keeping.^ 


stowed  by  a  pledgee  relates  mainly 
to  custody.  But  sometimes  the 
pledge  undertaking,  from  its  nature 
and  the  circumstances,  requires  such 
other  acts  as  colljcting  pledged 
negotiable  instruments  on  maturity, 
presentment  so  as  to  charge  an  in- 
dorser,  undertaking  to  realize  on 
book  debts  as  security,  &c.  So,  too, 
in  making  a  sale  on  default  and 
otherwise  realizing,  this  legal  stand- 
ard of  mutual-benefit  bailments  finds 
an  appropriate  application.  See 
Schoul.  Bailm.,  §§  206-208.  And  see 
Lamberton  v.  Windom,  12  Minn.  232; 
Lawrence  v.  McCalmont,  2  How.  426; 
Wells  V.  Wells,  53  Vt.  1.  In  such 
cases  ordinary  care  does  not  require 
the  pledgee,  without  his  own  special 
agreement  to  that  cfl'ect,  to  spend  his 
money  on  litigation  over  defaulted 
notes,  stubborn  debis,  and  the  like; 
but  rather  to  go  far  enough  to  test  a 
fair  collection  and  leave  further  pro- 
ceedings under  the  security  open  for 
mutual  contract,  or  abandonment  on 


his  own  part.  For  a  bank  as  pledgee 
to  neglect  presentment  of  a  note  so  a6 
to  charge  the  indorser  is  want  of 
ordinary  care.  Chemical  Nat.  Bank 
V.  Arm.strong,  50  Fed.  798.  Supine 
negligence  in  collecting  coupons  or 
in  allowing  debts  to  get  outlawed 
may  also  charge  the  pledgee.  Whit  in 
V.  Paul,  13  R.  I.  40;  Semple  Co.  v. 
Detweiler,  30  Kan.  386. 

6.  See  Storj-  Bailm.,  ib. ;  Beardslee 
V.  Richardson,  11  Wend.  25;  Marsh 
V.  Home,  5  B.  &  Cr.  322;  Tompkins 
V.  Saltmarsh,  14  S.  &  R.  275.  As  to 
this  shifting  of  the  burden  of  proof 
in  bailment  suits,  which  sometimes 
involves  very  delicate  distinctions, 
see  Schoul.  Bailm.,  §  23. 

7.  Schoul.  Bailm.,  §  209;  Andros- 
coggin R.  V.  Auburn  Bank,  48  Mo. 
335. 

8.  Coggs  V.  Bornnrd,  2  Ld.  Rayni. 
909;  Schoul.  Bailm.,  §§  209,  210; 
Story  Bailm..  §  341.  But  see  §  404, 
post,  as  to  sub-pledge  or  wrongful 
transfer  by  a  pledgee. 


003 


§  402 


THE  LAW  OF  PERSONAL  PEOPEETT, 


[part  in. 


§  402.     Whether  Pledgee  May  Use  the  Pledge. 

Another  important  inquiry,  in  this  connection,  concerns  the 
extent  to  which  the  pledgee  may  make  use  of  the  thing  pledged  to 
him.  Judge  Story,  relying  largely  upon  the  older  decisions  and 
dicta,  sums  up  the  law  in  five  propositions,  which  are  founded  in 
the  presumed  intent  of  the  pledgor.^  But  such  a  statement  of  the 
law  might  appear,  in  these  days,  not  quite  consistent  with  reason, 
unless  accepted  with  qualifications.  Thus,  Chancellor  Kent  evi- 
dently thinks  that  profits,  if  any,  should  be  applied  towards  the 
indebtedness.^  Such  discussions  seem  unprofitable  for  practical 
application  and  we  apprehend  they  becloud  the  true  principle  of 
the  bailment. 

In  modem  times  the  pledge  transaction  has  become  too  impor- 
tant to  be  determined  by  petty  instances.     And  on  the  whole,  the 


9.  (1.)  If  the  pledge  is  of  such  a 
nature  that  the  due  preservation  of  it 
requires  some  use,  such  use  is  not 
only  justifiable,  but  it  is  indispen- 
sable to  the  faithful  discharge  of  the 
pledgee's  duty.  (2.)  If  the  pledge 
would  be  worse  for  the  use,  as  the 
wearing  of  clothes  which  are  depos- 
ited, its  use  is  prohibited  to  the 
pledgee.  (3.)  If  the  pledge  is  such 
that  its  keeping  is  a  charge  to  the 
pledgee,  the  pledgee  may  use  it  by 
way  of  recompense  (aS  they  say)  for 
the  keeping.  (4.)  If  the  use  will  be 
beneficial  to  the  pledge,  or  it  is  in- 
different, there  it  seems  that  the 
pledgee  may  use  it;  as  if  the  pledge 
is  of  a  setting  dog,  it  may  well  be 
presumed  that  the  owner  would  con- 
sent to  the  dog's  being  used  in  part- 
ridge shooting,  and  thus  confirmed  in 
the  habits  which  make  him  valuable. 
(5.)  If  the  use  will  be  without  any 
injury,  and  yet  the  pledge  will 
thereby  be  exposed  to  extraordinary 
perils,  the  use  is  by  implication  inter- 


dicted. Story  Bailm.,  §§  329,  330, 
citing  Coggs  v.  Bernard,  2  Ld.  Raym. 
909,    917. 

1.  See  2  Kent  Com.  578;  Thomp- 
son V.  Patrick,  4  Watts,  414;  Jones 
Bailm.,  81.  And  though,  in  the  old 
case  of  a  cow,  it  was  held  that  the 
pledgee  might  milk  the  cow  and  use 
the  milk,  this  was  probably  on  the 
.supposition  that  it  no  more  and  no 
less  than  compensated  for  the  care 
of  the  animal  and  keeping  it  in! 
health ;  and  any  justification  of  the 
principle  beyond  this  can  only  be  on 
the  ground  that  in  trivial  matters  it 
is  not  well  to  try  to  be  too  precise. 
See  Schoul.  Bailm.,  §§  211,  212,  for 
further  comments  upon  Story  Bailm., 
§§  323,  330.  As  to  others  of  the 
above  propositions,  and  particularly 
the  second,  it  should  be  said  that  the 
line  cannot  in  fairness  be  strongly 
drawn  between  things  which  would 
be  and  things  which  would  not  be 
injured  by  the  use. 


604 


CHAP,  v.]  DEBTS    SECURED    BY    PLEDGE,    ETC.  §    403 

pledgee's  right  to  use  a  pledge  rests,  as  we  thiiik,  on  the  presumed 
reasonable  intention  of  the  parties  and  to  some  extent  upon  the 
custom  of  the  times;  the  general  principle  being,  after  all,  that 
the  pledge  is  but  a  security  for  the  pledgor's  debt  or  engagement, 
not  a  thing,  on  the  one  hand,  to  cause  the  pledgee  extraordinary- 
charges,  nor,  on  the  other  hand,  to  give  him  any  substantial  profit 
in  the  mere  keeping;  but  that  in  the  one  case,  on  a  final  reckon- 
ing, the  credit  goes  to  the  pledgee  and  in  the  other  to  the  pledgor. 
If  the  pledge  consist  in  good  stock,  or  other  valuable  securities 
yielding  dividends  and  profits,  or  in  a  herd  of  cattle,  the  pledgee 
certainly  cannot  avail  himself  of  the  dividends  or  profits  save  as 
in  discharge  pro  tanto  of  the  debt,  and  the  interest,  if  any,  which 
accrues  thereon,  and  proper  charges,  or  other  satisfaction  of  the 
pledge  undertaking.^ 

§  403.     Right  of  Pledgee  to  Sue  Third  Parties,  Assign,  Transfer, 
etc. 

As  to  the  special  property  in  the  pledge  by  virtue  of  the  bail- 
ment, we  may  observe  further  that  the  pledgee  has  the  right  to  sue 
mot  only  third  persons,  but  the  owner  himself,  if  need  be,  for 
wrongfully  invading  his  possessory  rights,  and  that  he  may  recover 
by  replevin  or  for  damages.  The  measure  of  damages  in  a  suit 
against  third  persons  is  the  full  value  of  the  pledge,  and  not  merely 
the  pledgee's  own  interest,  since  his  ultimate  liability  to  the  OAvner 
is  for  the  whole  pledge ;  ^  but  as  against  the  pledgor  and  those  in 
privity  with  him,  only  his  special  interest  as  pledgee.'* 

It  is  likewise  an  admitted  principle  that  the  pledgee  may  assign 


2.  See  Schoul.  Bailm.  198;  Andros 
•ogjrin  R.  v.  Auburn  Bank,  4S  Me 
335.  The  pledgee  of  stock  may  col 
lect  and  apply  dividends  to  the  debt 
eaty  V.  HoUiday,  8  Mo.  App.  118 
And    see    as    to    coupons,    Whitin    v 


Mass.  515;  Harkcr  v.  Dcmont,  '.)  Gill, 
7;  Swire  v.  Ix!ach,  18  C.  B.  N.  S.  479; 
Schoul.  Bailm.,  §  217;  L.  R.  3  P.  C. 
548;  1  Kerr,  N.  B.  150;  United 
States  Express  Co.  v.  Meinto,  72  111. 
293. 


Paul,  13  R.  I.  40.  4.  Treadwell  v.  Davis,  34  Cal.  601 

3.  Story    Bailm.,    §    303:    2    Kent  Brownell    v.    Hawkins.    4    Barb.  491 

Com.   585;   Donald  v.  Suckling:,  L.  R.  Benjamin    v.    Stremple,    13    111.  46« 

1  Q.  B.  585;  Adams  v.  O'Connor,  100  Schoul.  Bailm.,  §  ai7. 

605 


§  403         THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

over  the  pledge  (unless  in  special  cases  where  the  transaction  is  of 
a  personal  nature)  in  order  that  the  assignee  may  take  it  subject 
to  all  the  responsibilities  under  the  original  pledge  transaction ; 
or  he  may  deliver  it  into  the  hands  of  a  stranger  for  safe  custody ; 
or  he  may  convey  his  interest  conditionally  by  way  of  pledge  to 
another  person ;  in  all  of  which  cases  his  security  is  not  destroyed 
or  impaired.^  The  right  is  here  more  liberally  conceded  by  the 
law  than  in  the  case  of  a  mere  lien  claimant.  But  any  such  act 
on  the  pledgee's  part  is,  of  course,  subject,  properly  speaking,  to 
all  the  original  restrictions;  for  to  attempt  to  pledge  property 
beyond  the  pledgee's  own  demand,  or  to  make  a  transfer  as  though 
he  were  the  absolute  owner,  is  regarded  as  a  breach  of  trust  and 
a  fraud  upon  the  original  pledgor;  so  that  the  pledgee's  creditor 
can  in  general  acquire  no  title  in  the  property  beyond  that  of  the 
original  pledgee  himself.^  The  question  whether  an  innocent 
pledgee  from  a  fraudulent  pledgor  is  liable  for  conversion  in  deal- 
ing with  the  property  depends  on  whether  he  has  assumed  to  assert 
dominion  over  it;  and  thus  a  repledging  of  the  goods  even  by 
order  of  the  fraudulent  pledgor  is  held  to  be  such  an  act  of  domin- 
ion as  to  render  him  liable  to  the  rightful  owner.^  The  conse- 
quences, as  concerns  third  persons  acting  bond  fide,  may  be  more 
sweeping,  in  debarring  the  pledgor  from  pursuing  the  thing,  it  is 
true,  when  the  pledged  property  consists  of  negotiable  paper,  or 
perhaps  of  certain  quasi  negotiable  securities ;  this  on  principles 
sufficiently  indicated  elsewhere.^ 

5.  Story  Bailm.,  §§  322-324  ;  vol.  2,  part  iv.,  c.  1.  The  general  rule 
WMtaker  v.  Sumner,  20  Pick.  399;  as  to  negotiable  instruments  is,  that 
Mores  v.  Conham,  Owen,  123;  2  Kent  one  acquiring  title  hona  fide  without 
Com.  579 ;  Shelton  v.  French,  33  notice  of  infirmity  and  on  valuable 
Conn.  489;   Schoul.  Bailm.,  §  218.  consideration    is    to    be    protected    in 

6.  lb.  And  see  Belden  v.  Perkins,  his  rights,  even  though  the  things 
78  111.  449 ;  Ashton's  Appeal,  73  came  to  him  through  some  wrongful 
Penn.  St.  153;  Van  Blarcom  v.  transfer,  and  even  though  they  were 
Broadway   Bank,   37   N.   Y.    540.  stolen  from  the  true  owner.     lb.      As 

7.  Varney  v.  Curtis,  213  Mass.  309,  to  overdue  paper  or  an  instrument 
100  N.  E.  650.  whose  negotiability  appears  restricted 

8.  See  Bills  and  Notes,  c.  7,  infra,  on  inspection,  it  is  otherwise.     Ev«n 

606 


CHAP,  v.]  DEBTS    SECUKED    BY    PLEDGE,    ETC.  §    404 

§  404.     The  Same  Subject. 

But  according  to  many  of  the  American  cases  which  follow 
English  precedents,  the  pledgee's  transfer  in  breach  of  trust  does 
not  necessarily  so  impair  his  security  as  to  give  the  pledgor  a  right 
to  reclaim  the  thing  on  other  or  better  terms  than  before  the  trans- 
fer, and  regardless  of  what  he  owed.  Particularly  is  this  true 
where  the  breach  of  trust  appears  rather  a  technical  one  than  with 
a  wholly  wrongful  intent;  as  if  a  pledgee  should  merely  sub- 
pledge  or  assign  over  for  a  greater  amount  than  was  due  him ; 
and  the  rule  is  thus  far  applied  with  especial  reference  to  things 
easily  replaced  in  kind,  like  marketable  stocks  and  bonds,  and 
where,  too,  the  third  party  was  not  an  intentional  wrong-doer.  A 
pledgee's  over-dealing  with  the  pledge  appears  thus-  to  be  regarded, 
conformably  to  the  convenient  modern  practice  of  recouping  dam- 
ages in  a  suit,  not  as  utterly  annihilating  the  pledge  contract  nor 
as  extinguishing  his  interest  in  the  chattel,  but  so  that  the  pledgor 
must  tender  satisfaction  of  the  pledge  before  he  can  recover  posses- 
sion from  any  such  third  person  for  value  to  whom  the  pledgee 
may  have  transferred  it.^  Tlu^  i-ule  is,  however,  to  be  cautiously 
asserted;  for  there  are  some  chattels,  as,  for  instance,  valuable 
paintings,  whose  pledge  might  not  properly  carry  an  implied  right 
of  assigning  custody  at  all  to  strangers  without  the  pledgor's  per- 
mission; ^  and  it  is  still  barely  possible  that  in-  a  tortious  dealing 
by  the  pledgee  utterly  inconsistent  with  his  undertaking,  and  with 
the  third  person  in  collusion,  the  pledge  contract  might  be  held  as 

as    to    qunsi    negotiable    instruments,  585;  Johnson  v.  Stear,  15  C.  B.  N.  S. 

like  a  bill  of  ladin-,',   the  favor  thus  338.      This   is  the  declared  American 

accorded  to  the  bond  fide  possessor  is  rule   in   various   instances.      Talty  v. 

no   u&ually   allowed.       Shaw   v.    Mer-  Freedman'a    Savings    Co.,    93    U.    S. 

chants'    Bank,    101    U.    S.    557.       See  321;  Jarvis  v.  Roprers,  15  Mass.  389; 

§  471.     And  if  the  third  party  bought  Lewis  v.  Mott,  36  N.  Y.  395;   Belden 

or   advanced  upon  the  negotiable   in-  v.     Perkins.     78     111.     449;      Schoul. 

strument  with   due  notice  of  the  in-  Bailm.,    §    219;    First   Nat.    Bank   v. 

firmity  of  the  title,  or  if  he  received  Boyce,  78  Ky.  42. 
it    as   a   gift,   he   fails   of    protection  1.  Cockbum,  C.  J.,  and  Blackbiirn, 

within  the  rule.      lb.  J.,  in  Donald  v.  Suckling,  L.  R.  1  Q. 

9.  Donald  v.  Suckling,  L.  R.  1  Q.  B.  B.   585,  615,  618. 

007 


§  406  THE  LAW  OF  PERSONAL  PROPEKTY.       [PART  III. 

terminated  in  such  a  sense  that  the  whole  bailment  security  would 
be  wholly  lost.^ 

§  405.     Pledgor's  Right  to  Transfer  His  Own  Interest,  etc. 

The  pledgor  has  rights,  too,  with  reference  to  the  pledged  prop- 
erty. He  may  sell  or  assign  -his  own  interest  in  the  pledge,  sub- 
ject to  the  pledgee's  rights,  in  which  case  the  vendee  will  stand  in. 
the  pledgor's  place  and  can  redeem  the  pledge  and  hold  the  pledgee 
to  account.^  So  may  he  pledge  and  then  mortgage  the  thing ;  the 
effect  being  to  make  the  mortgage  a  junior  incumbrance  on  the 
title,  somewhat  analogous  to  a  second  mortgage  of  real  estate.'* 
At  the  common  law,  goods  pawned  or  pledged  and  in  the  pledgee's 
suitable  possession  are  not  liable  to  execution  in  an  action  against 
the  pledgor,  so  long  at  least  as  the  pledgee's  title  remains  unextin- 
guished; nor,  under  like  circumstances,  to  distress  for  the 
pledgor's  own  debt.  But  in  some  parts  of  the  United  States  there 
are  statutes  which  give  to  an  attaching  or  execution  creditor  the 
right  to  the  proceeds  of  a  pledge  to  the  extent  of  the  pledgor's 
right  to  a  surplus  after  satisfying  the  pledge.^  A  pledgor's  bank- 
ruptcy or  insolvency  does  not  of  itself  impair  the  pledgee's  secu- 
rity; ^  nor  does  his  death. ^ 

§  406.     True  Owner's  Rights  Where  the  Pledge  Was  Wrongful. 

On  the  general  principle  of  bailments  there  can  be  no  valid 
pledge  or  transfer  of  title  as  against  the  true  owner  of  a  thing,  who 
has  not  personally  or  by  agent,  expressly  or  by  implication,  as- 
sented to  the  transaction.     A  bailee's  mere  possession  of  goods  gives 

2.  lb.  Reichenbach  v.  McKean,  ffS  Penn.  St. 

3.  a  Kent  Com.  579;  Franklin  v.  432;  Ange  v.  Variol,  31  La.  Ann.  865. 
Neate,  13  M.  &  W.  481;  Schoul.  See  Lamberton  v.  Windom,  12  Minn. 
Bailm.,  §  220;  Story  Bailm.,  §§  350,  232;  Lawrence  v.  McCalmont,  2  How. 
353;  Goss  v.  Emerson,  3  Fost.  38.  426;  Schoul.  Bailm.,  §  221. 

4.  Sanders  v.  Davis,  13  B.  Mon.  6.  Halliday  v.  Holgate.  L.  R.  3  Ex. 
432.  2&9;  Yeatman  v.  Savings  Institution, 

5.  Swire  v.  Leach,  18  C.  B.  rr.  s.  95  U.  S.  764;  Schoul.  Bailm.,  §  222. 
479;  Stief  v.  Hart,  1  Comst.  30;  7.  Bennett  v.  Stoddard,  58  Iowa 
Pomeroy    v.     Smith,     17     Pick.     85;  654. 

608 


CHAP,  v.]  DEBTS    SECUEED    BY    PLEDGE,    ETC.  §    407 

him  no  power  to  pledge  them  for  his  own  debt  or  engagement  and 
as  his  own,  without  actual  authority  from  the  owner;  and  whether 
by  wrongful  sale  or  pledge,  personal  property  is  not  to  be  held  by 
transfer  at  common  law  as  against  the  true  owner,  without  his 
assent,  however  incapable  of  repudiation  might  be  the  transaction 
as  between  the  parties  themselves.  Hence  the  true  owner  may, 
if  seasonable  and  consistent  in  his  efforts,  recover  his  chattel  which 
another  has  wrongfully  pledged  without  his  permission;  and  as 
against  him,  the  pledgee  acquires  no  title,  though  he  had  dealt 
bo7id  fide  with  the  pledgor.^  Nevertheless  the  rule  of  a  bond  fide 
holder  for  value  without  notice  protects  the  pledgee  of  negotiable 
instruments  who  can  bring  himself  within  that  exception.'  And 
in  various  other  modern  instances  the  bond  fide  pledgee  of  other 
incorporeal  instruments,  like  stock  or  bills  of  lading,  has  been  per- 
mitted to  hold  his  security  on  the  ground  that,  of  two  innocent 
persons,  he  should  suffer  who  has  held  out  another,  by  indorsement 
or  assignment  in  blank,  with,  the  full  indicia  of  title  as  his  appar- 
ent agent. ^  And,  furthermore,  it  seems  fair  in  modern  practice, 
that  any  bailee  having  a  lien  on  the  thing  for  his  own  charges  or 
advances  should  be  permitted  to  assign  to  the  extent  of  his  own 
interest,  and  that  even  in  case  of  his  overdealing  this  right  of  lien 
should  be  recognized.^ 

§  407.     Remedies  of  Pledgee  on  Default  of  Pledgor. 

We  now  reach  that  period  where  the  debt  comes  due  which  the 
pledge  was  meant  to  secure.  At  the  common  law  a  pledge  does 
not  become  the  absolute  property  of  the  pledgee  if  it  fails  of  being 

8.  Sinfier  Man.  Co.  v.  Clark,  5  Ex.  more  so  that  in  eome  Stati'S  a  blank 
D.  37:  Cooper  v.  Willomatt,  1  C.  B.  indorsi'ment  or  assiprnmont  of  such 
672;  Gottlieb  v.  Hartman,  .3  Col.  53;  property  does  not  give  the  holder  the 
Branson    v.    Heckler,    22    Kan.    610;  full  legal  indicia  of  title. 

Small  V.  Robinson,  69  Me.  425.  As  to  a  sale  or  transfer  on  security 

9.  See  §  403,  snpra,  and  note.  by  a  pledgor  to  a  third   party  when 
1.  Burton's    Appeal,    ^3    Penn.    St.       the  pledgee  is  out  of  possession,   see 

214;    Stone   v.    Browi,    54    Tex.    330;       supra.  §§  400.  405. 

Sherry  v.  Frost,  7  Lea,  1.     This  doc-  2.  See  Fir.st  Nat.  Bank  v.  Boycc.  78 

trine  is  to  be  cautiously  applied,  the      Ky.  42;  §§  398,  404,  supra. 

39  609 


§  407  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

redeemed  bj  the  time  agreed  npon ;  on  the  contrary,  the  pledgee 
must  resort,  in  order  to  avail  himself  of  the  pledge,  to  process  of 
law,  or  sell  or  realize  his  security;  and  until  he  has  done  so  the 
pledgor  may,  within  any  reasonable  time,  redeem  it.^ 

The  law  of  pledge  has  unfolded  gradually,  and  seeks  to  meet 
the  wants  of  the  times ;  and  at  this  day  we  find  these  three  reme- 
dies open  to  the  pledgee,  after  the  debt  becomes  due  and  while  it 
remains  unpaid:  (1)  to  sue  the  pledgor  personally  for  his  debt, 
without  selling  the  pledge, —  a  remedy  always  open,  since  the 
pledge,  after  all,  furnishes  merely  a  collateral  security;  (2)  elect- 
ing to  take  his  remedy  upon  the  pledge,  to  file  his  bill  in  chancery 
and  obtain  a  judicial  sale  under  a  regular  decree  of  foreclosure ; 
(3)  as  an  alternative  remedy  upon  the  pledge,  to  give  reasonable 
notice  to  the  debtor  to  redeem  the  pledge  and  then  at  his  option 
sell  the  thing  publicly  without  judicial  process  at  all.'*  Where  the 
pledged  property  is  of  considerable  value,  or  various  conflicting 
rights  exist,  the  judicial  sale  is  the  safer  process;  but  in  small 
pledges  and  in  general  mercantile  transactions  of  this  kind  the 
sale  without  judicial  process,  which  likewise  must  be  fairly  con- 
ducted, is  greatly  preferable  as  being  the  most  expeditious  and  the 
least  expensive  means  of  realizing  satisfaction  for  what  is  due. 
At  any  rate,  the  pledgee  may  sue  the  pledgor  personally  for  the 
whole  debt  without  resorting  to  the  pledge  at  all;    he  may  even 

3.  On    ordinary    principles,    where  standing    the    older    books    on    this 

the  pledge  is  for  an  indefinite  period,  point.      2  Kent  Com.  581,  582;  Glanv. 

the   creditor   may   at    any    time    call  lib.   10,   e.   6 ;   Vanderzee  v.   Willis,   3 

upon   the   debtor   to   redeem,   making  Bro.  C.  C.  21;  Schoul.  Bailm.,  §  250. 

for  that  purpose  a  suitable  demand;  The  pledgor's!  right  to  redeem  may  be 

but  there  being  no  time  limited   for  waived  or  may  be  lost  by  his  laches, 

redemption,    the    pledgor    has,    it    is  Stevens  v.  Bell,  6  Mass.  339;   Schoul. 

said,    his    own    lifetime    to    redeem,  Bailm.,   §g   250,   251. 

unless    the    creditor    meantime    calls  4.  See  Kemp  v.  Westbrook,  1  Ves. 

upon  him  to  do  so;  and,  in  default  278;    Str.    919;    Elder   v.    Rouse,    15 

of    such    call,    the    right    to    redeem  Wend.   218;    Tucker  v.   Wilson,   1   P. 

descends    to    the    pledgor's    personal  Wms.   261;    2  Kent  Com.   582;   Davis 

representatives.     Lapse  of  time  with-  v.    Funk,    39    Penn.    St.    243 ;    Story 

out    special    reference    to    one's    life  Bailm.,   §   310;   Washburn  v.  Pond,  2 

appears   the   proper  barrier,   notwith-  Allen.  474. 

610 


CHAP,  v.] 


DEBTS    SECUKED    BY    PLEDGE,    ETC. 


§  407 


sue  and  attach  the  pledge  in  his  suit ;  and  it  is  only  for  his  wrong 
or  for  his  want  of  ordinary  care,  that  he  can  be  made  liable  for  a 
loss  which  occurs  through  his  failure  to  sell  the  pledge.^  In  other 
words,  he  is  bound  rather  to  conduct  his  sale  without  negligence 
than  regard  with  diligence  the  proper  time  for  making  the  sale. 
For  it  rests  usually  with  the  pledgor  to  suggest  when  a  sale  should 
be  made,  and  press  his  own  interest  in  ecpiity  if  the  pledgee  be 
dilatory.^  The  pledgee  must  be  circumspect  and  honorable  in  his 
conduct  notwithstanding;  and  unless  the  case  be  an  extremely 
urgent  one,  and  the  transaction  be  perfectly  fair,  he  cannot  take 
the  responsibility  of  compromising  with  parties  to  the  security  for 
less  than  the  sum  due  thereon ;  for  if  he  does,  he  is  liable  to  the 
pledgor  for  its  full  value.^ 


5.  Story  Bailm.,  §  310;  2  Kent 
Com.  582;  Schoul.  Bailm.,  §§  226- 
248. 

6.  See  Newsome  v.  Davis,  133  Mass. 
343;  Granite  Banlc  v.  Richardson,  7 
Met.  407;  Schoul.  Bailm.,  §  244; 
Word  V.  Morgan,  5  Sneed.  79 ;  Robin- 
son V.  Hurley,  11  Iowa,  410;  Minne- 
apolis Co.  V.  Betcher,  42  Minn.  210. 

7.  Bowman  v.  Wood,  15  Mass.  534; 
Depuy  V.  Clark,  12  Ind.  427;  Garlick 
V.  James,  12  Johns.  146;  Story 
Bailm.,  §  321;  Union  Trust  Co.  v. 
Rigdon,  93   111.   458. 

The  modern  tendency  is  to  make 
the  debtor  satisfy  to  tlie  full  extent 
of  the  security  given,  notwithstand- 
ing the  Sale  be  irregnlar  or  wrongful ; 
and  if  the  pledgee  himself  buys  in 
the  pledge  by  collusion  or  otherwise, 
the  practical  effect  is  that  the  pl-edgor 
may  avoid  it  or  may  treat  it  as  valid; 
and  in  the  former  instance  he  may 
redeem  as  though  no  sak'  had  taken 
place.  But  it  is  maintained  that  the 
pledgor  has  no  right  to  take  back  the 
goods  without  paying  the  debt,  not- 
withstanding a  dereliction  of  duty  on 

61 


the  pledgee's  part,  which  does  the 
pledgor  no  material  injury.  See 
Johnson  v.  Stear,  15  C.  B.  N.  s.  330; 
Donald  v.  Suckling,  L.  R.  1  Q.  B. 
585.  And  the  latest  English  and 
American  doctrine  on  the  subject  ap- 
pears to  be  that  the  pledgor  cannot 
treat  an  irregular  sale  of  the  pledge 
as,  per  se,  a  wrongful  conversion  of 
the  property;  but  that,  as  a  pre- 
requisite to  suing  either  the  pledgee 
or  a  third  person  to  whom  the  pledgee 
may  have  transferred  the  property, 
he  must  tender  the  amount  he  owes ; 
in  short,  that,  whatever  the  ground  of 
illegality  in  the  sale,  the  pledgor  can 
only  recover  damages  over  and  above 
the  amount  of  indebtedness  on  hiS 
part.  See  Halliday  v.  Holgate,  L.  R. 
3  Ex.  299  (1868).  See  remarks  of 
Willes.  J.,  in  ib. ;  Baltimore  Mar. 
Ins.  Co.  V.  Dalryniple.  2.-.  Md.  242: 
Lewis  V.  Mott.  36  N.  Y.  395;  Bulke- 
ley  V.  Welch.  31  Conn.  339;  Kidney 
V.  Persons,  41  Vt.  386;  §§  403,  404, 
supra;  Talty  v.  Freedman'8  Savings 
Co.,  93  U.  S.  321. 


§  408  THE  LAW  OF  PERSONAL  PROPERTY.       [PAKT  III. 

§  408.     Effect  of  Legislation  and  Special  Contract. 

Local  statutes  frequently  prescribe  a  specific  method  for  con- 
ducting the  sale  of  pledged  property  where  the  pledgor  has  failed 
to  redeem  his  debt  at  its  maturity,  in  addition  to  those  remedies 
which  are  afforded  by  law,  and  the  special  contract  of  the  parties.* 
The  local  legislation  should  always  be  regarded  in  this  connection. 

Moreover,  as  the  pledge  rests  upon  the  understanding  of  the 
parties,  it  is  undoubtedly  true  that,  by  a  suitable  express  contract 
to  the  effect,  pledgor  and  pledgee  may  regulate  in  advance  the 
terms  and  method  of  sale,  in  case  the  sale  should  become  neces- 
sary ;  and  this  course  is  often  advisable  where  the  pledgee  desires 
to  obtain  an  ample  power  of  sale.  The  time  for  sale  may  thus  be 
definitely  fixed,  and  the  manner  of  notice  prescribed ;  or,  indeed, 
the  notice  may  thus  be  waived  altogether.^  If  any  special  agree- 
ment exists  at  all,  it  must  ordinarily  regiilate  the  rights  of  both 
parties,  and  neither  of  them  will  be  allowed  to  depart  from  it  with 
impunity;  and  on  ordinary  principles  of  bailment,  the  express 
terms  of  the  pledge  contract,  as  to  method  of  keeping,  the  sale  on 

8.  See  Mass.  Rev.  Laws,  c.  198,  §§  by  contract.  Sehoul.  Bailm.,  §  248. 
S-10;  Sclioul.  Bailm.,  §  248.  See  70  and  cases  therein  cited.  It  ih  held, 
Mo.  290.  It  would  seem,  from  the  moreover,  that  the  rule  that  a  pledgee 
very  nature  of  the  transaction,  that  cannot  buy  at  his  own  sale  may  like- 
where  goods  are  deposited  as  security  wise  be  waived.  Chouteau  v.  Allen, 
for  the  repayment  of  a  loan  of  money  70  Mo.  290.  But  oppressive  stipula- 
on  a  future  day  certain,  though  with-  tions  will  not  be  enforced;  as,  for 
out  any  express  stipulation,  the  instance,  that  the  pledgee  shall  be- 
pledgee  has  a  right  to  sell  in  default  come  absolute  owner  on  default, 
of  payment  on  that  day;  though  if  Sehoul.  Bailm.,  §  249;  Dorrill  v. 
a  new  agreement  be  soibstituted,  that  Eaton,  35  Mich.  303.  As  to  the  lex 
agreement  must  be  followed.  Pigot  commissoria  on  this  last  point,  see  2 
V.  Cubley,  1.5  C.  B.  N.  s.  702.  Kent  Com.  583.      See,  further,  Belden 

9.  Robinson  v.  Hurley,  11  Iowa,  v.  Perkins,  78  111.  449;  Goldsmidt  v. 
410;  Mowry  v.  Wood,  13  Wis.  413;  Church  Trustees,  25  Minn.  202; 
Stevens  v.  Bell,  6  Mass.  339;  Rohrle  Union  Trust  Co.  v.  Rigdon.  93  111. 
V.  Stidger,  50  Cal.  207.  The  non-  458,  that  a  special  contract  is  to  be 
judicial  sale  should  ordinarily  be  a  fairly  and  beneficially  construed  in 
public  one,  i.  e.  at  auction.     But  this  such  cases. 

requirement  may  be  expressly  waived 

612 


.CHAP,  v.]       DEBTS  SECURED  BY  PLEDGE,  ETC.  §  409 

default,  and  other  particulars,  must  control,  so  long  as  rules  of 
public  policy  be  not  transcended.' 

Public  policy,  we  may  remark,  by  the  latest  judicial  interpreta- 
tion, permits  the  pledgee  to  vary  liberally  the  common-law  require- 
ments of  a  sale.  A  sale  upon  fair  notice  of  time  and  place 
intended,  and  public  rather  than  private,  is  what  the  common  law 
favors  in  default ;  but  special  contracts  have  been  sustained  which 
allow  the  pledgee  to  dispense  with  notice  to  sell  at  public  or  private 
sale  at  his  own  option  and  even  to  buy  in  for  himself.^  But  at  all 
events  the  pledgor's  default  must  be  clearly  fixed  in  one  way  or 
another.^ 

It  may  be  said  that  such  agreements  are  enforceable  to  the 
extent  that  they  facilitate  collection,"*  but  they  may  be  invalid 
when  they  provide  for  a  forfeiture  of  the  security ;  ^  and  some  pro- 
vision must  be  made  for  notice  to  the  debtor  of  the  sale,  giving 
him  reasonable  opportunity  to  redeem,  and  a  mere  general  notice 
to  the  debtor  of  intention  to  sell  is  insufficient.^ 

§  409.     How   Notes   and   Various   Other    Securities   Should   be 
Realized;    Collection,  etc. 
Where  the  pledge  is  a  negotiable  note,  the  pledgee  has  a  right 

1.  Schoul.  Bailm.,  §  248;  St.  Losky  La.  640,  45  So.  533.  The  rule  was 
V.  Davidson,  6  Cal.  643 ;  Lee  v.  Bald-  well  set  out  by  Judge  Taft  in  Ritchie 
win,  10  Ga.  208.  See,  for  instance  v.  McMuUen,  79  Fed.  522,  as  follows: 
of  a  ra&h  promise  by  the  pledgor  to  "A  court  of  equity  scrutinizes  with 
redeliver  absolutely.  Drake  v.  White,  great  care  the  contracts  made  be- 
lli Mass.  10.  tween   pledgee  and  pledgor  as  to  the 

2.  See  Schoul.  Bailm.,  §  248.  Even  transfer  of  title  to  the  pledgee  and 
though  the  sale  should  be  irregular  does  not  ho&itate  to  set  aside  such  a 
in  some  respects,  the  pledgor  may  contract  if  there  is  any  ground  for 
by  his  special  acquiescence  be  held  thinking  that  it  is  a  harsh  contract 
to  have  ratified  it.  Schoul.  Bailm.,  and  one  brought  about  by  the  posi- 
§  232 ;  Earle  v.  Grant,  14  R.  I.  228.  tion  of  vantage  that  the  pledgee  oc- 

3.  Demand  fixes  a  default  which  cupies  with  reference  to  the  pledgor." 
was  uncertain ;  but  otherwise  in  notes  6.  Goldsmidt  v.  First  Methodist 
payable  on  a  day  certain.  Church,   25   Minn.   202.       See   further 

4.  Hiscock  V.  Varick  Bank,  206  on  the  whole  subject  29  Harvard  Law 
U.  S.  28,  27  S.  Ct.  681.  Review,   277  et  seq. 

5.  Smith  v.   Shippers'  Oil  Co.,   120 

613 


§  409  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

to  recover  and  receive  the  money  due  upon  it,  and  to  sue  for  it  in 
his  own  name;  and  under  most  circumstances  it  becomes  the  cred- 
itor's duty  to  collect  a  note  deposited  with  him  as  collateral  secu- 
rity, making  presentment  and  giving  due  notice  of  non-payment  to 
indorsers.''  And  it  has  even  been  held  wrongful  for  one  to  sell  a 
negotiable  note  pledged  to  him  instead  of  collecting  it.^  The  rea- 
son of  this  rule  appears,  however,  to  be  that  short-time  paper 
maturing  under  the  pledge  contract  shall  be  collected  with  ordi- 
nary diligence,  and  applied  on  account,  with  perhaps  an  exchange 
or  renewal  of  securities  as  they  mature.^  As  to  marketable  bonds 
not  presently  redeemable,  or  long  commercial  paper,  to  fall  due 
much  later  than  the  maturity  of  the  secured  debt  or  engagement, 
the  presumption  that  the  transaction  intended  realizing  by  a  sale 
on  default  is  more  reasonable.^  When  mere  debts,  claims,  or 
money  rights,  or  overdue  paper  are  pledged,  circumstances  should 
determine  whether  a  collection  rather  than  sale  of  them  by  the 
pledgee  was  mutually  intended.^  As  to  stocks  and  various  other 
kinds  of  incorporeal  property,  peculiar  rules  may  apply.'' 

7.  See  Brown  v.  Ward,  3  Duer,  smidt  v.  Chureh  Trustees,  25  Minn. 
660 ;  Lawrence  v.  McCalmont,  2  How.       202.     Cf.  9  Lea,  63. 

426;  Lamberton  v.  Windom,  12  Minn.  9.  Schoul.   Bailm.,   §   238. 

232;   Fislier  v.  Fisher,  98  Mass.  303.  1.  Schoul.  Bailm.,  §  238;  Fraker  v. 

But,    under    ordinary    circumstances.  Reeve,   36  Wis.  85;   Alexandria  R.  v. 

the  holder  of  a  note  as  security  for  Burke,   22   Gratt.   254;    Water  Power 

money  lent  is  not  chargeable  with  a  Co.  v.  Brown,  23  Kan.  676.      In  some 

wrongful  conversion  of  it  by  refusing  cities  facilities  exist  for  the  sale   of 

to    deliver    it    up    until    the    person  long   promissory   notes  as  well   as   of 

claiming  it  pays,  or  offers  to  pay,  the  coupon   bonds.       Right   of   pledgee   to 

amount  for  which  it  is  held.     Benoir  purchase  at  sale  of  pledge.     Book  11, 

V.  Paquin,  40  Vt.  199.  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  261. 

8.  Markham  v.  Jaudon,  41  N.  Y.  2.  Schoul.  Bailm.,  §  238;  Mullen  v. 
235;  Schoul.  Bailm.,  §§  236-238;  Morris,  2  Penn.  St.  85;  Rice  v.  Bene- 
Zimpleman    v.    Veeder,    98    111.    613.  diet,  19  Mich.  132. 

Compromise  or  sacrifice  of  a  note  to  3.  See    as    to    the    sale    of    stock 

the    pledgor's   detriment    is    regarded  (which,   of   course,   a   pledgee   is   not 

with  manifest  disfavor  by  the  courts.  bound   to  make  at   his   own   instance 

Union   Trus.t   Co.    v.    Rigdon,    93    111.  on    default)     Schoul.    Bailm.,    §    234, 

458;    Zimpleman    v.    Veeder,    98    111.  and   cases   cited:    Newsome   v.   Davis, 

613;    Schoul.    Bailm.,    §    238;    Gold-  133  Mass.  343;   O'Neill  v.  Whigham, 

614 


CHAP,  v.] 


DEBTS    SECURED    BY    PLEDGE,    ETC. 


§  410 


But  the  general  principle  to  be  applied  is,  that,  whatever  be  the 
nature  of  the  security,  the  pledge  contract  implies  that  it  shall  be 
put  reasonably  towards  discharging  the  pledge  obligation,  in 
accordance  with  mutual  intent  and  the  good  sense  of  the  transac- 
tion/ And  hence  each  special  security  is  to  be  realized  fairly  and 
naturally,  whether  by  sale,  collection,  or  otherwise,  if  realized 
at  all. 

§  410.     Miscellaneous  Points  as  to  Realizing  the  Security. 

The  pledge  should  cover  not  only  the  debt  itself,  but  accumulated 
interest  on  the  debt,  and  all  necessary  expenses  incidental  to  the 
possession  of  the  pledge  by  the  pledgee ;  and  this  seems  to  include 
even  such  interest  as  may  be  due  on  equitable  grounds  only, 
through  the  unjust  delay  of  the  debtor  in  paying  up  what  he  owed.^ 


87  Penn.  St.  394;  Colquitt  v.  Stultz, 
65  Ga.  305.  For  enforcing  the  secur- 
ity of  mortgage  or  title  deeds  to  real 
estate,  see  English  v.  MoElroj^  62  Ga. 
313.  And  as  to  realizing  on  a  sav- 
ings-bank book,  see  Boynton  v.  Pay- 
row,  67  Me.  587. 

There  is  some  uncertainty  as  to 
whether  stocks  deposited  on  what  is 
called  a  "  margin,"  and  brokers' 
sales  generally,  are  to  be  treated  as 
strictly  pledges  or  not,  the  transac- 
tion being  peculiarly  a  modern  one. 
Late  decisions  in  New  York  tend  to 
establish  the  transaction  of  sale  on 
"  margin  "  as  that  of  a  strict  pledge. 
Such  sales  ®n  default  of  the  customer 
to  keep  his  margin  good  should  not 
be  made  without  notice,  nor  made 
oppres-sively.  Markham  v.  Jaudon, 
41  N.  Y.  235,  Grover  and  Woodruff, 
JJ.,  dissenting;  Baker  v.  Drake,  66 
N.  Y.  518.  Other  States  have  treated 
Such  transactions  apparently,  though 
not  so  clearly,  as  in  the  nature  of 
pledge.     Maryland    Fire    Ins.    Co.    v. 


Dalrymple,  25  Md.  242.  But  as  to 
the  Massachusetts  view  of  such  trans- 
actions, see  Covell  v.  Loud,  135 
Mass.  41.  And  see  Corbett  v.  Under- 
wood, 83  111.  324,  distinguishing  ex- 
ecutory grain  contracts,  Ac;  Schoul. 
Bailm.,  §  233.     See  suirra,  §  398a. 

4.  Schoul.  Bailm.,  §  240;  Post  v. 
Tradesmen's  Bank,  28  Conn.  420. 
Increments  of  the  pledge  retaini>d 
by  the  pledgee  follow  the  rule  of  the 
thing  pledged.  Sclioul.  Bailm.,  §  240; 
Story  Bailm.,   §   314. 

5.  2'  Kent  Com.  583  ;  Story  Bailm., 
§§  306,  357,  358.  To  be  sure  the 
common  law  furnishes  little  here  to 
go  upon ;  and  our  inferences  must  be 
drawn  mainly  from  the  civil  law 
and  the  general  course  of  reasoning; 
though  where  the  parties  make  an 
express  contract,  or  submit  to  some 
well -established  usage  to  aid  them  in 
these  respects,  it  is  certain  that  the 
courts  will  make  such  contract  or 
usage  the  test.  See  Story  ib. ;  1 
Dom.  b.  3,  tit.   3;   Story  Eq.  Jur..  § 


615 


§  410  THE  LAW  OF  PEESONAL  PKOPEKTY.       [PAKT  III. 

So,  too,  the  pledge  may,  by  agreement,  be  extended  to  cover  sub- 
sequent advances,  a  rule  which  is  subject  to  some  qualifications  in 
favor  of  third  parties;  while  the  better  opinion  is  that,  in  the 
absence  of  evidence  showing  that  the  pledge  was  intended  by  the 
parties  to  serve  as  collateral  security  for  a  loan  subsequent  to  that 
for  which  it  was  originally  given,  the  pledgee  must  restore  it  upon 
full  satisfaction  of  the  original  debt.^  Wherever  the  thing  is 
pledged  to  the  same  creditor  for  two  or  more  debts,  and  the  pledge 
when  sold  will  not  suffice  to  pay  them  in  full,  the  proceeds  of  the 
sale  are  naturally  applied  proportionally  to  all  the  debts  to  extin- 
guish them  pro  tanto,  if  the  creditor  suffers  no  special  disadvan- 
tage thereby.  But  the  law  leaves  appropriation  of  payments 
largely  to  a  creditor's  own  choice,  as  we  have  elsewhere  seen.^ 
Where,  again,  several  things  are  pledged,  each,  by  the  civil  law, 
and  probably  by  the  common  law  as  well,  is  deemed  liable  for  the 
whole  debt;  and  the  pledgee  may  proceed  to  sell  them  from  time 
to  time  till  the  whole  debt  is  completely  discharged ;  ^    and  here 

1034;  Somes  v.  British  Empire  Ship-  a  valuable  consideration  have  inter- 
ping  Co.,  8  H.  L.  Cas.  338;  Schoul.  vened,  the  circumstance  of  making  a 
Bailm.,  §§  249,  250.  subsequent  loan  while  holding  the 
6.  United  States  v.  Hooe,  3  Cr.  73 ;  pledge  might  go  far  towards  estab- 
Pettibone  v.  Griswold,  4  Conn.  158;  lishing  in  courts  of  equity  a  presump- 
2  Kent  Com.  584 ;  1  Atk.  236 ;  Jarvis  tion,  subject  of  course  to  rebutting 
V.  Rogers,  15  Mass.  389.  Personal  testimony,  that  the  pledge  was  mutu- 
property  pledged  for  a  particular  loan  ally  designed  to  secure  both  the  sub- 
cannot,  in  absence  of  special  agree-  sequent  and  the  original  loan;  so 
ment,  be  held  by  the  pledgee  for  any  desirable  is  it  deemed  to  avoid  cir- 
other  advance.  Duncan  v.  Brennan,  cuity  of  action  in  these  days.  See 
83  N.  Y.  487.  But  the  original  pledge  Gilliat  v.  Lynch,  2  Leigh,  493 ;  2 
transaction  may  give  to  the  security,  Vern.  691 ;  Adams  v.  Claxton,  6  Ves. 
by    its    own    terms,   a   very   generous  226. 

scope.      See    §    397 ;    Moors   v.   Wash-  7.  Herkimer .  Manuf.,     &e.     Co.     v. 

burn,   147   Mass.   344,   34   N.   E.   182.  Small,     21     Wend.     273;     Blackstone 

The  rule  of  the  civil  law  in  this  re-  Bank    v.    Hill,    10    Pick.    129;    Story 

spect  is  a  matter  of  doubt;   and  the  Bailm.,    §   312:    Wilcox   v.   Fairhaven 

most,   perhaps,   that   can   be   said    in  Bank,  7  Allen.  270;  supra,  §  371. 

the  pledgee's  favor,  ia  that,  where  no  8.  Story  Bailm.,  §  314 ;  1  Dom.  Civ. 

rights  of  creditora  or  purchasers  for  Law,  b.  3,  tit.  1. 

616 


CHAP,  v.]  DEBTS    SECUKED    BY    PLEDGE,    ETC.  §    411 

his  choice  is  liberal  as  among  them,  though  there  can  be  but  one 
satisfaction.^ 

If  the  property  pledged  be  insufficient  to  pay  the  whole  debt, 
together  with  incidental  expenses,  the  surplus  constitutes  a  per- 
sonal charge  against  the  debtor  or  other  contracting  party,  and 
may  be  recovered  against  him.^  But  if,  on  the  other  hand,  the 
creditor  has  obtained  entire  satisfaction,  and  there  is  a  surplus 
remaining,  this  surplus  belongs  (saving  the  claims  of  a  paramount 
owner)  to  the  pledgor,  or  to  subsequent  lien  parties  in  his  right, 
and  the  pledgee  must  account  accordingly.^ 

§  411.     Pledgee  May  Sue  the  Pledgor  Instead  of  Enforcing  the 
Security. 

The  pledgee,  of  course,  is  not  in  general  obliged  to  sell  or  realize 
the  pledge  on  maturity  of  the  debt  which  it  was  designed  to  secure ; 
nor  does  the  pledge  become  his  absolute  property  through  the 
simple  failure  of  the  pledgor  to  pay  off  his  indebtedness  at  the 
appointed  time.  If  the  pledgee  fails  to  enforce  his  right  to  sell, 
the  thing  remains  a  mere  pledge  as  before;  and  he  is  bound, 
under  these  circumstances,  to  restore  it  whenever  full  payment 
and  satisfaction  of  the  debt  is  tendered.^ 

Here  we  may  add  that  the  pledgee's  remaining  remedy  on  his 
pledgor's  default  is  to  sue  the  pledgor  personally  on  his  debt  or 
engagement.  For  the  mere  taking  of  security  imports  no  agree- 
ment to  pursue  the  security  first.'* 

9.  Sehoul.    Bailm.,     §§     241,     242;  Bank  of  Racine,  14  Wis.  331 ;  Schoul. 

Union  Bank  v.  Laird,  2  Wheat.  390;  Bailm.,  §  242. 
Fitzjrerald  v.  Blocker  32  Ark.  742.  3.  Komp  v.  Westbrook,  1  Ves.  278; 

1.  Story  Bailm.,  §  314;  Yelv.  178;  1  Bulst.  29;  Story  Bailm..  §  346. 
Stevens  V.  Bell,  6  Mass.  339;  1  Dom.  Debt  must  be  paid  before  poods  can 
b.  3,  tit.  1;  Schoul.  Bailm.,  §§  241,  be  recovered.  Book  17,  N.  Y.  Rpts., 
242;    Stokes  v.   Frazier,   72    111.   428;  B^nder's  ed.,  note.  p.  32. 

Faulkner  v.  Hill,   104  Mass.  188.  4.  Schoul.    Bailm..    §    246;    2    Kent 

2.  Van  Blarcom  v.  Broadway  Bank,  Com.  582.  He  may  attach  the  pledged 
37  N.  Y.  540;  Hancock  v.  Franklin  property  in  his  suit.  Whitwell  v. 
Ins.  Co.,  114  Mass.  155;  Rohrle  v.  Brifrham,  19  Pick.  117:  Buck  v.  In- 
Stidger,   50  Cal.  207;   Jesup  v.   City  gersoll,    11    Met.    226;    Arendalc    v. 

617 


§  412  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

§  411a.     Pledgor's  General  Right  to  Redeem. 

A  pledgor  is  entitled  to  a  prompt  and  honorable  restoration  of 
his  pledged  property,  or  (if  left  for  collection)  of  its  proceeds, 
whenever  the  pledgor  has  fulfilled  or  offered  to  fulfil  the  secured 
engagement  or  has  made  payment  or  tender  of  all  that  was  due 
from  him  under  the  bailment,  within  the  scope  of  debarment 
already  noticed.^  And  so  sedulous  of  his  rights  becomes  the  law, 
when  the  pledgor's  duty  has  been  rendered,  that  upon  his  tender 
at  the  appointed  day,  or  any  other  rightful  tender,  the  pledgee 
must  surrender  the  pledge  or  stand  liable  for  conversion,  unless 
he  can  show  good  reason  for  his  denial.^ 

§  412.     How   the   Contract   of   Pledge   Becomes   Extinguished; 
Extension,  etc. 

We  need  hardly  say  that  the  contract  of  pledge  becomes  extin- 
guished, according  to  universal  principles,  by  the  full  payment  of 
the  debt,  and  discharge  of  the  engagement  so  secured.  And  since 
debts  are  extinguished  not  only  by  payment,  but  by  satisfaction  in 
some  other  way,  the  substitution  of  new  security,  or  release  and 
waiver,  it  will  be  readily  inferred  that  the  contract  of  pledge  may 
be  extinguished  likewise  in  a  corresponding  variety  of  ways.'' 
But  there  may  be  renewal  or  extension  of  the  secured  debt ;  or  a 
substitution  of  one  security  for  another;  and  here  the  intent  of 
the  parties  determines  the  transaction.^ 

Morgan,    5    Sneed,    703.      But    if    he  the     lien     of     the     pledge,     and     the 

attaches,    he    abandons    his    lien    as  pledgor    may    recover    the    pledge    or 

pledgee.      Citizens'"   Bank    v.    Dowse,  its  value,  directly  or  by  set-oflF,  with- 

68  Iowa,  460.  out  keeping  his  tender  good  or  bring- 

5.  Schoul.  Bailm.,  §§  250,  252.  Re-  ing  the  money  into  court.  Mitchell 
lease    of    pledge.      Book    10,    N.    Y.  v.  Roberts,  17  Fed.  776. 

Rpts.,  Bender's  ed.,  note,  p.  58.  7.  Story  Bailm.,  §§  359-365 ;  Pigot 

6.  lb.,  §  253;  Talmage  v.  New  v.  Cubley,  15  C.  B.  N.  s.  702;  supra, 
York  Bank,  91  N.  Y.  531 ;  Wyckoff  v.  §§  365-369 ;  Schoul.  Bailm.,  §§  252, 
Anthony,    90    N.    Y.    442;    Fisher    v.  263. 

Brown,    104    Mass.    259.      Tender    of  8.  Schoul.   Bailm.,   §   263. 

the  debt  after  maturity  extinguishes 

618 


CHAP,  v.] 


DEBTS    SECURED    BY    PLEDGE,    ETC. 


§  413 


§  413.     Business  of  Pawnbrokers,  etc. 

There  are  many  statutes  to  be  found  in  England  and  this  country 
which  regulate  and  in  a  measure  restrain  the  business  of  pawn- 
brokers ;  a  class  of  persons  who  seem  to  have  been  always  in  bad 
odor  as  rapacious  plunderers,  for  the  most  part,  with  little  respect 
for  usury  laws,  and  yet  the  respected  kinsmen  of  petty  debtors.' 
Loaning  large  sums  on  collateral  security,  as,  for  instance,  by 
advancing  on  bills  of  lading  or  marketable  bonds  and  securities,  is 
becoming  at  the  present  day,  however,  a  matter  of  constant  and 
increasing  practice  among  capitalists,  trust  companies,  and  mon- 
eyed institutions;  while  even  corporations  are  not  unfrequently 
chartered  in  the  different  States  for  the  express  purpose  of  carry- 
ing on  the  old-fashioned  pa\vnbrokers'  business.  These  pawners' 
banks  not  only  afford  to  poor  people  a  ready  means  of  borrowing 
money  at  fair  rates  of  interest,  but  pay  their  shareholders  reason- 
able dividends  on  a  verv  safe  business  besides.^ 


9.  See  Fisher's  Digest  (English), 
"  Pawnbroker  and  Pledge." 

1.  The  subject  of  Pledge  is  natu- 
rally treated  at  length  in  works  on 
Bailment;  for  Pledge  is  properly  a 
branch  of  the  law  of  Bailments.  In 
Story  Bailments  may  be  found  a  fair 
treatise  on  this  topic;  but  while  the 
distinguished  author  was  alive,  the 
law   of   pledge  had   but   incompletely 


developed,  especially  with  reference  to 
giving  incorporeal  chattels  in  security. 
Schouler  Bailments,  Part  IV.,  c.  4, 
is  devoted  to  a  full  exposition  chf  the 
law  of  Pledge  or  Collateral  Security 
as  recognized  to-day.  Mr.  Leonard 
A.  Jones,  the  author  of  various  works 
upon  Personal  Securities,  has  issued 
a  volume  upon  this  subject  (2d  ed,, 
1901). 


619 


CHAPTER  VI 

DEBTS    SECURED    BY   MORTGAGE;    CHATTEL    MORTGAGES 

§  414.     Debt  on  Mortgage  Security  to  be  Considered;  Mortgages 
in  General. 

The  last  kind  of  secured  debt  to  be  considered  is  that  of  the  debt 
which  is  secured  bj  mortgage.  As  we  have  elsewhere  said,  mort- 
gages maj  be  of  real  estate  or  of  personal  property ;  and  a  mort- 
gage debt  before  foreclosure  is  to  be  classed  with  personal  prop- 
erty.^ But  chattel  mortgages,  or  mortgages  made  with  a  chattel 
as  the  security,  continue  personal  property  throughout.  For  this 
reason,  and  because  of  the  circumstance  that  works  on  real-estate 
law  treat  very  fully  and  appropriately  of  real-estate  mortgages, 
we  shall  confine  our  attention  in  the  present  chapter  to  chattel 
mortgages  or  mortgages  of  personal  property. 

Our  law  of  chattel  mortgages  at  the  present  day  is  largely  statu- 
tory and  based  upon  the  doctines  held  in  real-estate  mortgages. 
Each  State  has  its  own  code  in  this  respect;  details  differ  much, 
and  the  local  disposition  is  to  make  the  situs  of  the  mortgaged 
property  conclusive  of  rights  and  remedies."  In  all  cases  under 
this  head  the  local  legislation  should  be  carefully  consulted. 

Let  us  then  inquire,  firsts  what  constitutes  a  chattel  mortgage; 
second,  what  it  gives  in  security  and  secures ;  third,  the  rules  of 
delivery,  registry,  and  priority  of  title;   fourth,  the  general  rights 

1.  Supra,  §  60.  Y.    S.    516     (Sup.    App.    T..    1916); 

2.  Supra,  §  299.  Third  Nat.  Bank  Montenegro  Co.  v.  Bueris,  160  Ky. 
V.  Bank  of  Commerce,  139  S.  W.  665  557,  169  S.  W.  g'Se;  Barrett  Co.  v. 
(Tex.   Civ.  App.,   1911).  Van  Ronk,   212  N.  Y.  90,   105  N.  E. 

In  equity  the   chattel   mortgage    is  811;    St.    Louis    Co.    v.    Christopher, 

merely  security  for  the  debt.     Shorter  152  Wis.   603,   140  N.   W.   351:   Zim- 

V.  Dail,  122  Md.  101,  89  Atl.  329.    As  merle  v.    Childers,    67    Ore.    465,    136 

to    mortgage    hy     construction,     see  Pac.    349 ;    Jaequith    v.    Worden,    73 

Maynard  v.  Shaw,  246  Penn.  330,  92  Wash.  349,  122;  Pac.  33. 
Atl.  204;   MoMail  v.  Michaels  147  N. 

620 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    415 

and  liabilities  of  the  parties  concerned ;    and  fifth,  the  foreclosure 
and  redemption  of  chattel  mortgages. 

§  415.     As  to  What  Constitutes  a  Chattel  Mortgage. 

And,  first,  as  to  what  constitutes  a  chattel  mortgage.  There 
appears  to  be  no  substantial  difference  between  the  mortgage  of 
real  and  of  personal  property,  except  that  a  mortgage  being  in  its 
nature  a  transfer  of  title,  the  laws  respecting  the  necessity  of 
accompanying  possession  and  the  instruments  of  transfer  are  not 
in  both  cases-  the  same.  There  is  less  of  technicality  pertaining 
to  the  law  of  the  latter  than  of  the  former  subject ;  the  occasions 
for  applying  to  equity  for  relief  are  fewer;  and  the  topic  itself 
is  of  rather  recent  growth,  as  compared  Avith  that  of  real-estate 
mortgages,  which  dates  far  back  into  the  black-letter  days  of  the 
common  law. 

The  form  of  a  chattel  mortgage  is  usually  much  like  that  of  a 
mortgage  of  real  estate.  A  note  for  the  amount  of  the  debt  is 
given,  and  a  deed  is  executed  to  secure  that  note,  which  is  known 
as  the  mortgage  deed:  This  deed  begins  by -an  absolute  bill  of  sale 
of  the  goods  (corresponding  to  a  conveyance  of  lands)  with  cove- 
nant of  warranty ;  the  goods  being  properly  described  in  the  instru- 
ment. Then  follows  a  proviso  that  if  the  note,  debt,  or  other 
obligation  (reciting  it)  shall  be  duly  paid  by  the  mortgagor,  his 
executors,  administrators,  and  assigns,  then  the  sale  or  conveyance 
shall  be  void;  otherwise,  to  remain  in  full  force  and  effect;  and 
provisos  are  frequently  added  as  to  the  possession  of  the  property 
before  and  after  default,  and  the  particular  remedies  which  the 
mortgagee  shall  have  in  the  latter  event.''  In  other  words,  there 
is  a  simultaneous  sale  or  absolute  transfer  with  a  proviso  by  way 
of  defeating  it;  and  these  two  parts  go  to  make  up  a  mortgage. 
The  mortgagee  becomes,  technically  speaking,  owner  of  the  prop- 
erty in  the  common-law  sense,  subject  to  a  condition  of  the  transfer 
being  defeated  on  the  performance  of  a  certain  thing  by  the  raort.- 
gagor.     The  thing  mortgaged  becomes  thus  irredeemable  in  law, 

3.  For  form  of  such  chattel  mortf^age,  see  Curtis's  Conveyancer,  2d  ed. 

621 


§  416  THE  LAW  OF  PERSONAL  PROPEETY.       [PART  III. 

though  equity  or  statute  may  confer  a  right  of  redemption  and 
require  a  formal  foreclosure/ 

§  416.     The  Same  Subject;    Mortgage  Distinguished  from  Lien 
or  Pledge. 

Mortgages  of  chattels,  then,  -are  to  be  distinguished  at  common 
law  from  liens  and  pledges  in  this  sort  of  out-and-out  transfer  of 
the  title  conditionally  which  is  carried  by  the  original  transaction ; 
whereas  in  the  other  instances  the  secured  party  is  admitted  to  be 
a  mere  bailee  or  temporary  owner  having  possessory  rights.  If 
the  condition  be  not  performed,  the  property  is  absolutely  and 
indef  easibly  that  of  the  mortgagee  under  a  mortgage ;  and  courts 
of  law  look  at  no  other  owner;  while  courts  of  equity  have  done 
quite  little  here  as  compared  with  their  constant  interposition 
where  real-estate  mortgages  are  concerned,  to  control  and  mould 
legal  doctrines  for  themselves.^  Legislation,  however,  accom- 
plishes much  towards  assimilating  the  two  species  of  property  in 
modem  times,  and  equity  subjects  all  mortgages  to  foreclosure  and 
a  possible  right  of  redemption ;  the  fundamental  intent  of  giving 
security  in  such  a  transaction  is  regarded ;  so  that  pending  full 
performance  it  can  hardly  be  said  that  the  secured  party  has  an 
•available  and  complete  jus  disponendi.  A  chattel  mortgage,  in  its 
primary  sense,  is  a  kind  of  dead  or  dormant  pledge  as  compared 
with  an  ordinary  pledge,  though  likewise  a  security  for  debt ;  and 
the  mortgage  security  is,  in  general,  designed  to  secure  the  pay- 
ment of  a  debt,  or  the  fulfilment  of  an  engagement,  and  to  become 
void  if  the  debt  is  paid,  or  the  engagement  performed,  according 

4.  Chattel  mortgages,  validity  of,  equity  rule  regardless  of  form,  so  as 
who  may  assail.  Book  21,  N.  Y.  Rpts.,  to  confer  no  legal  title  at  once  upon 
note,  p.  565.  Attack  on  chattel  mort-  the  mortgagor,  but  to  serve  rather  as 
gage  by  trustees,  assignors  or  re-  security  merely  until  breach  of  con- 
ceivers.     Book  26,  531.  dition;    whereas   those    of    the    latter 

5.  And  hence  this  practical   differ-  kind   pass  the  legal   title   at  once  to 
enoe  has  widely  obtained  as  between  the  mortgagee,  subject  to  defeasance, 
mortgages   of   real   estate   and   mort-  agreeably    to    the    legal    rule.      See 
gages     of     personal     property,     that  Jones  Chattel  Mortgages,  §  1. 
those  of  the  former  kind  follow  the 

622 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTOAQE,    ETC.  §    417 

to  the  terms  agreed  upon  at  the  outset.  The  two  essential  parties 
to  the  mortgage  transaction  are  the  mortgagor,  usually  a  borrower, 
and  the  mortgagee,  usually  a  lender.^  The  possession  of  the  prop- 
erty by  the  party  to  be  secured  is  not  so  necessary  here  as  in  the 
case  of  a  pledge  or  pawn ;  for  an  actual  or  constructive  change  of 
possession  better  comports  with  the  pledge  transaction ;  and  vice 
versa,  where  no  possession  passes  under  the  terms  of  the  security, 
the  mortgage  transaction  rather  is  complied  with.' 

§  417.  The  Same  Subject;  Mortgage  Distinguished  from  Sale, 
etc. ;  Essential  Test. 
But  mortgages,  again,  are  to  be  distinguished  from  sales  with 
a  contract  for  repurchase ;  for  there  is  a  sort  of  unity  or  closeness 
in  the  present  kind  of  transaction  which  does  not  characterize  the 
other.  Intention  of  the  parties  is  here  and  in  other  personal 
property  transactions  strongly  upheld ;  and  often  a  bill  of  sale  or 
transfer  absolute  on  its  face  has  been  shown  to  be  intended  only 
for  a  pledge  or  mortgage,  by  some  other  writings  or  even  by  mere 
conduct  of  the  parties  and  parol  evidence.^     And  it  will  not  be 

6.  See  Maugham  v.  Sharpe,  17  C.  B.  change  of  title,  it  will  be  presumed 
N.  s.  464;  Flory  v.  Denny,  7  Ex.  581;  a  pledge  rather  than  a  mortgage; 
Coggs  V.  Bernard,  1  Smith  Lead.  Cas.  while,  on  the  contrary,  if  it  assumes 
298 ;  Bank  of  Rochester  v.  Jones,  4  to  transfer  the  legal  title  at  once  to 
ComSt.  497 ;  Doak  v.  Bank  of  State,  the  creditor  or  obligee,  perhaps  with 
6  Ire.  309';  Conard  v.  Atlantic  Ins.  terms  of  defeasance,  and  yet  so  that 
Co.,  1  Pet.  387.  the  title  sihall  become  absolute  in  him 

7.  For  the  distinction  between  through  the  other's  mere  non-per- 
pledge  and  mortgage,  see  further,  formance  of  his  condition,  there  is  a 
Schoul.  Bailm.,  §§  167,  168,  and  cases  mortgage  instead  of  a  pledge.  Schoul. 
cited;  Cofy  v.  Barnes,  20  Vt.  78;  Bailm.,  §  167.  and  cases  cited;  Leach 
Woodman  v.  Chesley,  39  Me.  45;  v.  Kimball.  34  N.  H.  568;  Brewster 
Smith  V.  Beattie,  31.  N.  Y.  542;  33  v.  Hartley,  37  Cal.  15;  cases  »\ijmi. 
E.  L.  &  Eq.  413;  Thompson  v.  Dolli-  That  a  conditional  transfer  of  title 
ver,  13S  Mass.  163;  Jonee  Chafct.  is  essential  to  a  ehattel  mortgage, 
Mort.,  §§  4-7;  Janvrin  v.  Fogg,  49  see  Jones  Chatt.  Mort..  §§  8-18,  com- 
N.  H.  340.  Apart  from  the  question  menting  upon  cases  somewhat  con- 
of  clianging  possession,  if  the  trans-  flicting,  decided  in  our  several  States, 
action  for  security  imports  the  mere  8.  Bill  of  .sale  as  chattel  mortgage, 
giving  in  security  with  no  immediate 

623 


§  417 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


concluded  that  parties  meant  a  regular  conditional  sale,  where  the 
facts  tend  rather  to  establish  the  creation  of  a  security.^     A  deci- 


Book  30,  N".  Y.  Rpts.,  Bender's  ed., 
notes,  p.  765. 

9.  Williamson  v.  Culpepper,  16  Ala. 
211;  Caswell  v.  Keith,  12  Gray,  351; 
Houser  v.  Kemp.  3  Penn.  St.  208; 
Smith  V.  Beattie,  31  N.  Y.  542 ;  Ful- 
ler V.  Parrisih,  3  Mich.  211;  Schoul. 
Bailm.,  §  169;  Wood  v.  Matthews,  73 
Mo.  477;  Morgan  v.  Dod,  3  Col.  551. 
At  law  the  legal  effect  of  a  written 
instrument  cannot  be  altered  or 
varied;  though  the  rule  is  here  ap- 
plied very  loosely ;  and  equity  maxims 
seek  to  discover  the  real  intention  of 
such   transactions.      See  Jones,   §   21. 

The  line  of  distinction  in  these  days 
as  stated  in  the  courts  is  often  quite 
shadowy;  and  as  business  parties 
draft  their  own  instruments  of  se- 
curity, it  may  sometimes  be  hard  to 
say  whether  a  particular  transaction 
is  really  a  pledge  or  a  mortgage.  See 
Wilson  V.  Little,  2  Comst.  443; 
Brewster  v.  Hartley,  37  Cal.  15;  Mil- 
liken  V.  Dehon,  27  N.  Y.  364;  Mur- 
dock  V.  Columbus  Ins.  Co.,  59  Miss. 
152.  On  the  whole,  however,  where 
a  construction  is  required  from  the 
courts,  the  judicial  preference  seems 
to  be  in  favor  of  a  pledge,  since  in 
such  transactions  for  security  the  law 
is  more  clearly  defined,  and  the 
mutual  rights  of  parties  upon  a  de- 
fault better  protected  than  under  a 
chattel  mortgage.  See  Bank  of  Brit- 
ish Columbia  v.  Marshall,  11  Fed. 
Rep.  19.  A  chattel  mortgage,  more- 
over, imports  greater  solemnity  of 
form  in  these  days,  suitable  for  regis- 
tration under  local  statute.  See  § 
148.  But  mutual  intention  of  the 
parties   governs    in    such    issues.      A 


broader  line  of  practical  demarcation 
would  be  in  cases  of  collateral  secur- 
ity between  secured  parties  in  pos- 
session and  secured  parties  out  of 
possession ;  as  in  the  Roman  pignus 
and  Jiypotheca.  Schoul.  Bailm.,  §  168. 
A  reservation  in  a  bill  of  sale,  or 
note,  of  a  lien  for  purchase-money, 
constitutes  no  mortgage,  but  only  a 
lien  by  express  contract.  Jones  Chatt. 
Mort.,  §§  11-13,  and  cases  cited; 
Gushee  v.  Robinson,  40  Me.  412; 
Shaw  V.  Wilshire,  65  Me.  485;  Met- 
calfe V.  Fosdick,  23  Ohio  St.  114; 
Groton  Man.  Co.  v.  Gardiner,  11 
R.  I.  626;  Green  v.  Jacobs,  5  S.  C. 
280.  An  instrument  by  which  one 
agrees  to  sell  and  the  other  to  pur- 
chase certain  personal  property  at  a 
specified  price,  and  that  the  vendor 
shall  have  a  lien  upon  the  property 
till  the  purchase-price  is  paid,  is 
sometimes  considered  to  be  in  the 
nature  of  a  chattel  mortgage.  Dun- 
ning V.  Stearns,  9  Barb.  630;  Ma- 
comber  v.  Parker,  14  Pick.  497.  Even 
a  bill  of  sale  which  is  absolute  on 
its  face  may  be  found  affected  by 
a  parol  agreement  of  the  parties 
that  the  property  shall  be  held  as 
security  for  the  payment  of  a  debt 
due  the  nominal  vendee,  and  so  the 
bill  of  sale  takes  the  character  of  a 
chattel  mortgage  and  no  more. 
Smith  V.  Beattie,  31  N".  Y.  54^; 
Acker  v.  Bender,  33  Ala.  230;  Mc- 
Fadden  v.  Turner,  3  JonCs,  481; 
Carter  v.  Burris,  10  S.  &  M.  527. 
But  see  Montany  v.  Rock,  10  Mo. 
506.  In  some  States  very  strict 
proof  is  required  to  defeat  a  bill  of 
sale  in  this   manner.     See   Williams 


624 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE.    ETC. 


§  417 


sive  test  of  a  l^al  mortgage  of  personal  property  is,  on  the  whole, 
the  use  of  language  which  makes  the  instrument  one  of  a  sale 


V.  Cheatham,  19  Ark.  278;  Colvard 
V.  Waugh,  3  Jones  Eq.  335;  Sewell 
V.  Price,  32  Ala.  97.  And  see  Fow- 
ler V.  Stoneum,  11  Tex.  478.  A  de- 
feasance cannot  be  engrafted  upon  a 
conveyance  of  personal  property  by 
parol.  Pennock  v.  McCormick,  120 
Mass.  275.  Courts  of  equity  some- 
times speak  of  an  "  equitable  mort- 
gage "  of  chattels,  which  is  to  be 
upheld.  Smithurst  v.  Edmunds  1 
McCarter,  408;  Donald  v.  Hewitt, 
33  Ala.  534.  A  deed  with  a  proviso 
for  the  privilege  of  redeeming  the 
property  conveyed  imports  prima 
fade  that  it  is  intended  as  a  security,, 
and  not  a  sale.  Wilson  v.  Weston, 
4  Jones  Eq.  349.  And  see  Plummer 
V.  Shirley,  16  Ind.  380.  Of  course, 
where  a  bill  of  sale  is  executed,  and 
an  instrument  of  defeasance,  besides, 
as  part  of  the  same  transaction,  or 
something  equivalent,  the  two  must 
be  construed  together;  and,  so  con- 
strued, they  constitute  a  mortgage. 
Carpenter  v.  Snelling,  9"7  Mass.  452; 
Taber  v.  Hamlin,  ib.  489;  Lessing  v. 
Grimland,  74  Tex.  239;  Blake  v.  Cor- 
bett,  120  N.  Y.  327.  Otherwise  where 
the  defeasance  was  subsequent,  and 
not  in  fulfilment  of  the  original  trans- 
action. Freeman  v.  Baldwin,  13 
Ala.  246;  Jones  Chatt.  Mort.,  §  19. 
Equity  often  disregards  technical  ex- 
pressions in  instruments,  in  order  to 
give  effect  to  the  real  intent  of  par- 
ties in  this  respect;  and  whether  in 
courts  of  law  or  equity  the  question 
of  sale,  mortgage,  or  pledge  is  largely 
determined,  as  a  matter  of  law,  from 
the  circumstances  and  proof  of  each 
case.      See  Woodman   v.   Chesley,    39 


Me.  45;  Coty  v.  Barnes,  20  Vt.  78; 
Whiting  V.  Eiehelberger,  16  Iowa.  422. 
And  the  true  test  appears  to  be,  as 
against  a  conditional  sale,  that  of 
some  transfer  of  title,  subject  to  com- 
plete defeasance;  as  against  a  pledge, 
that  of  some  transfer  of  title,  which 
in  case  of  non- performance  of  the  con- 
dition becomes  absolute  at  law  in  the 
transferee  by  its  o\vn  terms.  Cases 
supra;  Parshall  v.  Eggart,  52  Barb. 
367;  Wright  v.  Ross,  36  Cal.  414. 
And  see  also,  as  to  transactions 
treated  as  effecting  a  mortgage, 
Scott  V.  Henry,  13  Ark.  112;  Barfield 
v.  Cole,  4  Sneed,  465;  Ix)cke  v. 
Palmer,  26  Ala.  312 ;  U.  S.  Dig.  Mort- 
gage, 48,  49 ;  Cooper  v.  Brock,  41 
Mich.  488. 

But,  in  numerous  instances,  what 
might  appear  to  many  a  chattel  mort- 
gage has  been  treated  by  the  courts 
as  a  conditional  sale  instead.  Thus, 
a  sale  of  lumber  by  an  instrument  in 
writing,  on  condition  that  the  seller 
may  repurchase  it  at  the  same  price, 
on  or  before  a  certain  day,  is  not  a 
mortgage,  but  a  sort  of  conditional 
sale.  Lee  v.  Kilbiim,  3  Gray.  594. 
So,  too,  is  it  with  otlier  transactions 
where  a  sale  is  made,  accoinpanied 
by  an  agreement  for  a  repurchase 
upon  performance  of  specified  condi- 
tions. See  Magee  v.  Catching.  33 
Mis«.  672 :  Grant  v.  Skinner,  21  Barb. 
581;  Gushee  v.  Robinson.  40  Me.  412. 
And  wherever  the  intent  is  mani- 
fested that  the  title  shall  not  pass 
in  a  sale,  but  remain  "  exclusively 
vested "  in  the  seller,  and  not  vest 
in  the  purchaser,  unless  prior  to  a 
certain  date  the  latter  fully  pays  the 


40 


625 


§  418  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

conveying  the  title  of  the  property  in  so  conditional  a  sense,  that 
the  sale  shall  be  defeated  by  the  debtor's  performance  of  his  agree- 
ment ;  and  that  if  he  does  not  perform  the  creditor  shall  have  the 
title  absolutely.^ 

§  418.     Form  of  Chattel  Mortgage;    Parol  Mortgage,  etc. 

Mortgages  of  real  estate  are  either  legal  or  equitable;  that  is, 
the  parties  directly  intended  a  mortgage  transaction,  and  made 
their  instrument  accordingly,  or  else  they  failed  to  make  a  proper 
instrument,  while  their  conduct  and  acts  were  such  as  led  to  the 
same  practical  result.  Now,  a  mortgage  of  personal  property  may 
be  effected  in  a  variety  of  ways;  the  legal  requirements  being 
much  less  formal  than  in  the  case  of  real  estate.  Thus,  a  convey- 
ance, which  is  a  legal  essential  in  passing  the  title  of  real  estate, 
is  no  such  essential  so  far  as  concerns  personal  property ;  for  which 
reason  it  is  a  general  maxim,  that  chattel  mortgages  will  operate 
(in  the  absence  of  controlling  statutes)  to  transfer  title  in  the 
mortgaged  property,  even  if  there  be  no  instrument  under  seal, 
and  no  writing  whatever.^  Though  the  instrument  be  made  in 
the  form  of  a  deed  and  have  no  seal,  it  is,  irrespective  of  legisla- 
tion, a  sufficient  mortgage.^     Instances  are  to  be  found  where  a 

purchase-money,    there    is    no    mort-  tions.      See    Jones    Chatt.    Mort.,    §§ 

gage   created.       Plummer    v.    Shirley,  14-16. 

16   Ind.   380.      Courts   of  equity  lean  1.  Jones    Chattel    Mortgages,    §    8  ; 

rather  against   conditional    sales,   be'  53  Hun,   282 ;    Campbell  v.  Iron   Co., 

cause    the    consequence    of    error    in  83  Ala.  351. 

construing  a   conditional   sale  into   a  2.  Flory  v.   Denny,   7   Ex.   581 ;    11 

mortgage  is  not  so  injurious  as  that  E.  L.  &  Eq.  584 ;  McTaggart  v.  Rose, 

which  would  change  a  mortgage  into  14    Ind.    230;    Sweetzer    v.    Mead,    5 

a  conditional  sale.     Locke  v.  Palmer,  Mich.    107;    Jones    Chatt.    Mort.,    §§ 

26  Ala.  312;   Barnes  v.  Holcomb,   12  34-39. 

S.  &  M.  306.  3.  Gerrey    v.    White.    47    Me.    504. 

In  some  States  the  fusion  of  equity  And  seee  Partridge  v.  Swazey,  46  Me. 

and   the   common   law    is   more   com-  414;    U.    S.    Dig.    Suppl.    Mortgage, 

plete  than   in  others;   and  hence  the  424;  Gibson  v.  Warden,  14  Wall.  244; 

disposition   to  look  beyond   forms   to  Jones  Chatt.  Mort.,  §  102.     A  partner 

discover  the   intent  may  not  be   uni-  can  make  a  chattel  mortgage :   and  if 

fonnly    manifested    in    such    distinc-  he  does  so  and  adds  a  seal,  that  seal 

626 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC. 


§    419 


mortgage  made  by  word  of  mouth  is  supported  as  to  the  parties 
and  some  others.'*  In  certain  States  statutory  forms  are  pre- 
scribed, though  not  in  an  exclusive  sense;  an  affidavit  or  an 
acknowledgment  is  sometimes  additionally  required ;  and  an  in- 
strument of  plain  and  regular  form  is  always  preferable  in  these 
days  as  establishing  the  character  and  terms  of  the  transaction, 
and  so  as  to  conform  to  local  requirements  of  registration  which 
one  out  of  possession  needs,  to  make  his  security  good  against  all 
third  parties.^ 

§  419.     Matters  of  Description  in  a  Mortgage. 

We  have  said  that  the  mortgage  of  a  chattel  is  in  general  for 
some  debt  which  is  expressed  by  a  promissory  note  and  that  to 
such  note  and  its  terms  the  mortgage  deed  usually  refers.     A  note 


does  not  take  away  his  authority,  or 
in  any  way  change  the  force  of  the 
instrument.  Sweetzer  v.  Mead,  5 
Mich.  107;  Milton  v.  Mosher,  7  Met. 
244.  See  Randall  v.  Baker,  20  N.  H. 
335. 

4.  See  Brooks  v.  Ruff,  37  Ala.  371 ; 
Watson  V.  James,  15  La.  Ann.  386. 
A  separate  piece  of  paper  containing 
a  list  of  articles,  and  attached  by 
wafer  to  the  mortgage,  is  presumed 
to  have  been  annexed  before  execu- 
tion of  the  mortgage.  Belknap  v. 
Wendell,  1  Fost.  175.  As  to  certifi- 
cate of  acknowledgment  or  oath  some- 
times required  by  statute,  see  Sowden 
V.  Craig,  26  Iowa,  156;  Stone  v.  Mar- 
vel, 45  N.  H.  481.  See  further,  Jones 
Chatt.  Mort.,  §§  34-39;  U.  S.  Dig.  1st 
Series,  Mortgages,  4403-4416. 

While  at  common  law  a  valid  mort- 
gage of  personalty  may  be  made  with- 
out writing,  there  must  be  a  writing 
to  satisfy  the  Statute  of  Frauds  in 
case  there  is  no  delivery,  and  the 
value  of   it   is  $50   or  more.     As   to 


other  local  statutes  requiring  the  fil- 
ing or  recording  of  the  mortgage,  see 
§  425,  post.  And  see  Jones  Chatt. 
Mort.,  §  2,  and  cases  cited.  A  verbal 
mortgage  comes  seldom  before  the 
courts  in  these  days.  Delivery  would 
often  be  deemed  essential  to  its  valid- 
itj-;  and  if  the  thing  were  delivered 
it  would  more  naturally  be  presumed 
a  pledge.  See  Ceas  v.  Bramley,  18 
Hun,  187;  Bardwell  v.  Roberts,  66 
Barb.  433.  But  cf.  Morrow  v.  Turney, 
35  Ala.  131. 

A  parol  agreement  to  give  a  chattel 
mortgage  upon  which  money  has  been 
advanced  may  be  enforced  in  equity 
as  between  the  parties  themselviM*; 
but  aliter  as  to  creditors  and  honA 
fide  purchasers  without  notice.  Mor- 
row V.  Turney,  35  Ala.  131;  Shelburne 
v.  Ivctsinger,  52  Ala.  96 ;  Conchman 
V.  Wright,  8  Nob.  1;  Jones  Chatt. 
Mort.,  §  3. 

5.  Sw  Jones  Chatt.  Mort.,  §  34; 
supra,  §  415. 


G27 


§    419  THE    LAV/   OF    PERSONAL    PROPERTY.  [PART  IIL 

SO  secured,  whether  payable  on  time  or  on  demand,  expresses  for 
itself  when  the  condition  of  the  mortgage  shall  be  deemed  broken 
or  fulfilled.  But  if  the  mortgage  secures  the  payment  "  according 
to  its  tenor  "  of  a  promissory  note  payable  at  a  day  certain  and 
already  overdue,  the  condition  will  be  understood  to  be  the  pay- 
ment of  the  note  in  its  then  existing  state, —  or  virtually  on 
demand.^  If  no  particular  time  is  specified  for  the  payment  of  a 
sum  secured  by  mortgage,  "  a  reasonable  time "  will  be  under- 
stood.^ The  debt  which  the  mortgage  makes  a  charge  upon  the 
property  is  that  which  is  described  in  the  condition  of  the  deed, 
and  in  case  of  discrepancy  the  recital  under  that  condition  will 
govern.^ 

It  is  not  necessary,  as  between  the  parties  themselves  at  least, 
that  the  personal  property  should  be  so  described  in  the  mortgage 
as  to  be  capable  of  identification  by  the  written  recital  or  name 
alone,  for  parol  evidence  is  here  admissible  to  fully  identify.^ 

But  property  not  fairly  and  specifically  included  under  the 
mortgage  cannot  be  thus  brought  within  its  protection  nor  substi- 
tuted ;  ^  and  the  mortgage  relied  upon  without  delivery  should  as 
to  third  parties  enable  them,  with  the  aid  of  such  inquiries  as  the 
instrument  itself  suggests,  to  identify  the  chattels  covered.^     In 

6.  Pettis  V.  Kellogg,   7   Cush.   456.  date  may  be  cured  by  parol  evidence. 

7.  Farrell    v.    Bean,    lO'    Md.    217.  Partridge  v.   Swazey,   46  Me.   414. 
That  such  mortgage  is  not  necessarily  2.  Winter   v.    Landphere,    42    Iowa, 
given    to    secure    a   debt,    see    §    422,  471;    Connally   v.    Spragins,    66    Ala. 
post.  258;    Jones   Chatt.   Mort.,   §§    54,   55, 

8.  Kaysing  v.  Hughes,  64  111.   123.  and  cases  cited;  Lawrence  v.  Evarts, 

9.  Jones  Chatt.  Mort.,  §§  53,  64,  7  Ohio  St.  194;  Tindall  v.  Wasson, 
66;  Harding  v.  Coburn,  12  Met.  333;  74  Ind.  495.  A  schedule  may  be  an- 
Wagner  v.  Watts,  2  Cranch,  C.  C.  nexed,  but  this  does  not  enlarge  the 
169;  Tindall  v.  Wasson,  74  Ind.  495;  scope  of  the  mortgage.  Ex  parte 
Dunning  V.  Stearns,  9f  Barb.  630;  Bar-  Jardine,  L.  R.  10  Ch.  322;  Jones 
rett  V.  Bennett,  7  Met.  354;  Conkling  Chatt.  Mort.,  §  75;  Burditt  v.  Hunt, 
v.  Shelley,  28  N.  Y.  360.  25  Me.  419;   Webb  v.  Stone,  4  Fost, 

1.  Jones   Chatt.   Mort.,   §§    62,   67;  282. 

Hutton  V.   Arnett,    51   111.   198 ;    Van  A     defective     description     may     be 

Evera  v.  Davis,  51  Iowa,  637;  Sharpe  cured  by  a  subsequent  actual  delivery 

V.  Pearce,  74  N.  C.  600.     Mistakes  of  of  the  property  to  the  mortgagee,  as 

628 


CHAP.  VI.]  DEBTS    SECURED    BY    IsrORTGAGE,    ETC.  §    421 

short,  any  mortgage,  in  order  to  be  effectual  as  against  third  par- 
ties, ought  to  identify  in  some  way  the  subject-matter  to  which  it 
relates ;  whether  by  describing  the  property  definitely  or  by  plainly 

stating  its  location.'' 

§  420.     What  Does  a  Chattel  Mortgage  Give  in  Security. 

We  now  ask  secondly,  what  does  a  chattel  mortgage  give  in 
security  or  secure?  As  to  what  may  be  given  in  security,  it  ap- 
pears to  be  a  rule  that  whatever  kind  of  property  is  capable  of 
being  absolutely  sold  or  pledged  may  likewise  be  mortgaged.  And 
hence  rights  in  remainder  and  reversion,  "  choses  in  action,"  so 
called,  and  incorporeal  property  generally,  may  be  mortgaged  as 
well  as  things  corporeal,  and  chattels  real  as  well  as  chattels  per- 
sonal ;  also,  under  equity  rules,  may  contingent  debts  or  liabilities, 
if  not  mere  possibilities,  as  well  as  debts  due  and  certain."* 

§  421.     The  Same  Subject;  Rule  as  to  Future- Acquired  Property. 

The  question  how  far  a  chattel  mortgage  may  be  made  to  cover 
future-acquired  property  has  undergone  considerable  discussion  in 
the  courts,  and  the  decisions  are  not  uniform.  But  the  distinc- 
tion appears  to  be  correctly  taken  between  the  product  of  property 

against  persons   who  have  not  mean-  4.  2  Story  Eq.  Jur.,  §  1012:  4  Kent 

time  acquired  bona  fide  interest  in  the  Com.  144;  Ru>^>ell  Road.  In  re,  L.  R. 

thing.     Parsons  Savings  Bank  v.  Sar-  13   Eq.   78;    Carleton   v.   T^ighton.    3 

gent,    20    Kan.    576;    Williamson    v.  Mer.  667 ;  Conard  v.  Atlantic  Ins.  Co., 

Steele,    3    Lea,    527.     And   see   Jones  1  Pet.  387.    And  see  vol.  ii.,  post,  pt. 

Chatt.    Mort.,    §§     53-78,    and    cases  vi.,   c.    1;    supra,    %%    395.   396,   as   to 

cited.     In  many  States  quite  a  liberal  pledge.      But  causes   of   action   grow- 

rule  of  construction  is  applied  to  de-  ing  out  of  a   personal   wrong   cannot 

scriptions   partially  erroneous  or  im-  be  mortgaged.     Pindell  v.  Grooms,  18 

perfect.     See  Van  Heusen  v.  RadclifT,  B.  Monr.  501.     Proj)erty  exempt  from 

17   N.   Y.   580;    Pettis   v.   Kellogg,    7  attachment  may  be  mortgagini  as  well 

Cush.  456.  as  pledged ;  for  the  exemption  is  only 

3.  Jones,    §§    54,    54  a ;     Adams    v.  a  privilege  of  which  an  owner  is  not 

Ryan,    61    Iowa,    733;     Adamson    v.  compelled  to  avail   himself.      Love   v. 

Horton,  42  Minn.  161,  43  N.  W.  849;  Blair,   72    Ind.   281.      See  also   Jones 

Grounds  v.  Ingram,  75  Tex.   503,  13  Chatt.  Mort.,  §  174,  and  cases  cited. 
S.  W.  1118;  Nu.^sbaum  v.  Waterman 
Ck).,  9  Ga.  App.  256,  70  S.  E.  259. 

629 


§    421  THE    LAW    OF   PERSONAL    PROPERTY.  [PAET  IIL 

which  the  mortgagor  owns  at  the  time  of  his  mortgage,  and  prop- 
erty to  which  the  mortgagor  has  no  right  at  the  time  of  the  mort- 
gage, either  actual  or  potential,  but  in  which  he  expects  to  acquire 
some  title  at  a  future  day.  In  the  latter  case  the  mortgage  can- 
not make  an  effectual  transfer;  but  in  the  former  it  may.^  In 
instances  such  as  the  wool  growing  on  a  flock  of  sheep,  the  produce 
of  a  dairy,  unfinished  articles  of  manufacture  upon  which  labor  is 
subsequently  expended,  without  substantially  changing  their  char- 
acter or  value,  a  mortgage  embracing  after-acquired  chattels  has 
been  upheld,  and  the  mortgage  has  taken  effect  upon  the  thing 
acquired  as  soon  as  the  thing  comes  into  existence.  Some  of  the 
cases  go  further  than  this ;  and  machinery  or  stock  to  be  subse- 
quently added  to  machinery  or  stock  which  is  likewise  mortgaged, 
have  been  carried  to  the  mortgagee  even  as  against  third  parties ; 
though  we  may  find  even  here  that  the  mortgagee  had  taken 
possession  of  the  property  before  any  other  lien  attached;  a  cir- 
cumstance of  itself  entitled  to  much  weight.^ 

Ordinarily,  under  our  modern  local  statutes  at  least,  and  on 
common-law  principles,  a  chattel  mortgage  would  not  apply  to 
goods  which  are  not  in  existence,^  or  not  capable  of  being  identified 
at  the  time,  nor  to  goods  which  are  to  be  purchased  and  procured, 
to  replace  those  intended  to  be  sold,  nor  to  after-acquired  chattels 
generally;  and  stipulations  on  the  mortgagor's  part  to  this  effect 
amount  usually  to  nothing  more  than  an  executory  agreement 
which,  as  against  third  parties  more  especially,  and  those  acquir- 

5.  See  Holroyd  v.  Marshall,  10  H.  L.  6.  Walker  v.  Vaughn,  33  Conn.  577; 
Cas.  191;  Gardner  v.  McEwen,  19  State  v.  Tasker,  31  Mo.  445;  Titus 
N.  Y.  123;  Story  Eq.  Jur.,  §  1040;  v.  Mabee,  25  111.  257;  Farmers'  Loan, 
Lunn  V.  Thornton,  1  M.  Gr.  &  S.  379';  &c.  Co.  v.  Commercial  Bank,  11  Wis. 
Conderman  v.  Smith,  44  Barb.  404 ;  207,  explaining  Chynoweth  v.  Tenney, 
Jones  V.  Richardson,  10  Met.  481;  10  Wis.,  397;  Chapman  v.  Weimer, 
Harding  v.  Coburn,  12  Met.  333;  4  Ohio  St.  481.  And  see  Belding  v. 
Jenckes  v.  Goffe,  1  R.  I.  511.  Where  Read,  3  H.  &  C.  955;  Reeves  v.  Whit- 
live-stock  is  mortgaged,  the  natural  more,  9  Jur.  N.  s.  1214. 
increase  and  produce  of  the  stock  be-  7.  Mortgage  on  property  not  in 
come  also  subject  to  the  mortgage.  esse.  Book  27,  N.  Y.  Rpts.,  Bender 
Forman  v.  Proctor,  9  B.  Monr.   124.  ed.,  note,  p.  265. 

630 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    421 

ing  an  adverse  interest  in  the  thing,  requires  the  subsequent  and 
seasonable  execution  of  a  new  mortgage.  For  as  a  rule  a  mort- 
gage of  future-acquired  property  is  void  per  se  at  law  as  against 
third  parties  in  adverse  interest,  unless  the  mortgagee  takes  actual 
possession  of  such  property  before  any  adverse  interests  have 
fastened  upon  it,  or  obtains  constructive  priority  under  a  new 
mortgage.^ 

The  main  difficulty  results  from  the  circumstance  that  equity 
asserts  a  rule  more  favorable  to  the  mortgagee  out  of  regard  to  the 
true  intent  of  the  transaction.  While  in  equity  the  mortgage  of 
future-acquired  chattels  does  not  pass  the  title  completely,  it  never- 
theless creates  in  the  mortgagee  an  equitable  interest;  and  this 
equitable  interest  is  upheld  as  against  judgment  creditors  and 
others,  upon  the  theory  that  the  mortgage,  though  inoperative  as 
an  instrument,  operates  to  transfer  the  beneficial  interest  to  the 
mortgagee  as  soon  as  the  property  is  acquired ;  the  mortgagor,  if 
need  be,  becoming  a  trustee  for  the  mortgagee  before  the  latter 
takes  personal  possession  of  the  thing.^     But  at  all  events,  the 

8.  See  Barnard  v.  Eaton,  2  Cush.  plied  to  the  subsequent  annexation 
294;  Codman  v.  Freeman,  3  Cush.  or  substitution  of  certain  machinery. 
306;  Ranlett  v.  Blodgett,  17  N.  H.  And  see  Lazarus  v.  Andrade,  5  C.  P. 
298.  And  see  Mowry  v.  White,  21  D.  318.  Such  was  the  rule  Sustained 
Wis.  417;  Hamilton  v.  Rogers,  8  Md.  by  Mr.  Justice  Story  still  earlier,  in 
301.  The  mortgage  of  a  customer's  Mitchell  v.  Winslow,  2  Story,  630. 
future  possible  accounts  is  not  good  And  to  that  conclusion  is  the  general 
against  third  persons.  Purcell  v.  tendency  of  the  later  American  de- 
Mather,  35  Ala.  570.  See  also  Jones  cisions.  See  Beall  v.  W^hite,  94  U.  S. 
Chatt.  Mort.,  §§  138-169,  and  cases  382;  McCaffrey  v.  Woodin,  65  N.  Y. 
cited,  where  this  subject  is  exhaust-  459;  and  variou.s  other  cases  cited, 
ively  presented.  Effect  of  chattel  Jones  Chatt.  Mort.,  §  173,  showing 
mortgage  on  crops  and  after-acquired  that  in  Massachusetts  and  Wisconsin 
property.  Book  13,  N.  Y.  Rpts.,  at  least  this  rule  has  not  been  favored. 
Bender's  ed.,  note,  p.  938;  Book  29,  Autiiority  to  the  mortgagee  to  en- 
N.  Y.  Rpts.,  Bender's  ed.,  note,  p.  ter  and  seize  after-acquirinl  chattels 
434.  Mortgages  on  crop,  termination  creates  no  equitable  interest  per  se. 
by  death.  Book  26,  N.  Y.  Rpts.,  Reeve  v.  Whitmore,  4  De  G.  J.  4  S. 
Bender's  ed.,  note.  p.  24.  1.     Nor  can  a  valid  lien  in  eciuity  be 

9.  Holroyd  v.  Marshall,  10  H.  L.  created  upon  goods  not  specifically 
Cas.  191,  settles  this  doctrine  for  the  defined  by  the  instrument  creating 
English   courts   in  a  case   which   ap-  the  lien,    fielding  v.  Read,  3  H.  A  C 

631 


§  422 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


policy  of  our  registry  laws  requires  that  the  written  chattel  mort- 
gage shall  clearly  express  its  intention  where  after-acquired  prop- 
erty is  to  be  covered  by  it.^ 

The  circumstance  that  one  attempts  to  mortgage  property  which 
he  does  not  possess  will  not  invalidate  the  mortgage  as  regards 
property  which  he  actually  possesses.^ 

§  422.     What  Does  a  Chattel  Mortgage  Secure. 

Usually  a  distinct  indebtedness  described  in  a  promissory  note 
which  forms  part  of  the  mortgage  transaction  is  secured.  But  a 
mere  contingent  indebtedness  may  be  thus  secured :  for  in  either 
a  real  estate  or  personal  mortgage  the  condition  need  not  be  for  the 


955;  Tadman  v.  D'Epineuil,  20  Ch. 
D.  758.  See  further,  Jones  Chatt. 
Mort.,  §§  170-175.  Railway  mort- 
gages usiually  cover  after-acquired 
property.     lb.,  §  175. 

1.  Lormer  v.  Allyii,  64  Iowa,  725, 
21  N.  W.  149";  Montgomery  v.  Chase, 
30  Minn.  132. 

As  to  after-acquired  property,  see 
Robson  V.  Dailey,  130  N.  Y.  S.  1036 
(S.  C.  Eq.  T.,  1911)  ;  Miner  v.  Na- 
tional Co.,  167  Mich.  42,  132  N.  W, 
466;  Johansen  Co.  v.  Alles,  197  Fed. 
274,  116  C.  C.  A.  636;  Williams  v. 
Kimball  Co.,  188  Mo.  App.  646,  176 
S.  W.  478    ( substituted  chattels ) . 

The  oflfs'pring  of  a  female  animal 
mortgaged  is  subject  to  the  encum- 
brance. McCarver  v.  Griffin,  69  So. 
920  (Ala.  Sup.,  1915)  ;  In  re  Dunton, 
114  Me.  270,  95  Atl.  1038. 

2.  Gardner  v.  McEwen,  19  N.  Y. 
123;  Voorhis  v.  Langsdorf,  31  Mo. 
451.  We  may  add  that  the  mort- 
gage of  a  specific  number  of  articles 
of  a  particular  kind  in  a  place  where 
other  like  articles  are  kept  will  confer 
upon  the  mortgagee  a  right  of  selec- 
tion.    Call  V.  Gray,  37  N.  H.  428. 


And  although  the  thing  mortgaged 
be  repaired  and  changed,  the  identity 
of  the  thing  remaining,  and  its  value 
not  being  materially  increased,  the 
right  of  property  in  the  mortgagee  is 
not  thereby  altered.  Comins  v.  New- 
ton, 10  Allen,  518 ;  Putnam  v.  Gush- 
ing, 10  Gray,  334;  Crosby  v.  Baker, 
6  Allen,  295.  Moving  the  mortgaged 
goods  from  one  place  to  another  does 
not  destroy  the  mortgagee's  title, 
though  it  might  increase  the  difficulty 
of  establisihing  them  as  the  goods 
covered  by  his  mortgage.  Whelden 
V.  Wilson,  44  Me.  1.  The  fact  that 
the  goods  mortgaged  were  in  part 
perishable  does  not  necessarily  avoid 
the  mortgage.  Googins  v.  Gilmore, 
47  Me.  9.  Nor  that  the  value  of  the 
mortgaged  goods  has  greatly  increased 
since  the  date  of  the  mortgage,  espe- 
cially if  they  were  mortagged  when 
in  an  unfinished  state.  Perry  v.  Pet- 
tingill,  33  N.  H.  433.  And  see  Comins 
V.  Newton,  10  Allen,  518.  As  to  a 
sufficient  description  of  things  in  an 
unfinished  state,  see  Lawrence  v. 
Evarts,  7  Ohio  St.  194. 


632 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC. 


§  422 


payment  of  any  definite  sum  of  money.^  Indeed,  it  is  not  essen- 
tial that  the  mortgage  should  secure  any  pa^Tnent  whatever,  for  it 
may  secure  the  performance  of  any  obligation  on  the  mortgagor's 
part."*  As  between  mortgagor  and  mortgagee  the  recitals  of  a 
mortgage  may  establish  a  consideration  in  a  suit  involving  title 
to  the  thing ;  but  where  a  mortgage -appears  prima  facie  fraudulent 
as  to  creditors,  the  mortgage  should  be  able  to  show  some  legal  and 
valid  consideration.^  Parol  evidence  is  admissible  to  show  the 
purpose  for  which  a  chattel  mortgage  was  executed,  or  to  identify 
a  note  intended  to  be  secured  by  it ;  nor  is  the  full  expression  of 
consideration  essential  in  the  mortgage  instrument,  provided  the 
transaction  be  bond  fide  established  and  the  description  be  such 
that  inquiry  aliunde  would  enable  subsequent  creditors  to  ascertain 
the  extent  of  the  incumbrance.^ 

A  chattel  mortgage  made  to  secure  future  advances  is  valid; 
and  in  general  a  debt  which  is  wholly  future  may  be  secured  and 
not  merely   a   present   or   a    pre-existing   debt.'^     Nor   need    the 


3.  Goddard  v.  Sawyer,  9  Allen.  78; 
Treat  v.  Gilmore,  49  Me.  34;  Ripley 
V.  Larmouth,  56  Barb.  21;  Robinson 
V.  Hill,  15  N.  H.  477;  Byram  v.  Gor- 
don, 11  Mich.  531. 

4.  lb.;  Hellyer  v.  Briggs,  55  Iowa, 
185;  Jonc3  Chatt.  Mort.,  §§  79-83. 
As  to  taking  such  security  as  guar- 
antor, sec  Preble  v.  Conger,  66  Til. 
370. 

5.  Tifft  V.  Barton,  4  Denio,  171; 
Kranert  v.  Simon,  65  111.  344;  Jones 
Chatt.  Mort.,  §§  80,  81.  A  mortgage 
may  be  valid  though  the  security  be 
not  wholly  for  the  mortgagee's  bene- 
fit. Morse  v.  Powers,  17  N.  H.  286; 
Jones  Chatt.  Mort.,  §  84.  As  to  the 
rule  of  bond  fide  party  for  value 
against  the  true  owner  of  property, 
as  applied  here,  see  Jones  Chatt. 
Mort.,  §  81;  Tiffany  v.  Warren,  37 
Barb.    571 ;    Thompson   v.   Van   Vech- 


ten,  27  N.  Y.   568;   Craft  v.   Russell, 
67  Ala    9. 

6.  McKinster  v.  Barbcock,  20  N.  Y. 
378;  Bainbridge  v.  Richmond,  17  Hun, 
391;  Jones  Chatt.  Mort.,  §§  89,  90, 
96;  Partridge  v.  Swazey,  46  Me.  414. 
But  a  mortgage  which  gives  a  totally 
false  description  of  the  security  cannot 
be  relied  on  at  law;  for  the  instru- 
ment should,  if  proper,  be  reformed  in 
equity.     Jones,  §  88. 

7.  Jones  v.  Guaranty  Co.,  101  U.  S. 
62a;  Bro\\Ti  v.  Kiefer,  71  N.  Y.  610; 
Barnard  v.  Moore,  8  Allen,  273 :  Speer 
V.  Skinner,  35  111.  282;  Ackerman  v. 
Ilunsicker,  85  N.  Y.  43;  Jones  Chatt. 
Mort.,  §  94;  Lawrence  v.  Tucker,  23 
How.  14;  Googina  v.  Gilmore,  47  Me. 
9';  Chaffee  v.  Atlas  Co.,  43  Neb.  224. 
Local  statute  may  affect  this  rule. 
See  Page  v.  Ordway.  40  N.  H.  253; 
Farmers'  Bank  v.  Bell.  176  S.  W.  92a 


633 


§  423  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

amount  of  intended  advances  be  stated  in  the  mortgage  instru- 
ment, if  the  purpose  be  described  with  reasonable  certainty.^  But 
to  give  effect  to  such  a  mortgage  as  against  a  bond  fide  purchaser, 
judgment  creditor,  or  intervening  lien-claimant,  the  mortgagee 
should  be  able  to  show  that  he  has  made  the  contemplated  advances 
or  incurred  the  liability  mentioned  and  that  the  debt  or  liability  is 
still  outstanding ;  ^  for  advances  made  after  the  mortgagee  has 
actual  notice  that  others  have  acquired  bond  fide  rights  for  value 
in  the  property  will  be  postponed  to  them,  unless  the  circumstances 
made  it  essential  that  the  mortgagee  should  extend  the  risks  which 
his  security  was  intended  to  protect.^  A  mortgage  cannot  in  gen- 
eral be  extended  so  as  to  cover  advances  not  contemplated  at  the 
time  of  its  execution ;  for  this  is  matter  for  a  new  mortgage  be- 
tween the  parties  which  regards  the  intervening  priorities  of 
others.^  Nor  can  a  mortgage  securing  a  debt  of  a  fixed  amount  or 
description  be  so  e>xtended  as  to  become  a  lien  for  another  and 
different  indebtedness  not  so  expressed.''  But  the  rule  has  been 
that  a  mortgage  need  not  show  on  its  face  that  it  was  meant  to 
comprehend  future  dealings  and  indebtedness,  since  creditors  may 
be  put  to  their  own  inquiry  on  such  points ;  "*  yet  it  is  better  and 
safer  to  express  the  idea  in  the  mortgage  instrument. 

§  423.     Mortgages  Made  Under  a  Qualified  Title,  etc. 

It  is  not  necessary  that  the  mortgagor  should  have  the  absolute 
title  to  property  which  is  the  subject-matter  of  the  mortgage ;  ^ 

(Tex.  Civ.  App.,  1915)  ;  Buck  V.  Buck,  v.    McChesney,   86   N.   Y.   242;    Jones 

162  Cal.  300,  122  Pac.  466.  Chatt.  Mort.,  §§  9'4,  97. 

8.  Jarratt  v.  McDaniel,  32  Ark.  598.  2.  Davenport  v.  McChesney,  86  N. 
A  false  description  should  be  reformed  Y.  243  ;  Monnot  v.  Ibert,  33  Barb, 
in  equity  before  legal   remedies   may  24. 

be    pursued.      See    FoUett    v.    Heath,  3.  Jones,    §    91;    Mueller   v.    Provo, 

15  Wis.  601;  Webb.  v.  Stone,  4  Fost.  80    Mich.    475;    Harrington    v.    Sam- 

282.  pies,  36  Minn.  200. 

9.  Jones  Chatt.  Mort.,  §   94.  4.  Jones,  §  96. 

1.  Franklin  v.  Meyer,  36  Ark.   96;  5.  Jones  Chatt.  Mort.,  §  114;   Pon- 

Speer  v.  Skinner,  35  111.  282;  Preble  der  v.  Rhea,  32  Ark.  435;  Leland  v. 
V.    Conger,    66    111.    370;    Davenport      Sprague,  28  Vt.  746. 

634 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    424 

though  the  usual  rules  prevail  as  to  a  paramount  owner  whose 
assent,  express  or  implied,  has  not  been  given.^  So  may  the 
owner  of  a  chattel  not  in  possession  (as,  for  instance,  where  he  has 
already  pledged  it  or  a  bailee  has  a  lien  upon  it)  make  a  valid 
mortgage  of  the  thing  subject  to  a  pre-existing  pledge  or  lien ;  in 
which  case  notice  to  the  pledgee  or  lien-claimant  perhaps  (or  a 
registry  of  the  instrument)  would  be  proper.^  And  there  may  be 
a  prior  and  junior  mortgage  of  the  same  chattel.^ 

One  in  possession  of  property  under  a  conditional  sale  may 
mortgage  his  interest,  such  as  it  is,  and  on  payment  of  the  price 
the  mortgage  will  become  valid.^  On  the  other  hand,  a  vendor 
who  has  sold  chattels  conditionally  may  mortgage  his  own  interest.* 

§  424.     Mortgage  Should  Conform  to  Legislative  Policy,  etc. 

Transactions  of  this  character  should  be  entered  into  bond  fide, 
and,  like  any  other  contract,  should  not  only  be  entered  into  by 
competent  parties  by  way  of  mutual  agreement,  but  conform  to 
good  morals  and  legislative  policy.^ 

6.  Supra,  §  406;  Stanley  v.  Gaylord,  And  as  to  other  interests  in  personal 
1  Cush.  536;  Malcom  v.  Loveridge,  property  which  may  become  absolute 
13  Barb.  372 ;  Glazse  v.  Blake,  56  Ala.  by  perfecting?  some  executory  contract, 
379.  As  to  subsequent  ratification  see  Jones  Chatt.  Mort.,  §  117;  For- 
by  the  true  owner,  see  Jones  Chatt.  man  v.  Proctor,  9  B.  Mon.  124. 
Mort.,  §   119;    112  Mass.  250.  2.  Thus  a  mort^afire  made  to  secure 

7.  Jones  Chatt.  Mort.,  §  115 ;  Pin-  a  debt  for  spirituous  liquors  would, 
dell  V.  Grooms,  18  B.  Mon.  501;  Case  under  the  statutes  of  some  States,  be 
V.  Woleben,  52  Iowa,  389.  void.       See    Brigham    v.    Pottor,    14 

8.  Smith  V.  Coolbaugh,  21  Wis.  Gray,  522.  But  see  Trott  v.  Irisrh,  1 
427.  Allen,    481.      But    the    party    out    of 

9.  Cronipton  v.  Pratt,  105  Mass.  possession  of  property  illegally  mort- 
255;  Jones  Chatt.  Mort.,  §  117.  And  gaged  by  him  occupies  the  worse 
see  Holman  v.  Lock,  51  Ala.  287.  position    for    seeking    to    recover    it. 

1.  Everett    v.    Hall,    67    Me.    497;  Bagg  v.   Jerome.   7   Mich.    145.      And 

Jones  Chatt.   Mort.,   §   118.  see   §   398.     By  the  statutes  of  some 

So,  too,  as  to  a  mortgage  of  chat-  States  a  mortgage  founded   in  usury 

tels  by  one  holding  possession  under  is    void    or    voidable.      Thompson    v. 

a  lease  for  a  purchase  by  instalment,  Van  Vechten,  27  N.  Y.  568.     See  §§ 

see  Chase  v.  Ingalls,  122  Mass.  381 ;  248-290,  supra,  on  Interest  and  Usury. 

Currier    v.    Knapp,    117    Mass.    324.  And    legislation    sometimes    requires 

635 


§  425 


THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 


§  425.     Rules  of  Delivery,  Registry,  etc. ;   Local  Statutes  Require 
Registry. 

Thirdly,  we  are  to  consider  the  rules  of  delivery,  registry,  and 
priority  of  title.  And  here  we  find  that  legislation  essentially 
alters  much  of  the  conunon  law  pertaining  to  chattel  mortgages, 
and  requires  certain  formalities  to  be  pursued,  without  which  a 
mortgagee's  title  is  at  least  precarious  as  regards  the  mortgagor, 
and  of  no  avail  against  third  parties  whose  hond  fide  rights  may 
have  intei*vened.  To  pursue  the  details  of  the  later  American 
legislation  in  this  respect  would  be  unprofitable ;  ^  and  scarcely 
less  so  to  recount  the  numerous  decisions  which  constantly  arise 
under  the  registration  acts  of  the  different  States.  But  it  may  be 
generally  stated  that  the  object  of  this  legislation  is  not  so  much 
to  guard  or  affect  the  reciprocal  rights  of  mortgagor  and  mort- 
gagee, as  to  prevent  subsequent  purchasers,  incumbrancers,   and 


the  debt,  liabiltiy,  or  agreement  to 
be  strictly  between  mortgagor  and. 
mortgagee.  Parker  v.  Morrison,  46 
N.  H.  280.  And  see  Belknap  v. 
Wendell,  11  Fost.  92.  There  should 
be  the  assent  of  both  parties  to  the 
transaction ;  for  which  reason  a  mort- 
gage made  by  a  debtor,  without  the 
creditor's  knowledge  or  assent,  is 
held  to  he  inoperative.  Oxnard  v. 
Blake,  45  Me.  602;  Welch  v.  Sackett, 
12  Wis.  243.  Nor  can  a  mortgage 
hold,  which  is  "  made  with  the  in- 
tent to  hinder,  delay,  or  defraud 
creditors,"  —  both,  parties  participat- 
ing in  this  design, —  according  to  the 
general  policy  of  English  and  Ameri- 
can' legislation.  Eich  v.  Le^'y,  16  Md. 
74;  Stein  v.  Hermann,  23  Wis.  132; 
Meixsell  v.  Williamson,  35  111.  529 ; 
Conkling  v.  Shelley,  28  N.  Y.  360. 
And  see  as  to  illegal  consideration. 
Continental  Co.  v.  J.  F.  Madden,  140 
Ga.  39,  78  S.  E.  460. 

In  a  few  States   statutory   restric- 
tions   are    placed    upon    the    subject- 


matter  of  chattel  mortgages.  See 
Jones  Chatt.  Mort.,  §§  121,  122.  As 
to  the  mortgage  of  fixtvires,  see  supra, 
§§  114,  124;  Jones  Chatt.  Mort.  §§ 
123-137. 

Contests  between  mortgagees  and 
attaching  creditors  over  chattels  are 
frequently  so  sharp  and  bitter  that  it 
behooves  one  who  takes  any  by  way 
of  mortgage  security  to  have  a  good 
instrument  drawn  up,  and  to  see  that 
the  property  given  in  security  and 
the  thing  to  be  secured  are  both 
plainly  described  and  clearly  identi- 
fied in  it.  The  essential  question  is 
quite  apt  to  be  one  of  honest  inten- 
tion in  such  case&;  written  expres- 
sions may  make  this  honest  intention 
manifest,  while  general  and  mislead- 
ing descriptions  in  a  mortgage  ought 
to  throw  a  doubt  over  a  mortgagee's 
title  where  other  creditors  contest  it. 

3.  Necessity  for  filing  chattel  mort- 
gage and  when  it  should  be  filed. 
Book  25,  N.  Y.  Rpts.,  Bender's  ed., 
note,  p.  773. 


636 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    425 

attaching  creditors  from  being  imposed  upon  by  their  joint  artifice 
and  fraud.  Transfers  of  interests  in  chattels,  when  made  without 
some  delivery,  actual  or  symbolical,  of  the  thing,  are  very  objec- 
tionable, even  though  the  parties  to  the  transaction  be  content  to 
have  it  so;  for  the  original  owner,  who  has  incumbered  his  prop- 
erty, may  thus  keep  up  a  fictitious  credit,  and  peril  the  interests 
of  those  with  whom  he  deals  outside,  by  appearing  to  their  eyes 
the  same  continuous  owner. 

Hence  is  it  that  our  local  statutes  now  make  it  essential  for 
chattel  mortgages  to  be  in  writing  and  formally  executed,  in  order 
to  prevail  against  such  interested  third  parties  without  notice; 
and  furthermore  require,  in  absence  of  delivery  of  the  property  to 
the  mortgagee,  that  this  instrument  be  duly  spread  out  upon  the 
public  records.  The  recording  or  filing  of  a  mortgage  is  generally 
equivalent  to  a  change  of  possession  under  such  legislation.  In 
this  aspect,  then,  the  law  of  chattel  mortgages  comes  to  resemble 
more  closely  than  ever  that  of  real-estate  mortgages ;  and  it  is 
customary  in  these  days  for  registry  and  non-possession  before 
default  to  characterize  one  class  of  these  transactions  as  well  as  the 
other."*     ^N'otice  by  record  is  made  effectual  by  such  legislation 

4.  Making  allowance  for  the  many  And  see  Jones  Chatt.  Mort.,  §§  248- 
shades  of  difference  in  our  State  legis-  274,  where  the  cases  are  considered 
lation,  it  may  be  said  generally,  at  length;  Stewart  v.  Piatt,  101  U.  S. 
that  these  statutes  require  either  731.  As  to  registry  under  English 
registry  or  delivery  of  the  goods  in  statutes,  see  Keith  v.  Burrows,  1 
order  to  make  the  mortgage  hold;  C.  P.  D.  722.  The  subsequent  re- 
but not  usually  both  registry  and  de-  moval  of  the  mortgagor  to  a  new 
livery.  And  the  place  of  record  is  place  does  not  make  a  new  record 
usually  where  the  mortgagor  resides,  necessary  in  such  place.  Brigham  v. 
or  where  he  resides  and  has  his  place  Weaver,  6  Cush.  298 ;  Barrows  v. 
of  busine&s.  Call  v.  Gray,  37  N.  H.  Turner,  50  Me.  127;  Jones,  §  260. 
428 ;  Lang^vorthy  v.  Little,  12  Cu.sh.  And  see  Smith  v.  McTiCan.  24  Iowa, 
109;  Henderson  v.  Morgan,  26  111.  322.  See,  further.  Vaughn  v.  Bell. 
431;  Bevans  v.  Bolton,  31  Mo.  437;  9  B.  Monr.  447:  Fowler  v.  Merrill, 
Weed  V.  Standley,  12  Fla.  166;  Kood  11  How.  37.');  Oxnard  v.  Blake.  45 
v.  Welch,  28  Conn.  157;  Kuhn  v.  Me.  602;  De  Courcey  v.  Little,  4 
Graves,  9  Iowa,  303;  Rich  v.  Roberts,  Green  (N.  J.),  115.  As  to  the  date 
50  Me.  395;  Matlock  v.  Straughn,  21  when  the  record  takes  effect,  soo 
Ind.    128;    U.   S.   Dig.   Mortgage,   49.  Holmes  v.  Sproul,  31  Me.  73;  Hand- 

637 


§  425 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


from  the  time  that  the  instrument  is  left  for  record  at  the  proper 
office ;  and  such  record  notice  charges  the  public  and  gives  full 
priority  to  the  mortgage.^  And  in  some  States  the  mortgage 
ceases  to  be  valid  against  subsequent  purchasers  of  the  property 
in  good  faith,  and  lien-creditors  of  the  mortgagor,  after  the  expira- 
tion of  a  certain  period  from  the  original  filing  for  record,  unless  it 
is  registered  anew.^ 


ley  V.  Howe,  22  Me.  560;  Craig  v. 
Dimock,  47  III.  308.  For  formalities 
connected  with  the  record,  and  the 
recording  officer's  duties,  see  Head  v. 
Goodwin,  37  Me.  181 ;  McLarren  v. 
Thompson,  40  Me.  284;  McCord  v. 
Cooper,  30  Ind.  9;  Jordan  v.  Farns- 
worth,  15  Gray,  517;  Swift  v.  Hall, 
23  Wis.  532;  Case  v.  Jewett,  13 
Wis.  498;  Porter  v.  Dement,  35  HI. 
478;  Woodruff  v.  Phillips,  10  Mich. 
500;  Jones  Chatt.  Mort.,  §  248. 

Limitations  as  to  the  value  or  the 
species  of  secured  property  requiring 
record  are  to  be  found  in  some  of 
the  statutes.  See  Newby  v.  Hill,  2 
Met.  (Ky.)  530;  Either  v.  Buswell, 
51  Me.  601.  And  see,  as  to  mort- 
gage of  a  legacy.  Marsh  v.  Wood- 
bury, 1  Met.  436. 

5.  Miller  v.  Whitson,  40  Mo.  97; 
Parker  v.  Palmer,  13  R.  I.  359;  Jones 
Chatt.  Mort.,  §  270;  Gorham  v.  Sum- 
mers, 25  Minn.  81. 

Statutes  of  our  States  relating  to 
the  record  of  chattel  mortgages  are 
Sometimes  extended  expressly  to 
ships  and  vessels.  Mtna  Ins.  Co.  v. 
Aldrich,  20  N".  Y.  92.  But  in  general 
the  United  States  registry  acts  here 
apply,  and  State  record  is  presumably 
dispensed  with.  See  supra,  c.  1 ; 
Wood  V.  Stockwell,  55  Me.  76;  Veazie 
V.  Somerby,  5  Allen,  280. 

A  mortgage  imperfectly  acknowl- 
edged is  rendered  invalid  as  against 


subsequent  purchasers  and  creditors 
of  the  mortgagor,  by  the  statute  rule 
of  some  States.  Jones  Chatt.  Mort., 
§  248;  Frank  v.  Miner,  50  111.  444. 
A  mortgage  which  embraces  both 
real  and  personal  property  ought  to 
be  recorded  twice  in  conformity  with 
the  registry  laws  respectively  applica- 
ble to  real  and  personal  property. 
Jones  Chatt.  Mort.,  §  279.  But  sepa- 
rate instruments  of  mortgage  would 
be  here  desirable.  See  Stewart  v. 
Beale,  68  N".  Y.  629.  As  to  recording 
a  mortgage  of  fixtures,  see  Jones, 
§  281.  And  as  to  recording  a  sched- 
ule which  forms  part  of  the  chattel 
mortgage,  see  Sawyer  v.  Pennell,  19 
Me.  167;  Chapin  v.  Cram,  40  Me. 
561. 

6.  See  Dillingham  v.  Bolt,  37  N.  Y. 
198;  Hill  v.  Beebe,  3  Kern.  556;  27 
N.  Y.  568;  Wetherell  v.  Spencer,  3 
Mich.  123;  Paine  v.  Mason,  7  Ohio 
St.  19'8;  Edson  v.  Newell,  14  Minn. 
228;  National  Bank  v.  Sprague,  20 
N.  J.  Eq.  13;  Jones  Chatt.  Mort., 
§§  286-298.  Delivery  of  a  chattel 
mortgage  for  record  will  not  avail,  if 
both  execution  and  delivery  were  for 
absent  parties  who  were  thus  made 
mortgagees  without  their  knowledge. 
Welch  V.  Sackett,  12  Wis.  243. 

Record  operates  as  a  constructive  no- 
tice. See  Third  Nat.  Bank  v.  Nat.  Bank 
of  Commerce,  139  S.  W.  665  (Tex. 
Civ.  App.,  1911)  ;   Vander  Weyden   v. 


638 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC, 


§  426 


Where  the  chattel  mortgage  is  properly  recorded  in  the  State 
where  it  was  executed  and  the  goods  were  situated,  the  mortgagee 
prevails  over  a  purchaser  for  value  in  another  State  without  notice, 
whither  the  mortgagor  removed  the  goods/ 

§  426.     The  Same  Subject;    Effect  of  Unrecorded  Mortgage. 

The  registry  of  an  instrument  operates  as  constructive  notice 
of  title.  Now  it  is  a  familiar  principle  of  equity  that  actual 
notice  to  any  interested  party  will  dispense  with  a  constructive 
notice;  and  in  some  States  it  is  held  that  any  existing  creditor  or 
purchaser,  who  has  actual  notice  of  a  prior  unrecorded  chattel 
mortgage,  can  claim  no  priority  on  the  ground  that  the  mortgage 
was  not  registered.^  But  the  practice  in  this  respect  is  not  uni- 
form ;  for  in  various  States  such  legislation  declares,  that  an  un- 
recorded mortgage  or  even  a  recorded  mortgage  imperfectly 
executed,  cannot  avail  even  against  purchasers  with  actual  notice, 
if  the  goods  remain  in  the  mortgagor's  possession ;  ^    and  under 


Coors,    52    Col.    298,    121    Pac.    155; 
Hayes    v.    Taylor,    35    S.    D.    320,    52 
N.  W.   116    (notice  actual)  ;   Shorter 
V.    Dail,    122    Md.    101,   89  Atl.    320 
Rothchild    v.    Van    Alstine,    90    Neb 
441,    133    N.    W.    843     (attachment) 
As    to    lienholder's   priority,    See   Na 
tional    Citizens'    Bank    v.    McKinley 
118  Minn.  162,  136  N.  W.  579;  Boat 
men's  Bank  v.  Fritzlen,  221  Fed.  145 
137   C.   C.  A.   45    (lien   for  feeding) 
Nelson  v.   First  Nat.  Bank,   184   111 
App.   349    (innkeeper). 

Non-execution  and  non-record  con 
sidered  in  Commonwealth  Trust  Co 
V.  Salem  Co.,  77  N.  H.  146,  89  Atl 
452;  Gibson  v.  Linthieum,  150  Pac 
908  (Okla.  Sup.,  1915).  An  unre 
corded  mortfratjo  may  be  good  as  be 
twcen  the  original  parties.  Hof  v 
Mager,  168  App.  Div.  318,  154  N.  Y 
S.  60.  Possession  of  the  property  is 
prima     facie     notice     of     due     title. 


Levitt  V.  Brendell,  163  Iowa,  67,  144 
N.  W.  19f. 

7.  Newsum  v.  Hoffman,  124  Tenn. 
369,  137  S.  W.  490. 

8.  Smith  V.  Zurcher,  9  Ala.  208; 
Lewis  V.  Palmer,  28  N.  Y.  271 ;  Allen 
V.  McCalla,  25  Iowa,  4C4;  Hathorn 
V.  Lewis,  22  111.  395.  Actual  notice, 
to  be  effectual,  should  be  notice  of 
all  which  the  statute  recpiires  to  be 
recorded.  Sawj'cr  v.  Penncll,  19  Me. 
167.  Actual  notice  may  be  proved 
by  facts  and  circumstances;  but  the 
burden  is  upon  tlie  party  alleging 
actual  notice  to  sliow  it.  Rogers  v. 
Pierce,  12  Neb.  48;  Piper  v.  Hilliard, 
58  N.  H.  198,  29^5 ;  Jones  Chatt.  Mort.. 
§§  309,  310.  Validity  as  to  creditors 
of  unfiled  cluittei  mortgage.  B(M)k 
28.  N.  Y.  Rpts.,  Bender's  od..  note, 
p.   120. 

9.  Rich  V.  Roberts.  48  Me.  548; 
Travis  v.   Bishop,   13   Met.   304;    Mc- 


639 


§  426  THE  LAW  OF  PERSONAL  PKOPEETY.       [PART  III. 

any  circumstances  tte  rule  is  frequently  made  a  matter  of  mere 
statute  construction.^  Even  where  the  statute  expressly  states 
that  no  mortgage  shall  be  valid  unless  recorded  as  against  cred- 
itors, still  an  unrecorded  mortgage  is  lately  held  valid  against  sub- 
sequent creditors.^ 

But  as  concerns  mortgagor  and  mortgagee,  and  all  parties  other 
than  subsequent  purchasers  or  incumbrance  and  lien  creditors  of 
the  mortgagor,  it  is  quite  different.  A  mortgage  of  personal  prop- 
erty on  proper  consideration  may  be  pronounced  good  as  ]>etween 
the  parties  to  it  without  any  record  or  change  of  possession,  inas- 
much as  it  amounts  at  all  events  to  an  executory  agreement  which 
is  obligatory  and  ought  to  be  enforced.^  A  mortgage  furthermore 
is  good  between  the  parties  to  it,  although  it  does  not  conform  to 
such  statute  requirements  as  relate  to  the  record  or  execution  of  the 
instrument.'*  At  present,  however,  under  the  policy  of  our  State 
legislation,  either  an  actual  delivery  of  the  mortgaged  goods  to  the 
mortgagee,  or  a  record  of  the  mortgage,  is  usually  made  essential 
to  perfect  the  title  in  him,  though  rarely  are  both  deemed  neces- 
sary; and  as  to  a  written  instrument  of  mortgage,  this  is  so 
important  that  in  some  States  a  delivery  of  chattels  as  collateral 
security  without  any  written  instrument  conformable  to  the  statute 
would  not  be  regarded  as  a  mortgage  at  all.^  Any  delay  in  re- 
cording a  chattel  mortgage  does  not,  however,  as  a  rule,  affect  its 
validity  as  between  the  parties  to  the  transaction,  or  with  reference 

Court  V.  Myers,  8  Wis.  236;   Wilson  2.  Holt  v.   Crucible   Steel   Co.,   224 

V.    Milligan,    75    Mo.    41;    Wilson   v.  U.  S.  262,  32  S.  Ct.  414. 

Leslie,  20  Ohio  St.  161;  Lockw'ood  v.  3.  See  U.  S.  Dig.  Mortgage,  Suppl. 

Slevin,    26    Ind.    124 ;    Jones    Chatt.  423 ;  Johnson  v.  JeflFries,  30  Mo.  623 ; 

Mort.,   §   314.      Under   some  statutes  supra,  §  418. 

notice  of   a   mortgage  not   filed   does  4.  Jones  Chatt.   Mort,,   §   237,   and 

not   afi'ect   creditors,   but   does    affect  cases. 

.subsequent    purchasers    and    mortga-  5.  See  Day  v.   Swift,   48   Me.   368; 

gees.     Farmers'    Loan    Co.    v.    Hen-  Wooster  v.   Sherwood,  25  N.  Y.  278; 

dricken,     25     Barb.     484;   Sayre     v.  Call  v.   Gray,   37  N.   H.   428;   Byram 

Hewes,  32  N.  J.  Eq.  652 ;  Jones  Chatt.  v.    Gordon,    11    Mich.    531;    Hodgson 

Mort.,  §  318.  V.    Butts,    3    Cr.    140;    preceding   sec- 

1.  See  Jones  Chatt.  Mort.,  §§  308-  tion. 
318,  and  cases  cited. 

640 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC. 


§    426 


to  utter  strangers  or  wrong-doers;  but  the  mortgage  continues 
ineffectual  only  as  against  intervening  purchasers  or  incumbranc- 
ers and  creditors  with  lien;  ^  and  (as  we  have  seen  the  rule  to  be 
in  certain  States)  only  of  any  such  of  these  as  have  had  no  actual 
notice  in  season.'^  General  creditors  without  a  lien  on  the  thing 
could  not  impeach  such  mortgage  except  as  being  fraudulent  or  as 
giving  an  unrighteous  preference  under  a  bankrupt  or  insolvent 
law.^ 

One  of  two  things,  however,  the  mortgagee  should  do  to  make 
his  title  complete, —  either  cause  the  mortgage  to  be  recorded,  or 
else  take  possession  of  the  property,  as  he  has  a  right  to  do ;  sup- 
posing, besides,  that  he  has  already  had  the  mortgage  instrument 
itself  delivered  to  him  or  his  agent.  When  the  registry  acts  are 
duly  complied  with,  or  possession  is  taken  by  the  mortgagee,  the 
mortgage  becomes  valid  and  operative  so  as  to  protect  the  mort- 
gaged property  from  creditors  not  having  already  made  a  levy  of 
execution  or  attachment,  and  subsequent  purchasers  from  the 
mortgagor.^ 


6.  Westcott  V.  Gunn,  4  Duer,  107; 
Evans  v.  Herring,  3  Dutch.  243 ; 
Pratt  V.  Harlow,  16  Gray,  379;  Coe 
V.  Columbus,  &c.  R.  R.  Co.,  10  Ohio 
St.   372. 

7.  See  qualifications  of  this  rule  in 
preceding  section,  under  the  statutes 
of  some  States. 

8.  Thompson  v.  Van  Vechten,  27 
N.  Y.  568;  Jones  Chatt.  Mort.,  § 
24.5. 

9.  See  Bro-wn  v.  Webb,  20  Ohio, 
389:  Single  v.  Phelps,  20  Wis.  sg'S; 
Bank  of  Rochester  v.  Jones,  4  Comst. 
497;  Morrow  v.  Turney,  35  Ala.  131; 
Fromme  v.  Jones,  13  Iowa,  474;  Saw- 
yer V.  Turpin,  91  U.  S.  114 ;  Jones, 
§  237.  The  recording  or  filing  of  a 
mortgage  being  generally  equivalent 
to  a  change  of  possession,  the  party 
claiming  under  it  is  relieved  of  the 


burden  of  proving  the  bond  fides  of 
the  transaction.  Jones  Chatt.  Mort., 
§  236.  and  cases  cited;  Morrill  V. 
Sanford,  49  Me.  566;  Robinson  v. 
Elliott,  22  Wall.  513;  Coles  v.  Clark, 
3  Cush.  399.  An  unfiled  or  unre- 
corded mortgage  is  valid  against  the 
mortgagor's  executor  or  administra- 
tor, just  as  it  is  valid  against  the 
mortgagor  himself.  Jones  Chatt. 
Mort.,  §  239-;  Gill  v.  Pinney,  12  Ohio 
St.  38.  The  same  rule  .seems  to  be 
preferable  as  concerns  the  insolvent 
e&tate  of  a  living  or  dead  mortgagor, 
where  no  fraud  is  shown  in  fact. 
Jones,  §§  239,  240,  241;  Stewart  v. 
Piatt,  101  U.  S.  731  ;  Yeatman  v. 
Savings  Institution,  95  U.  S.  764.  But 
see,  for  decisions  to  the  contrary. 
Jones  Chatt.  Mort..  5j§  240.  242.  And 
see  as  to  intended  fraud  upon  credit- 


41 


641 


§  427  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

§  427.     Delivery  and  Possession,  etc.,  Without  Registry,  etc. 

What  change  of  possession,  then,  will  suffice  to  render  the  mort- 
gagee's title  complete  without  a  record  of  the  mortgage  ?  The 
answer  must  be,  such  change  as  the  property  admits  of ;  and  this 
will  depend  upon  circumstances,  as,  for  instance,  the  nature  of  the 
property  and  its  situation.^  A  mortgagee  has  been  deemed  in 
actual  possession  as  against  attaching  creditors  of  the  mortgagor, 
where  he  has  placed  a  keeper  over  the  mortgaged  goods,  though 
concealing  somewhat  the  purpose  of  the  keeper's  presence  out  of 
regard  for  the  mortgagor's  family ;  or  where  some  other  stranger 
has  taken  possession  as  the  mortgagee's  agent,  notwithstanding  the 
goods  are  still  left  on  the  mortgagor's  premises.^  Mortgaged 
property  may  in  general  be  delivered  to  and  kept  by  a  bond  fide 
agent  of  the  mortgagee."'  No  formal  ceremony  is  essential.  But 
where  mere  words  of  delivery  are  used,  and  the  goods  continue 
upon  the  mortgagor's  premises,  either  under  his  personal  charge 
or  that  of  his  own  former  agent,  no  sufficient  change  of  possession, 
generally  speaking,  takes  place  as  against  the  public.'*     And  to 

ors,    Fourth    Nat.    Bank    v.    Willing-  v.  Bpnham,  84  N.  Y.  634.     This  is  the 

ham,  213  Fed.  219',  229,  129  C.  C.  A.  reasonable     rule,     because     possession 

563.  continued    by    the    mortgagor    or    his 

1.  Fry  V.  Miller,  45  Penn.  St.  441 ;  agent  is  usually  a  badge  of  fraud,  or 
Morse  v.  Powers,  17  N.  H.  286.  at  least  misleads  the  public.     But  un- 

2.  See  Morse  v.  Powers,  17  N.  H.  der  some  exceptional  circumstances, 
286;  Laflin  v.  Griffiths,  35  Barb.  58;  consistently  with  perfect  good  faith, 
Carpenter  v.   Snelling,  97  Mass.   452.  and  particularly  where  lien  creditors 

3.  lb.;  McPartland  v.  Read,  11  Al-  or  bona  fide  purchasers  are  not  af- 
len,  231;  Wheeler  v.  Nichols,  32  Me.  fected,  a  mortgagee  is  permitted  to 
233 ;  Jones  v.  Swayze,  42  N.  J.  L.  make  the  mortgagor  his  agent  to  keep 
279;  Jones  Chatt.  Mort.,  §  180.  If  a  possession,  as  in  the  case  of  a  pledge, 
third  person  be  already  in  possession,  See  Jones  Chatt.  Mort.,  §  181;  Turner 
his  consent  to  hold  as  the  mortgagee's  v.  Killian,  12  Neb.  580 ;  Dayton  v. 
agent  suffices  for  delivery.  Jones  People's  Savings  Bank,  23  Kans.  421. 
Chatt.  Mort.,  §  183;  Ancona  v.  Concurrent  possession  by  mortgagor 
Rogers,  1  Ex.  D.  285.  and  mortgagee  is  not  to  be   favored, 

4.  Menzies  v.  Dodd,  19  Wis.  343;  as  against  third  persons,  without  at 
Doak  v.  Brubaker,  1  Nev.  218 ;  Doyle  all  events  seasonable  notice  by  the 
v.  Stevens,  4  Mich.  87;  Pickard  v.  mortgagee  of  his  rights.  See  Flagg 
Marriage,  L.  R.  l  Ex.  D.  364;  Steele  v.  Pierce,  58  N.  H.  348;  Jones,  §  185. 

642 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    427 

satisfy  the  usual  legal  requirements,  chattels  mortgaged  under  an 
instrument  which  is  not  recorded  ought  not  only  to  be  taken  into 
the  mortgagee's  possession,  but  kept  there.^  A  mortgagee's  posses- 
sion, to  be  effectual  against  the  public,  ought  to  be  actual,  honest 
and  open.^ 

The  danger  of  deceiving  creditors  by  the  possession  of  the  mort- 
gagor does  not  exist  where  the  goods  are  in  the  possession  of  a  third 
person  who  is  not  his  agent,  and  in  such  case  the  necessary  change 
of  possession  is  accomplished  by  an  agreement  by  the  third  person 
to  hold  as  the  agent  of  the  mortgagee.^  But  it  has  been  held  that 
the  possession  of  an  agent  of  the  first  mortgagee,  who  agrees  to 
hold  also  for  the  second  mortgagee,  is  not  sufficient  to  uphold  the 
second  mortgage  as  against  the  trustee  in  bankruptcy  of  the  mort- 
gagor.8 

The  mortgagee  of  personal  property,  in  all  cases  where  there  is 
no  special  agreement  restraining  the  right  of  control  on  his  part, 
may  possess  himself  of  the  property  whenever  he  wishes ;  and 
unless  liens  have  meantime  attached  to  the  goods  while  in  the  mort- 
gagor's hands,  his  right  in  this  respect  cannot  be  lawfully  resisted.' 

5.  See  Parshall  v.  Eggart,  52  Barb.  while  a  condition  precedent  continues 
367;  Wright  V.  Tetlow,  99  Mass.  397;  unfulfilled.  Frost  v.  WoodrufT,  54 
Hickman  v.  Perrin,  6  Cold.  135;  Look  111.  155;  Weld  v.  Cutler,  2  Cray,  195; 
V.  Comstock,  12  Wend.  244;  Hage  v.  Jones  Cliatt.  Mort.,  §§  18G,  1S7. 
Campbell,  78  Wis.  572,  47  N.  W.  179.  7.  Hodges  v.  Kurd,  47  III.  363; 
A  change  of  possession  of  part  under  NaSh  v.  Ely,  19  Wend.  (N.  Y.)  523. 
the  unrecorded  mortgage  will  usually  8.  MofTatt  v.  Beeler,  (Kun.), 
protect  the  mortgage  lien  as  to  that  137  Pac.  963. 

part.      Jones    Chatt.    Mort.,    §    179';  9.  Whisler  v.  Roberts,  19  111.  274; 

Stewart   v.    Smith,   60    Iowa,    275,    14  Foster    v.    Perkins,    42    Maine,    168; 

N.  W.  Rep.  310.     But  the  burden  to  Coty  v.  Barnes,  20  Vt.  78 ;  Sawyer  v. 

prove    delivery   or   a    cliange   of    pos-  Turpin,    9-1    U.    S.    114;    Mitciiell    v. 

session  is  upon  the  per.son  who  claims  Black,  6  Gray,  100. 

to  hold  under  an  unrecorded  mortgage.  At  common   law  a   mortgage   valid 

McCarthy  v.  Grace,  23  Minn.  182.  against   lien   creditors   could   only    be 

6.  State  V.  Benham,  84  N.  Y.  634;  made  by  a  delivery  of  the  property; 
Anderson  v.  Brenneman.  44  Mich.  and  one  intent  of  the  registrj'  stat- 
198.  Constructive  or  verbal  posses-  utes  was  to  do  away  with  this  neces- 
sion  is  not  to  be  favored  in  such  sity  and  give  even  greater  notoriety 
cases.       Delivery     is    not    completed  to  the  transaction,  where  record  was 

G43 


§    428  THE    LAW    OF    PERSONAL    PROPERTY.  [pART  IIL 

It  is  not  uncommon  for  a  chattel  mortgage  to  provide  in  terms  that 
the  mortgagee  may  take  possession  whenever  he  deems  the  debt 
insecure,  in  which  case  the  mortgagee  has  the  immediate  right  of 
possession ;  and  mortgages  of  this  kind  will  be  upheld  generally, 
if  honestly  made  and  recorded  in  due  form.^  But,  again,  it  is  fre- 
quently stipulated  that  the  mortgagor  shall  retain  possession  until 
default  of  payment;  nor  are  such  stipulations  fraudulent  or 
against  the  policy  of  the  law, —  though  here  it  would  be  well  to  "add 
a  provision  in  the  mortgage  that  in  case  the  chattels,  or  any  part 
thereof,  shall  be  attached  at  any  time  by  any  person  before  pay- 
ment of  the  money  secured,  or  in  case  the  mortgagor  shall  attempt 
to  sell  them  without  the  mortgagee's  consent,  then  the  latter  shall 
have  the  right  to  take  immediate  possession  of  the  whole  property 
to  his  use.^ 

§  428.     Want  of  Delivery  as  a  Badge  of  Fraud. 

But  the  want  of  a  delivery  and  continuous  change  of  possession 
in  mortgaged  chattels  will  usually,  as  respects  third  parties  with 
lien  claims,  or  those  who  bond  fide  purchase  or  advance  upon  the 
property,  raise  a  presumption  of  fraud.  Such  a  presumption  may 
commonly  be  rebutted;  and  the  issue  of  good  faith  and  honest 
dealing  on  the  part  of  mortgagor  and  mortgagee  in  any  such  case 
belongs  rather  to  a  jury  than  the  court.  Thus  the  modern  English 
doctrine,  and  that  more  generally  adopted  by  American  courts,  is 
that  possession  by  either  a  vendor  or  a  mortgagor  is  only  prima 
facie  a  badge  of  fraud,  and  does  not  exclude  explanations  to  the 

made.     Usually,  then,  delivery  of  pos-  pensable.      lb. ;    Wallen    v.    Rossman, 

session   or   record   is   needful.     Jones  45  Mich.  333. 

Chatt.   Mort.,   §   176.     But  the  mort-  1.  Frost  v.  Mott,  34  N.  Y.  253  ;  Fris- 

gagee  may  rightfully  take  possession  bee  v.  Langworthy,  11  Wis.  375. 
before    any    other    right    or    lien    at-  2.  For  the  interpretation -to  be  given 

tache&.     lb.,   §   178.     All   such   state-  to  such  stipulations  as  the  above,  see 

menta  are,  of  course,  subject  to  legis-  Welch  v.  Whittemore,  25  Maine,  86; 

lative  expressions  on  this  point;   for  Whitney   v.    Lowell,    33    Maine,    318; 

in   some   States   either   an  immediate  Prior  v.  White,  12  111.  261 ;  Woodman 

delivery  of  the  property,  or  a  record  v.  Chesley,  39  Maine,  45;   Babcock  v. 

of  a  chattel  mortgage,  is  made  indis-  McFarland,  43  111.  381. 

644 


CHAP.  VI.]  DEBTS    SECUEED    BY    MORTGAGE,    ETC. 


§    428 


contrary.^  Such  possession  by  a  mortgagor  is  an  unfavorable  cir- 
cumstance; but  irrespective  of  the  registry  laws  it  may  be  shown 
to  be  consistent  -with  honesty  in  the  transaction."*  And  the  fact 
that  the  mortgagor's  possession  is  expressly  provided  for  by  the 
terms  of  the  instrument,  appears  generally  sufficient  to  overcome 
the  presumption  of  fraud  which  might  otherwise  arise;  subject, 
however,  to  registry  statutes.^ 


3.  Jones  Chatt.  Mort.,  §  320,  and 
numerous  cases  cited. 

4.  Conard  v.  Atlantic  Ins.  Co.,  1 
Pet.  386;  Jones  Chatt.  Mort.,  §§  325, 
326,  and  cases  cited.  Possession  un- 
der chattel  mortgage  must  be  actual 
imder  the  statute.  Book  4,  N.  Y. 
Rpts.,  Bender  ed.,  note,  p.  699. 

5.  D'Wolf  V.  Harris,  4  Mason,  .515; 
Barrow  v.  Paxton,  5  Jones,  258;  Stix 
V.  Sadler,  109  Ind.  254;  Jones  Chatt. 
Mort.,  §  323.  Validity  of  chattel 
mortgage  retaining  power  to  sell. 
Book  5,  N.  Y.  Rpts.,  Bender  ed.,  note, 
p.  706. 

Other  frauds  under  the  statutes  of 
Elizabeth  and  at  common  law  are 
often  considered  in  connection  with 
chattel  mortgages  and  voluntary  con- 
veyances. See  Jones  Chatt.  Mort., 
§§  333-351.  Fraudulent  preferences 
under  bankrupt  and  insolvent  laws 
are  likewise  treated  in  this  connec- 
tion,    lb.,  §§  356-366. 

Any  arrangement  between  mortga- 
gor and  mortgagee  which  would  leave 
the  former  in  practical  control  of  the 
property,  with  its  beneficial  enjoy- 
ment and  the  right  of  disposal,  is 
highly  objectionable;  far  more  open 
to  the  suspicion  of  fraud  than  a  mere 
possession  in  the  mortgagor;  and 
where  such  arrangements  can  be  sus- 
tained under  any  circumstances,  they 
are  most  likely  on  the  ground  that 
the  mortgagor  was  disposing  of   the 

64i 


property  only  as  the  mortgagee's 
agent,  and  for  applying  of  the  satis- 
faction of  the  securitj'  whatever  might 
be  realized.  But  the  rule  to  be  ap- 
plied in  cases  of  this  sort  is  well 
stated  as  follows:  Where  a  mortgage 
instrument  contains  illegal  provi- 
sions, and  such  as  are  not  reconcil- 
able, on  any  possible  hj-pothesis,  with 
an  honest  or  legal  intent,  the  law  de- 
claresi  it  void  upon  its  face,  because 
no  evidence  could  change  its  charac- 
ter. The  cases  in  which  this  absolute 
and  unchangeable  presumption  arises 
are  not  numerous.  There  are  other 
cases  in  which,  upon  the  face  of  the 
instrument,  a  statutory  presumption 
arises  which  is  only  prima  facie  evi- 
dence of  fraud.  And  there  are  still 
more  cases  in  which  the  whole  ille- 
gality charged  must  be  made  out  by 
extrinsic  evidence.  In  both  of  the 
classes  last  named  the  jury  must  de- 
termine all  the  facts.  Campbell,  J., 
in  Oliver  v.  Eaton,  7  Mich.  112.  This 
whole  subject  of  the  validity  of  chat- 
tel mortgages  witliout  accompanying 
possession  is  somewhat  in  a  state  of 
conflict  and  uncertainty.  But  the  or- 
dinary doctrine  concerning  fraudulent 
transfers  of  property,  "  made  with 
the  intent  to  hinder,  delay,  or  defraud 
creditors,"  bears  immediately  upon 
the  present  que&tion.  Sw,  in  addi- 
tion to  foregoing  cases.  State  v. 
Tasker,  31  Mo.  445;   Gardner  v.  Me- 


§  430 


THE  LAW  OF  PEESONAL  PROPERTY. 


[part  III. 


§  429.     Priority  Among  Chattel  Mortgages. 

Priority  between  unrecorded  mortgages  is  generally  determined 
by  priority  of  execution.^  The  effect  of  registry  legislation,  how- 
ever, is  to  give  a  general  preference  to  mortgages  in  the  order  of 
their  filing  for  record.^ 

§  430.     Rights,   etc.,  of   Mortgagor  and  Mortgagee:     Right   of 
Possession. 

Fourthly^,  as  to  the  rights  and  liabilities  of  the  parties  to  a 
chattel  mortgage.^  The  general  property  in  the  chattels  ordi- 
narily passes  to  the  mortgagee  under  the  instrument,  and  he  holds 
the  legal  title  to  them,  which,  if  the  writing  be  duly  recorded,  no 
stranger,  according  to  the  policy  of  most  States,  has  the  right  to 
disturb.  The  instrument  of  mortgage  and  the  uncancelled  mort- 
gage note  prima  facie  establish  his  title  in  the  property,  even  as 
against  the  mortgagor  himself.^     He  has  a  right  of  possession  as 


Ewen,  19"  N.  Y.  123;  Wilhelmi  v. 
Leonard,  13  Iowa,  330;  Bro'v\Ti  v. 
Wiebb,  20  Ohio,  389;  Hickman  v. 
Perrin,  6  Cold.  135;  Weld  v.  Cutler, 
2  Grray,  195  ;  Bank  of  Leavenworth  v. 
Hunt,  11  Wall.  391;  Place  v.  Lang- 
worthy,  13  Wis.  629 ;  Read  v.  Wilson, 
22  111.  377;  U.  S.  Dig.  Mortgage,  49, 
50;  Suppl.  ib.  424-426.  In  some 
States  the  rule  against  frauds  is  ap- 
parently more  strict  than  in  others, 
often  because  of  the  peculiar  word- 
ing of  the  statute.  See  Ranlett  v. 
Blodgett,  17  N.  H.  29S;  Robinson 
V.  Holt,  39^  N.  H.  557;  Steinart  v. 
Deuster,  23  Wis.  136.  Whether  a 
mortgage  of  a  trader's  stock,  which 
permits  the  mortgagor  to  sell  in  the 
usual  course  of  trade,  be  essentially 
fraudulent,  is  a  disputed  question 
which  occasions  much  controA'ersy. 
See,  at  length,  Jones  Chatt.  Mort., 
§§  379-425,  and  cases  cited. 

Suffering    property    covered    by    a 
chattel    mortgage    to    remain    in    the 


hands  of  the  mortgagor  unreasonably 
long  after  default  is  often  a  circum- 
stance imputing  fraud.  See  Jones, 
§§  369-378;  Bullock  v.  Narrott,  49 
111.  62.  And  the  circumstance  that 
the  mortgagor  is  left  in  the  posses- 
sion and  use  of  property  which  is 
necessarily  consumed  in  the  use  is 
strongly  unfavorable  to  the  idea  of 
a  hond  fide  transactions  as  against 
creditors  of  the  mortgagor.  Bobbins 
v.  Parker,  3  Met.  117;  Jones  Bailm., 
§§  367,  368. 

6.  Tiffany  v.  Warren,  37  Barb.  571. 

7.  See  Jones  Chatt.  Mort.,  §  246. 
All  this  is  largely  a  matter  of  local 
statute  construction.  See  De  Courcey 
v.  Collins,  21  N.  J.  Eq.  357;  Green  v. 
Bass,  83  Ohio  St.  378,  94  N.  E.  742 
( priority  maintained ) . 

8.  Rights  of  chattel  mortgagee. 
Book  28,  N.  Y.  Rpts.,  Bender  ed.,  note, 
p.   670. 

9.  See  Conner  v.  Carpenter,  28  Vt. 
237;  Moore  v.  Murdock,  26  Cal.  514; 


646 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    430 

incidental  to  such  right  of  property,  which  right  of  property,  how- 
ever, is  defeasible  upon  condition  subsequent  and  not  absolute.' 
The  title  of  the  mortgagee  thus  gained  is  sufficient  for  maintain- 
ing an  action  at  law  against  all  persons  not  setting  up  any  claim 
under  the  right  to  redeem ;  and  he  may  sue  for  the  conversion  of 
the  goods,  although  they  are  not  in  his  actual  possession,  so  long 
as  he  has  the  right  of  possession  therein.^  The  validity  of  the 
mortgage  is  not  affected  in  the  least  by  the  fact  that  he  holds  other 
independent  collateral  security  for  the  debt  which  his  mortgage 
secures.^  And  a  mortgagee's  immediate  right  of  possession  to  the 
chattels,  such  as  entitles  him  to  sue  for  them,  holds  good  in  gen- 
eral, wherever  there  is  no  distinct  agreement  to  the  contrary,  and 
even  though  the  mortgage  debt  be  not  yet  due.'* 

But  here,  once  more,  we  are  confronted  with  the  circumstance 
that  mortgages  of  chattels  often  give  the  mortgagor  the  right,  in 
express  terms,  to  hold  the  chattels  until  maturity  of  the  debt  or 
breach  of  condition ;  and  when  this  is  the  case,  and  the  construc- 
tive possession  is  not  in  the  mortgagee,  the  latter  cannot  sue  for 
conversion  of  the  property ;  ^    nor  is  the  mortgagor  s  possession 

Fikes  V.   Manchester,  43   111.  379;   U.  Harmon    v.    Short,    8    S.    &   M.    433. 

S.  Dig.  Mortgage,  50;   Suppl.  ib.  425,  And  where  the  mortgage  is  made  to 

427;   Jones  Chatt.  Mort.,  §   426,  and  several,  they  may  join  in  such  suits, 

cases    cited.      The    rule    varies    some-  Wheeler  v.  Nichols,  32  Me.  233. 

what  according  to  local  statute  pro-  3.  Aj-res  v.  Wattson,  57  Pcnn.   St. 

visions  concerning  title  and  registry.  360. 

See  ante,  §  425;  Jones  Chatt.  Mort.,  4.  See   supra,    §    427;    Brackett   v. 

§  427.  Bullard,     12     Met.     308;     Welch     v. 

1.  Jones  Chatt.  Mort.,  §  426;  Coles  Sackett,  12  Wis.  243;  Ferguson  v. 
V.  Clark,  3  Cush.  399;  Hall  v.  Samp-  Clifford,  37  N.  H.  86;  Skiff  v.  Solace, 
son,  3r)  N.  Y.  274;  Miller  V.  Pancoast,  23  Vt.  279;  Landon  v.  Emmons.  97 
5  Dutch.  250.     Mortgagor  remains  in  Mass.   37. 

possession     and     permitted     to     sell.  5.  See  Curd  v.  Wunder,  5  Ohio  St. 

Book    19,    N.    Y.    Epts.,    Bender    ed..  92:   Goulet  v.  Asseler,  22  X.  Y.  225. 

note,   p.   62.     Right   of  chattel  mort-  If  the  parties  make  an  express  stipu- 

gagor    to    take    possession.      Book    9,  lation   in   regard  to  possession  before 

N.  Y.  Rpts.,  Bender  ed.,  note,  p.  281.  default,  that  determines  their  rights. 

2.  Hotchkiss  v.  Hunt,  49  Me.  213;  Jones  Chatt.  Mort..  §  430;  McGuire 
Fenn  v.  Bittleston,  7  Ex.  152;  Free-  v.  Bonoit,  33  Md.  181.  A  mortgagor 
man  v.  Freeman,  2  C.  E.  Green,  44;  cannot    maintain    trespass    or    trover 

64Y 


§  430 


THE  LAW  OF  PERSONAL  PEOPERTY. 


[part  III. 


under  such  a  provision  like  that  of  a  mere  bailee,  but  he  is  held 
to  be  owner  as  well  as  rightful  possessor  until  default.^  For,  to 
sustain  trover  or  trespass,  one  must  show  that  he  had  either  the 
actual  possession  or  the  right  of  the  possession  at  the  time  of  the 
alleged  taking  or  conversion.  The  title  of  a  mortgagee  of  chattels, 
however,  so  long  as  the  mortgagor  has  the  right  of  possession,  is 
of  a  reversionary  nature;  and,  for  damages  to  this  reversionary 
interest,  the  mortgagee  is  permitted  to  sue  to  recover  damage, 
according  to  the  recognized  practice  of  some  States,  although  the 
right  to  immediate  possession  be  not  in  him,  but  in  the  mortgagor.^ 
And  courts  of  equity  will  interfere,  on  a  bill  properly  filed  for  that 
purpose,  to  protect  a  mortgagee  of  personal  as  well  as  of  real  prop- 
erty against  waste  or  destruction  by  the  mortgagor  in  possession 
or  the  mortgagor's  creditors.^  Legislative  policy  in  a  few  States 
distinctly  regards  the  chattel  mortgage  in  the  equitable  light  of  a 


against  a  mortgagee  rightfully  in  pos- 
session of  the  property,  nor  maintain 
replevin.  Jones  Chatt.  Mort.,  §§  434, 
435,  436;  Holmes  v.  Bell,  3  Cush. 
322;  Leach  v.  Kimball,  34  N.  H.  568. 
Nor  can  a  junior  mortgagee.  lb. ;  4 
Litt.  285;  Landon  v.  Emmons,  97 
Mass.  37.  But  where  the  mortgagor 
has,  by  express  terms  of  the  mortgage 
or  otherwise,  the  right  to  remain  in 
possession  until  default,  the  mort- 
gagee becomes  thus  liable  if  he  dis- 
turbs such  possession.  Jones,  §§  437, 
442;  Brink  v.  FeoflF,  44  Mich.  69. 
Whether  the  mortgagee  can  be  en- 
joined from  taking  possession,  see 
Cline  V.  Libby,  46  Wis.  123. 

As  against  third  persons  the  mort- 
gagor's possession  may  sometimes  be 
considered  the  constructive  possession 
of  the  mortgagee.     See  Jones,  §  446 
Jones     V.     Webster,     48     Ala.     109 
Stamps    V.    Oilman,    43    Miss.    456 
Simmons  v.  Jenkins,  76  111.  479.     On 
the  death  of  the  mortgagor,  personal 


estate  in  his  possession  passes  into 
the  custody  of  the  law  for  adminis- 
tration. Kater  v.  Steinruck,  40  Penn. 
St.  501. 

A  mortgage  sometimes  expressly 
provides  that  the  mortgagee  may  take 
possession  of  the  mortgaged  goods  in 
case  they  are  removed  from  the  prem- 
ises ;  or,  more  generally,  whenever  the 
mortgagee  shall  deem  himself  inse- 
cure; and  such  provisions  are  sus- 
tained to  the  fullest  extent  by  the 
courts,  as  neither  unconscionable  nor 
hard.     Jones,  §§  430  a,  431. 

6.  Jones,  §  428;  Fenn  v.  Bittleston, 
8  E.  L.  &  Eq.  483;  Johnson  v.  Simp- 
son, 77  Ind.  412;  Des  Moines  Co.  v. 
Uneaphor,  156  N.  W.  171  (Iowa  Sup. 
1916 ) . 

7.  Googins  v.  Gilmore,  47  Me.  9 ; 
Manning  v.  Monaghan,  23  N.  Y.  539. 

8.  Long  Dock  Co.  v.  Mallery,  1 
Beasl.  94;  Parsons  v.  Hughes,  12  Md. 
1 ;  12  N.  J.  Eq.  93 ;  Curd  v.  Wunder, 
5  Ohio  St.  92. 


648 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    431 

mere  security,  so  that  no  legal  title  shall  pass  to  the  mortgagee 
until  after  foreclosure  or  something  equivalent,  and  a  clear 
default.^ 

§  431.     Sale,  Transfer,  etc.,  by  Mortgagor;  Mortgagor's  Interest. 

So  far  is  the  mortgagee  favored  where  he  has  the  legal  title  to 
the  chattels  and  the  right  of  immediate  possession,  that  sales  as 
of  the  entire  property  made  by  the  mortgagor,  or  a  subsequent 
pledge  or  mortgage,  without  notice  given  of  the  existing  incum- 
brance and  with  the  design  of  defrauding  him  of  his  interest  may 
be  repudiated  (subject  to  the  usual  exceptions),  even  where  inno- 
cent participants  must  suffer  loss  thereby.^  But  the  mortgagor 
may  have  rights  in  the  mortgaged  property.  And  if,  as  against 
the  mortgagee,  he  has  the  right  to  the  possession  of  the  property 
until  default  or  for  any  definite  period, —  a  right  which  may  be 
secured  to  him,  as  we  have  seen,  by  express  stipulation, —  that 
interest  may  be  attached  and  sold  on  execution,  subject  to  the  mort- 
gage.^ Furthermore,  while  the  mortgagor  has  no  transmissible 
legal  title  after  a  total  default,  but  only  an  equity  of  redemption, 
it  is  settled  that  he  may  before  default  sell  the  mortgaged  property 
while  in  possession,  subject  in  all  strictness  to  the  mortgage  in- 

9.  Jones   Bailm.,   §   427;    INIichigan,  rendered   afterwards   in   favor   of  the 

Minnesota,  Oregon,  etc.  mortgagor   in   such  suit  will   pass  to 

1.  Coles  V.  Clark,  3  Cush.  399.  And  the  mortgagee  likewise.  See  Pindell 
as  to  intermixed  goods,  see  Jones,  v.  Grooms,  18  B.  Monr.  501. 
§§  481-483;  Willard  v.  Rice.  11  Met.  2.  Saxton  v.  Williams,  15  Wis.  291J ; 
493.  A  sale  in  exclusion  of  the  mort-  Manning  v.  Monaghan,  28  N.  Y.  585; 
gagee'fe  rights  justifies  his  action  in  Hull  v.  Carnley,  1  Kern.  501 ;  Rinds- 
trover  for  the  property.  lb.;  Jones  kofT  v.  LjTuan,  16  Iowa,  260;  Curd  v. 
Chatt.  Mort.,  §  460.  Wunder,  5  Ohio  St.  92 ;  Hal!  v.  Samp- 

Where   the   mortgage    of   a    chattel  son,  35  N.  Y.  274. 
passes  only  an  equitable  title  to  the  It  is  held  that  a  mortgagor  in  pos- 

mortgagee,   by   reason   of   the   posses-  session  of  mortgaged   property   which 

sion  of  the  chattel  being  at  that  time  is    exempt    from     execution     by     law 

in    a    third    person    with    whom    the  can  maintain  trespass  against  an  offi- 

mortgagor    has   a    suit    pending   over  cer    wlio    wrongfully    levies    upon    it. 

the  title,  the  benefit  of  any  judgment  Vaughan  v.  Thompson,  17  HI.  78. 

040 


§  431 


THE  LAW  OF  PERSONAL  PKOPERTY. 


[part  III. 


cumbrance ;  ^   and  in  general  his  right  to  transfer  his  own  interest 
to  a  third  person  is  not  impugned. 

A  mortgagor  of  chattels,  however,  has  no  right  to  pledge  or 
mortgage  the  property  to  another  person,  or  otherwise  to  create 
a  lien  incumbrance  upon  it,  to  the  extent  of  prejudicing  the  mort- 
gagee's rights.'*  As  to  selling,  absolutely  and  exclusively  as  his 
own,  mortgaged  property  to  which  the  mortgagee  has  the  legal  title, 
neither  law  nor  equity  will  regard  the  mortgagor  as  having  any 
such  right,  and  he  could  hardly  attempt  to  do  so  without  intending 
to  perpetrate  a  fraud,  and  becoming  guilty  of  tortious  conversion.^ 
By  the  laws  of  some  States,  indeed,  it  is  made  an  indictable 
offence  for  the  mortgagor  to  sell  the  mortgaged  chattels,  without 
first  obtaining  the  written  consent  of  the  mortgagee.^  If  the 
mortgagee  permitted  a  sale  or  junior  incumbrance,  for  some  con- 
venient purpose  of  his  own,  and  with  a  recognition  of  his  own 
security,  it  is  of  course  a  diiferent  matter. 


3.  Cadwell  v.  Pray,  41  Mich.  307; 
Daly  V.  Proetz,  20  Minn.  411;  Jones 
Chatt.  Mort.,  §  454. 

4.  Bissell  V.  Pearce,  28  N.  Y.  252; 
Sargent  v.  Usher,  55  N.  H.  287.  As, 
for  instance,  where  one  who  has  mort- 
gaged animals  by  a  deed  to  A,  duly 
recorded,  tries  to  give  a  paramount 
lien  to  B  for  pasturing  them,  while 
the  mortgage  remains  unimpeachable. 
But  a  lien  given  by  force  of  law  — 
as,  e.  g.,  that  of  a  bailee  hired  to  re- 
pair the  thing  —  may  take  priority 
of  a  chattel  mortgage.  Beall  v. 
White,  94  U.  S.  382 ;  Williams  v.  All- 
sup,  10  C.  B.  N.  s.  417.  See  Jones, 
§§  472-480.  And  see  Drummond  v. 
Griffin,  114  Me.  120,  95  Atl.  506  (liv- 
eryman's lien)  ;  Monthly  Installment 
Co.  V.  Skellett,  124  Minn.  144,  144 
N.  W.  751. 


5.  Chapman  v.  Hunt,  2  Beasl.  370; 
Bellume  v.  Wallace,  2  Rich.  80. 

6.  State  v.  Plaisted,  43  N.  H.  413; 
White  Mountain  Bank  v.  West,  46 
Me.   15. 

But  the  title  may  pass,  though  the 
consent  of  the  mortgagee  be  ex- 
pressed verbally.  Gage  v.  Whittier, 
17  N.  H.  312;  Shearer  v.  Babson,  1 
Allen,  486.  And  the  later  cases  ap- 
pear to  favor  an  inference  of  authority 
to  sell  from-  the  mortgagee,  or  even 
a  waiver  of  his  lien,  under  dubious 
circumstances,  as  in  a  pledge.  At  all 
events  the  modern  judicial  disposition 
is  to  uphold  a  transfer  by  the  mort- 
gagor, who  is  left  in  possession  as 
apparent  owner,  to  the  extent  of  an 
assignment  of  his  own  incumbered 
title.  See  Jones  Chatt.  Mort.,  §§  454- 
471.  See  Fuller  v.  McLeod,  91  S.  C. 
328,  74  S.  E.  647. 


650 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC. 


§    432 


§  432.     Mortgagee's  Rights  and  Liabilities. 

Tke  rights  of  the  mortgagee  under  a  chattel  mortgage  are  found 
to  turn  usually  upon  his  right  of  possession  to  the  mortgaged  prop- 
erty or  a  proper  registry  of  his  mortgage.  But  sometimes  the 
controversy  arises  upon  the  nature  of  the  property  itself, — 
whether  it  shall  be  deemed  real  or  personal,  or  mixed.^ 

The  liabilities  of  a  mortgagee  of  chattels  in  possession  before 
default  are  doubtless  those  substantially  of  a  pledgee  in  possession, 
except  so  far  as  the  mortgagee  shall  be  deemed  an  o\vner  rather 
than  a  bailee.  And*  if  he  exceeds  the  power  which  the  law  or  his 
mortgage  in  terms  confers  upon  him,  in  dealing  with  the  property, 
he  must  make  good  the  loss  which  would  otherwise  fall  upon  the 
mortgagor,  unless  the  latter  ratifies  his  acts ;  ^  not,  however,  in 
disregard  of  his  own  secured  claim.^ 


7.  See  Bringholff  v.  Munzenmaier, 
20  Iowa,  513;  Sheldon  v.  Edwards, 
35  N.  Y.  279;  Perkins  v.  Swank,  43 
Miss.  349.  And  as  to  the  removal  of 
tenant's  fixtures  by  a  mortgagee,  see 
London,  &c.,  Co.  v.  Drake,  6  C.  B. 
X.  s.  Tg'S. 

8.  Beckley  v.  Munson,  22  Conn.  299. 
See  preceding  chapter. 

To  adjust  more  completely  the 
clashing  interests  of  mortgagee  and 
attaching  creditors,  legislation  inter- 
poses in  many  States.  For  instance, 
in  Massachusetts  there  are  statutes 
permitting  mortgaged  goods  to  be  at- 
tached as  if  unincumbered,  provided 
the  attaching  creditor  pays  or  tenders 
to  the  mortgagee  the  amount  of  his 
incumbrance  within  ten  days  after 
demand.  And  in  making  his  de- 
mand the  mortgagee  must  state  in 
WTiting  a  just  and  true  account  of  the 
debt  or  demand  for  which  the  prop- 
erty is  liable  to  him.  Mass.  Rev. 
Laws,  c.  167,  §§  69-78.  Under  this 
statute  many  decisions  have  been 
made.      Gilmore    v.    Gale,    33    N.    H. 

65 


410;  Kimball  v.  Morrison,  40  N.  H. 
117.  But,  if  there  be  no  such  legisla- 
tion, an  oflieer  cannot  levy  upon  per- 
sona! property  which  is  mortgaged, 
whether  in  possession  of  the  mort- 
gagor or  mortgagee,  though  the  mort- 
gage be  not  due,  unless  it  contains  an 
express  stipulation  permitting  the 
mortgagor  to  retain  possession  for  a 
definite  period;  nor  even  then,  if 
that  period  has  elapsed.  Eggleston 
V.  Mundy,  4  Mich.  295,  and  cases 
cited.  This,  at  least,  is  the  ordinary 
rule,  independently  of  ei|ui(al)l(* 
maxims  and  statute;  and  nutwitii- 
standing  an  attachment  of  the  chat- 
tels in  the  mortgagor's  possession,  the 
mortgagee  retains  his  usual  right  of 
taking  possession.  Raxton  v.  Wil- 
liams, 15  Wis.  292;  Cudworth  v. 
Scott.  41  N.  H.  456.  See,  at  length, 
Jones  Chatt.   Mort.,  §§   555-600. 

9.  Receiver  may  take  possession  of 
and  sell  mortgage  chattels  remaining 
with  mortgagor.  Book  3,  N.  Y.  Rpts., 
Bender  ed.,  note,  p.  142. 


§    433  TlIS    LAW   OF    PERSONAL    PKOPEKTT.  [PAET  111. 

§  433.     Mortgagee's  Assignment  of  the  Mortgage. 

Chattel  mortgages  are  frequently  assigned  by  a  mortgagee ;  and 
although  such  property  may  not  be  deemed  assignable  or  negotiable 
at  the  earlier  law,  yet  a  party  taking  an  assignment  of  such  an 
instrument  acquires  rights  and  an  interest  in  the  debt  secured  and 
the  property  pledged  which  the  courts  both  of  law  and  equity 
recognize.  The  debt  is  the  principal  thing  here,  and  the  mort- 
gaged goods  the  security;  and  if,  as  is  commonly  the  case,  the  debt 
be  expressed  by  a  note,  the  most  natural  course  would  be  to  deliver 
the  note  with  suitable  indorsement  and  assign  the  mortgage.  This 
right  of  assigning  mortgages  is  to  a  considerable  degree  regulated 
by  statute,  and  the  tendency  in  our  country  is  to  assimilate  chattel 
and  real-estate  mortgages  in  this  respect;  requiring  assignments 
to  be  recorded  as  well  as  the  original  instruments ;  and  giving  to 
the  assignee  substantially  the  same  interest  and  rights  of  action 
which  belonged  to  the  mortgagee  himself,  while  subjecting  him  to 
the  same  liabilities.'  But  although  the  assignee  of  a  chattel  mort- 
gage usually  takes  subject  to  all  equities  between  the  original 
parties,  h©  may  rely  upon  the  record  and  is  protected  against  latent 
equities  of  which  he  had  no  notice."^  N^or  are  partial  assignments, 
though  recorded,  to  be  favored  as  against  subsequent  parties  who 
take  without  actual  notice  of  them.^  Usually  an  assignee  without 
notice,  actual  or  constructive,  stands  upon  the  same  footing  as  a 
bond  fide  mortgagee  without  notice.* 

1.  See  Gilchrist  v.  Patterson,  18  ment  of  the  debt  secured  passes  all 
Ark.  575;  Beach  v.  Derby,  l?  111.  the  mortgagee's  equitable  interest  in 
617;  Moody  v.  Ellerbe,  4  S.  C.  21;  the  mortgaged  property,  whether  the 
Carpenter  v.  Cummings,  40  N.  H.  assignment  be  before  or  after  for- 
158;  Lewis  v.  Palmer,  28  N.  Y.  271;  feiture.  Jones  ib.,  §  503,  and  cases 
Potter  V.  Holden,  31  Conn.  385;  Rob-  cited.  No  warranty  of  title  is  thus 
inson  v.  Fitch,  26  Ohio  St.  659.  implied.     Jones  v.  Huggeford.  3  Met. 

2.  Barbour  v.  White,  37  111.  164;  515.  An  assignment  of  a  mortgage 
Pierce  v.  Faunce,  47  Me.  507;  Mayor  without  the  debt  secured  by  it  is 
V.  Soulier,  48  Mich.  411.  either  a  nullity  or  a  transfer  of  the 

3.  French  v.  Haskins,  9  Gray,  195;  legal  title  in  trust  for  the  benefit  of 
2  Wis.  322;  Jones  Chatt.  Mort.,  §  504.  the   holder   of  the  debt:    but  mutual 

4.  See  Jones  Chatt.  Mort.,  §§  501-  intention  is  here  to  be  favored.  Jones, 
519,    and    cases    cited.      The    assign-  §   505 ;    Campbell  v.   Birch,   60  N.   Y. 

652 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC. 


§  434 


§  434.  Foreclosure  and  Redemption  of  Chattel  Mortgages; 
Mertgagee's  Common-Law  Rights  on  Default. 
Fifthly,  as  to  the  foreclosure  and  redemption  of  chattel  mort- 
gages. The  rule  of  the  common  law  is,  that  a  mortgagee  of  per- 
sonal property,  upon  the  failure  of  the  mortgagor  to  perform  the 
condition  of  his  mortgage,  acquires  an  absolute  title  to  the  prop- 
erty.^ And  under  these  circumstances  he  not  only  has  a  right  to 
take  possession  of  the  mortgaged  property  from  the  mortgagor  or 
any  one  holding  under  him,  but  would  peril  his  own  interests  as 
against  the  mortgagor's  creditors,  unless  he  did  so  with  due  dili- 
gence; supposing,  of  course,  that  he  is  not  in  possession  already, 
in  which  latter  case,  doubtless,  his  title  would  become  completely 
vested.^  Nor  can  such  creditors  attach  the  mortgaged  property  in. 
his  possession  after  the  time  for  payment  has  expired.^     Where 


214;  Polhemus  v.  Trainer,  30  Cal 
685.  The  mortgagee's  assignable  in- 
terest continues  so  long  as  he  has  a 
subsisting  mortgage;  and  his  assign- 
ment, while  in  or  out  of  possession, 
confers  substantially  all  his  interest. 
Jones,  §§  506,  507;  26  Ohio  St.  659. 

Where  the  local  statute  expressly 
requires  chattel  mortgages  to  be  filed 
or  recorded,  there  is  no  inference  that 
assignments  must  likewise  be  re- 
corded. Jones,  §  518;  12  Abb. 
(N.  Y.)  Pr.  97;  Hawkins  v.  Co. 
Com'rs,  2  Allen,  264. 

As  to  a  "  subsequent  purchaser," 
&c.,  within  the  meaning  of  statutes 
making  void  an  unrecorded  mortgage 
as  against  such  parties,  see  Jones 
Chatt.  Mort.,  §§  484,  485.  Under  our 
registry  statutes  subsequent  mort- 
gages of  the  same  personal  property 
may  be  made,  subject  to  the  prior 
recorded  mortgages.  Asi  to  the  rights 
of  subsequent  mortgagees,  see  Jones 
Chatt.  Mort.,  §§  492-500.  Local  leg- 
islation    with     reference     to     chattel 


mortgages  determines  largely  by  ex- 
press enactment  the  rights  of  parties 
respectively  under  a  chattel  mortgage. 

5.  Langdon  v.  Buel,  9  Wend.  80; 
Winchester  v.  Ball,  54  Me.  558; 
Brown  v.  Phillips,  3  Bush.  656;  Gil- 
christ V.  Patterson,  18  Ark.  575; 
Phillips  V.  Hawkins,  1  Branch,  272. 

6.  See  Lacey  v.  Giboney.  36  Mo. 
320;  Mercer  v.  Tinsley,  14  B.  Monr. 
273;  Nichols  v.  Webster,  1  Chand. 
(Wis.)  203;  Wooley  v.  Fry,  30  111. 
158;  McNeal  v.  Emerson,  15  Gray, 
384;  Jones  Chatt.  Mort.,  §  705.  If 
out  of  possession,  the  mortgagee  may 
take  peaceable  possession  on  di-fault; 
but  not  possession  by  violence. 
Thornton  v.  Cocharn,  51  Ala.  415; 
McClure  v.  Hill,  30  Ark.  26S;  J.  T. 
Case  Co.  v.  Barney,  154  Pac.  674 
(Okla.  Sup.  1916).  If  peace  pos- 
session cannot  be  obtained  on  default, 
he  should  resort  to  a  i^uit,  and  re- 
plevin or  detinue  may  Ix*  maintained. 
Jones.  §§   705,  706. 

7.  Bacon  v.  Kimmel.  14  Mich.  201. 


653 


§  434  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

several  notes  maturing  at  different  dates  are  secured  on  the  same 
chattel  mortgage,  and  the  condition  of  the  mortgage  is  broken  on 
default  in  payment  of  any  one  of  the  notes,  the  mortgagee  may  at 
his  option  take  possession  on  the  first  default,  if  he  has  not  posses- 
sion already,  or  may  await  the  maturity  of  the  last  note;  and  the 
same  principle  applies  to  interest  instalments.^  And  it  is  the 
mortgagor's  own  loss  if  he  neglect  to  pay  the  instalments  as  they 
fall  due  and  thus  save  a  forfeiture.'  But  where  the  debt  secured 
is  payable  on  demand,  or  in  general  there  is  an  engagement  secured 
whose  breach  is  not  clearly  fixed,  the  mortgagee's  rights  do  not 
become  absolute  until  demand  is  made  or  delinquency  becomes 
clearly  fixed ;  though  notice  of  intention  to  foreclose  would  some- 
times be  regarded  as  equivalent  to  a  formal  demand.^  And,  in 
general,  the  mortgagee's  title  becoming  absolute  on  breach  of  con- 
dition of  the  mortgage,  he  has  the  right  not  only  to  possess  him- 
self of  the  chattels  given  as  security,  but  may  sell  them  after^vards 
at  public  or  private  sale,  so  as  to  confer  a  good  title,  and  may  pay 
his  debt  out  of  the  proceeds.^ 

All  legal  claim  on  the  mortgagor's  part  is  gone  after  forfeiture, 
and  he  cannot  at  law  compel  the  mortgagee  to  receive  payment  and 
restore  the  property.^  N'or  is  the  mortgagee  bound,  upon  taking 
possession  for  condition  broken,  to  make  a  sale.^ 

8.  Barbour  v.  White,  37  111.  164.  ard,    33    Okla.    426,    122    Pac.    649. 

9.  Spring  v.  Fisk,  6  C.  E.  Green,  And  see  National  Bank  v.  McKinley, 
175.  But  as  to  whether,  upon  a  de-  118  Minn.  162,  136  N.  W.  579;  Gate 
fault  upon  one  instalment,  the  mort-  v.  Merrill,  109^  Me.  424,  84  Atl.  897; 
gagee  can  sell  the  entire  property,  Flinn  v.  Fredrickson,  89  Neb.  563,  131 
there    is    some    conflict    of    opinion.  N.  W.  934. 

Jones,    §§   767-769,   and    cases   cited;  Sale    of    the    property   l>y    mutual 

109  Mass.  59^7;  40  Mich.  610.  consent    may    extinguish.      Bank    of 

1.  Ely  V.  Carnley,  19  N.  Y.  496;  Hinton  v.  Swan,  156  Iowa,  715,  131 
Goodrich    v.    Willard,    2    Gray,    203;  N.  W.  1032. 

Jones  Chatt.  Mort.,  §  703.  3.  Wood    v.    Dudley,    8    Vt.     430; 

2.  See  Story  Eq.  Jur.,  §  1031 ;  Chap-  Charter  v.  Stevens,  3  Denio,  33 ; 
man  v.  Hunt,  2  Beasl.  370.  Jones  Chatt.  Mort..  §  699. 

Power   to  take   possession   is   often  4.  Nichols    v.    Webster,    1     Chand. 

conceded    when    the    mortgagee    feels      203;    Bradley  v.   Redmond,   42   Iowa, 
himself  "  insecure."     Wertz  v.  Barn-      152. 

654 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    435 

§  435.     Modern  Rule  Favors  Mortgagor  More  Liberally;    Equi- 
table Doctrine  as  to  Default. 

But  it  is  to  he  borne  in  mind  that,  regarding  this  transaction 
justly,  the  fundamental  object  of  the  mortgage  is  practically  to 
secure  payment  of  the  debt  or  fulfilment  of  the  obligation ;  not  to 
forfeit  chattels  absolutely  on  breach  of  condition,  without  any 
regard  to  their  value.  And  as  the  topic  of  chattel  mortgages  has 
grown  and  expanded  in  modern  times,  so  likewise  has  the  disposi- 
tion increased,  on  the  part  of  local  courts  and  local  legislatures,  in 
conformity  with  equity  maxims,  to  recognize  in  the  mortgagor  an 
equitable  right  or  interest  of  which  he  may  avail  himself  by  pay- 
ing what  he  owes  and  redeeming  the  property.  And  when  the 
mortgagee  sells  the  mortgaged  chattels  (which  he  may  do  without 
a  formal  foreclosure),  he  ought  to  do  it  by  a  fair  public  sale  and 
after  due  notice  to  the  mortgagor;  and  equity  will  require  the 
creditor  to  deal  justly  with  the  property  both  as  to  the  time  of  the 
notice  and  the  manner»of  the  sale.^  And  the  mortgagor  may  assert 
his  rights  in  this  respect  by  a  bill  in  equity,  if  he  commences  his 
suit  in  a  reasonable  time ;  ^  though  it  is  only  by  way  of  such 
interference  tliat  the  mortgagee's  legal  title  becomes  disturbed. 
Such  has  long'been  the  rule  of  equity  courts  with  reference  to  real- 
estate  mortgages ;  nevertheless,  as  to  chattel  mortgages,  these  prin- 
ciples are  more  rarely  asserted ;  so  that  a  legal  though  defeasible 
title  in  the  mortgagee  before  default,  and  forfeiture  of  the  mort- 
gagor's title  at  once  upon  default,  appears  still  the  readier  result 
where  a  chattel  mortgage  is  given.'' 

5.  Bird  v.  Davis,  1  McCartor,  467;  jrago  is  still  roparded  as  a  transfer  of 

Wilson  V.  Brannan,  27  Cal.  259,  and  the   title,  and   not  a   mere   lien,   to  a 

case?   cited;    Freeman   v.   Freeman,   2  {greater   extent.      Jones   Cliatt.    Mort., 

C.  E.  Oreen,  44.  §  699,  and  cases  cited. 

e.  II).    And  sec  as  to  pledges,  stipra.  No    provision    in    the    mort^rape    in 

§  407.  regard   to  a   sale  or   payment  of   the 

7.  Mr.  Jones  observes  that  while  in  orpins    to    the    mnrtgafror    prevents 

nearly  half  the  States  a  mortgage  of  the  title  from  becoming  absolute  upon 

real   estate  has   come  to  be   regarded  default  without  a  sale.    Jones.  §  700; 

as  merely  a   lien   and   not  a   convey-  2   Denio,   170;   Durfee  v.  Crinnpli.  69 

ance  of  the  legal  title,  a  chattel  mort-  111.  371.     But  the  rule  is  ditferently 

655 


§  437  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

§  436.     Mortgagee  May  Foreclose  in  Equity. 

Thus  are  we  brought  to  another  remedy,  which  a  mortgagee  may 
pursue  at  his  election ;  namely,  to  bring  a  bill  of  foreclosure,  some- 
what as  in  the  case  of  a  real-estate  mortgage.  x\n(l  this  is  his 
prudent  and  the  ordinary  course  where  the  mortgage  transaction 
involves  property  of  considerable  value  and  there  are  other  incum- 
brances, and  parties  are  interested  whose  rights  cannot  readily  be 
ascertained  and  adjusted.^  The  mortgagee  of  personal  property 
has  an  equitable  lien  for  the  payment  of  his  mortgage  debt  on  the 
proceeds  of  its  sale  by  an  assignee  of  the  mortgagor  for  the  benefit 
of  creditors.'  And  until  a  judicial  sale  can  be  properly  effected, 
equity  is  ready  to  protect  the  chattels  against  conversion  or 
destruction.^ 

§  437.     Modem  Statutes  Regulating  Foreclosure  and  Redemp- 
tion ;    Special  Agreements  of  Parties,  etc. 

Furthermore,  the  foreclosure  and  redemption  of  chattel  mort- 
gages are  at  the  present  day  considerably  regulated  by  local  stat- 
utes. And  these  statutes  partake  frequently  of  both  equity  and 
common-law  principles.  Thus,  in  some  States  a  definite  period 
is  allowed  after  breach  of  condition  for  the  mortgagor  to  redeem, — 
say,  sixty  days ;    and  the  mortgagee's  title  becomes  absolute  if  the 

stated  in  some  States.     Bohl  v.  Linn,  197;    Blakemore    v.    Taber,    22    Ind. 

34  Mich.   360.     And  see  Plumiera  v.  466;    Freeman   v.    Freeman,   2    C.   E. 

Bricka,  79  Misc.  468,  140  N.  Y.  S.  71.  Green,  44;  Briggs  v.  Oliver,  68  N.  Y. 

The  local  statute  should  be  consulted.  336;  Jones,  §§  776-788. 

As  to  tender  after  default,  see  Smith  9.  Wilson  v.  Gray.  2  Stockt.  323. 

Wogan  Co.  v.  Rice,  34  Okla.  294,  125  1.  Freeman    v.    Freeman,    2    C.    E. 

Pac.  456.     A  fair  sale  di-sposal  on  a  Green,  44. 

reasonable  time  after  default,  etc.,  is  Where  a  legal  remedy  of  foreclosure 

required    in    some    States.      Hawkins  is   adequate,   foreclosure   in   equity  is 

Co.  V.  Morris,  143  Ky.  738,  137  S.  W.  denied.     Ford  v.  Guano  Co..  144  Ga. 

527.  353,  87  S.  E.  274.     See  as  to  general 

When   possession   is  taken  and   se-  creditors    in   foreclosure    proceedings, 

curity    satisfies    the    debt,    payment  Commonwealth    Trust    Co.    v.    Salem 

operates.      Levy    v.    Reich,    78    Misc.  Co.,  77  N.  H.  146,  89'  Atl.  452.     And 

413,  138  N.  Y.  S.  419.  see    Harmon    v.    Dothan    Nat.    Bank, 

8.  See  Bryan  v.   Robert,   1    Strobh.  181  Ala.  360.  64  So.  621. 
Eq.    334;    Dupuy   v.    Gibson,    36    HI. 

656 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC. 


6    437 


debt  is  not  paid  by  the  time  this  period  has  expired.^  Provisions 
abound,  however,  requiring  a  mortgagee's  sale  after  notice,  and 
the  payment  to  the  mortgagor  of  any  surplus  which  may  remain 
after  satisfying  the  mortgage  debt.^  Foreclosure  notices,  and  the 
registry  of  certificates  too,  are  sometimes  made  matters  of 
legislation.'* 

Even  the  mutual  contract  of  the  parties  may  largely  determine 
their  respective  rights;  for,  as  in  real-estate  mortgages,  it  has 
now  become  quite  customary  to  insert  in  the  mortgage  instrument 
a  power  of  sale  clause,  conferring  upon  the  mortgagee  the  right  to 
a  summary  sale  after  giving  a  prescribed  notice.  These  powers 
of  sale  are  jealously  scrutinized  by  courts  of  equity;  and  yet  on 
the  whole  they  appear  to  be  favorably  upheld ;  ^   as  they  certainly 


2.  Winchester  v.  Ball,  54  Me.  558. 
See  Daniels  v.  Henderson,  5  Fla.  452. 

3.  In  some  States  the  same  statute 
applies  to  the  foreclosure  of  both  real 
estate  and  chattel  mortgages.  These 
statutes  are  by  no  means  uniform  in 
their  provisions;  but  the  legislative 
disposition  appears  to  be  to  require  a 
sale  on  default  somewhat  after  the 
manner  observed  in  pledges.  Very 
little  provision  is  made  in  these  stat- 
utes for  the  redemption  of  chattel 
mortgages ;  that  being  left  rather  to 
equity  administration,  and  the  right 
existing  until  the  statute  foreclosure 
becomes  complete.  See  Jones  Chatt. 
Mort.,  c.  17,  where  these  statutes  are 
noted  at  length. 

Any  income  derived  by  the  mort- 
gagee from  the  beneficial  use  of  the 
mortgaged  property  ought  usually  to 
go  to  the  mortgagor,  or  towards  the 
extinction  of  the  debt,  at  least ;  and 
though  a  mortgagee  in  possession 
may  not  be  sued  at  law  by  the  mort- 
gagor for  the  income  he  receives 
from  the  property,  yet  the  latter  is 
entitled  to  a   fair  allowance  in   this 


respect  with  any  surplus  proceeds 
which  remain  over  from  a  sale.  Os- 
good V.  Pollard,  17  N.  H.  271. 

4.  Taber  v.  Hamlin,  97  Mass.  489; 
Hatch  V.  Bates,  54  Me.  136. 

5.  See  Ashton  v.  Corrigan,  L.  R.  13 
Eq.  76;  Olcott  v.  Tioga  R.  R.  Ck)., 
27  N.  Y.  546;  Walker  v.  Stone,  20 
Md.  IQ'S;  Brightly  v.  Norton,  3  B.  & 
S.  305;  Williams  v.  Hatch,  38  Ala. 
338;  Thurber  v.  Jewett,  3  Mich.  295; 
Jones  Chatt.  Mort.,  §§  789-82]-.  And 
the  mortgagee,  under  a  power  of 
sale,  has  reasonable  discretion  as  to 
adjournment  of  the  sale.  Hosmer  v. 
Sargent,  8  Allen,  97. 

It  would  appear  that  in  most 
parts  of  this  country  the  mortgagee 
of  a  chattel  is  permitted  to  purchase 
it  at  a  ."^ale  made  under  the  mortgage, 
provided  the  sale  be  fairly  conducted 
and  he  act  honorably;  and,  indeed, 
the  tendency  is  to  insert  some  such 
permission  as  this  in  power-of-sale 
mortgages,  even  where  the  legislature 
has  not  already  granted  it.  The  pur- 
chase would  be  good  at  common  law, 
and  equity  is  not  likely  to  interfere 


42 


657 


§  438 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


are  in  the  case  of  a  pledge ;  ^  nor  is  it  to  be  presumed  that  statute 
directions  regarding  the  mode  of  sale  exclude  the  mortgage  parties 
from  agreeing  that  sale  upon  default  shall  be  after  some  different 
method/  An  irregular  foreclosure  sale  may  operate  as  an  assign- 
ment of  the  mortgage;  and  at  all  events  the  lien  of  an  unpaid 
mortgage  debt  remains.^ 

§  438.     Mortgagee    May    Pursue    Personal    Remedies    Against 
Mortgagor  on  Default. 

As  with  respect  to  a  pledge,  so  our  present  secured  creditor  may 
waive  or  postpone  his  claim  under  the  mortgage  security,  and  pur- 
sue his  personal  remedies  against  the  mortgagor.  His  attachment 
of  the  mortgage  property  or  of  other  property  in  a  personal  suit  to 
recover  his  debt  is  no  violation  of  the  mortgagor's  rights.'     He  has, 


with  it  save  on  the  application  of 
parties  interested  and  when  the  mort- 
gagee appears  to  have  abused  his 
opportunities.  See  Bean  v.  Barney, 
10  Iowa,  498;  Lyon  v.  Jones,  6 
Humph.  533;  Olcott  v.  Tioga  R.  R. 
Co.,  27  N.  Y.  546;  Wright  v.  Ross, 
36  Cal.  414.  But  see  Korns  v.  Shaf- 
fer, 27  Md.  83;  Pettibone  v.  Perkins, 
6  Wis.  616;  Imboden  v.  Hunter,  23 
Ark.  622.  And  see  Jones,  §§  806- 
810.  And  whether  the  mortgaged 
property  be  sold  with  the  consent  of 
the  mortgagor,  or  by  way  of  fore- 
closure, a  mortgagee  has  the  right, 
unless  he  has  clearly  stipulated  to  the 
contrary,  to  apply  the  proceeds  to 
the  payment  and  satisfaction  of  the 
mortgage  debt;  or,  if  that  debt  isi 
payable  by  instalments,  towards  the 
payment  of  any  instalments  which 
may  be  due,  at  his  option.  Hasten 
V.  Cummings,  24  Wis.  623 ;  Saunders 
V.  McCarthy,  8  Allen,  42.  See  White 
Mountain  Bank  v.  West,  46  Me.  15; 
Locke  v.  Palmer,  26  Ala.   312.     And 


see  Long  v.  Long,  1  C.  E.  Green,  59, 
as  to  a  bond  secured  by  mortgage. 

6.  §§  407,  408. 

7.  Jones  Chatt.  Mort.,  §§  778,  789'; 
Denny  v.  Van  Dusen,  27  Kans.  437. 
Parties  may  agree  expressly  that  the 
mortgagee  may  sell  on  default  at 
private  sale.  Reynolds  v.  Smith,  28 
Kans.  810 ;  Ballou  v.  Cunningham, 
60  Barb.  425.  As  to  permitting  a 
sale  without  notice,  the  question  of 
fairness  is  open  to  proof.  Wylder  v. 
Crane,  53  111.  490.  Power  of  sale  does 
not  imply  power  to  barter  or  exchange 
the  property.  Edwards  v.  Cottrell,  43 
Iowa,  194.  In  general  the  sale  under 
a  power  must  be  fair  and  bond  fide 
in  order  to  extinguish  the  equity  of 
redemption.  See  Jones,  §§  801-805. 
Contract  may  empower  to  sell  before 
default.  Schmittdiel  v.  Moore,  101 
Mich.  590. 

8.  Jones,  §  811;  Rose  v.  Page,  82 
Mich.  105;  Chaffee  v.  Atlas  Co.,  43 
Neb.  224. 

9.  Buck  V.  IngersoU,  11  Met.  226; 


658 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    439 

moreover,  the  same  right  that  a  mortgagee  of  real  property  has  to 
pursue  his  remedies  concurrently ;  suing  on  the  mortgage  note  and 
carrying  on  proceedings  at  the  same  time  for  foreclosure.'  Hold- 
ing various  securities  he  may  avail  himself  of  any  or  all  of  them 
at  discretion;  deriving,  however,  but  one  satisfaction,^  and  per- 
mitting the  subrogation  of  securities  for  purposes  of  contribution. 

§  439.     Mortgagor's  Equity  of  Redemption, 

We  have  already  alluded  to  the  mortgagor's  equity  of  redemp- 
tion ;  a  right  which  is  regarded  with  increased  favor  in  these  days, 
as  constituting  his  real  and  beneficial  interest  in  the  mortgaged 
property.  The  worth  of  the  equity  of  redemption  in  mortgaged 
chattels  is  substantially  the  value  of  those  chattels  over  and  above 
the  liability  which  they  are  designed  to  secure.  If  the  mortgagee 
of  personal  property  retains  the  property  after  breach  of  condition, 
as  we  have  seen  he  may,  without  selling,  though  he  have  the  legal 
title  in  the  chattels,  yet  are  they  always  liable  to  redemption  in 
equity,  at  the  mortgagor's  instance,  subject  of  course  to  lapse  of 
time  and  laches  on  his  part ;  and  the  debt  being  satisfied,  the  mort- 
gagee would  have  no  right  to  retain  them  longer.''  And  if  the 
mortgagee  sells  the  property,  the  mortgagor  is  allowed  to  redeem 
after  the  day  of  forfeiture  at  any  time  before  foreclosure  is  com- 
pleted by  equity  proceedings  or  by  such  sale  upon  due  notice  or  by 
some  other  mode  which  complies  with  statute  or  a  just  understand- 
ing of  the  parties.'*     The  surplus  proceeds,  after  satisfaction  of 

Whitney  v.  Farrar,  51  Me.  418;  Tay-  Green,   44;    Story   Eq.  Jur.,   §    1031; 

lor  V.  Cheever,  6  Gray,  146.     Though  Doane    v.    Garretson,    24    Iowa,    351. 

probably    attachment    of    the     mort-  See,   also,  »upra,   p.   534. 

gaged    property   abandons   one's   atti-  4.  lb.     It  is  even  held  that  a  mort- 

tude   as   mortgagee.  gagor  of  chattels  in  possession  has  a 

1.  Juchter  v.  Boehm,  63  Ga.  1;  right  to  renew  his  interest  in  them 
Pettibone  v.  Stevens,  15  Conn.  19;  after  breach  of  the  condition  of  the 
Jones  Chatt.  Mort.,  §  758;  142  N.  W.  first  mortgage,  but  before  a  sale. 
340   (Mich.),  Smith    v.    Coolbaugh,    21    Wis.    427. 

2.  Ayres  v.  Wattson,  57  Penn.  St.  And  see  Carty  v.  Fenstemaker,  14 
360;    Chapman  v.   Clough,  6  Vt.   123.  Ohio  St.  457.     As  to  long  delay,  see 

3.  Freeman    v.    Freeman,    2    C.    E.  Osborne  v.  Morgan,  171  111.  App.  549. 

659 


§  440 


THE    LAW    OF    PERSONAL    PKOPEETY. 


[PAKT  III. 


the  mortgage  debt  and  incidental  expenses,  ought,  after  a  sale  of 
the  property,  to  be  paid  over  by  the  mortgagee  to  the  mortgagor.^ 
Equity  courts  are  always  suspicious  of  arrangements  by  means  of 
which  the  mortgagee  pretends  to  buy  in  his  mortgagor's  right  of 
redemption ;  for  in  preserving  this  right  lies  the  debtor's  last  hope, 
and,  the  equity  finally  extinguished,  his  interest  in  the  property  is 
gone  completely.  Any  sale  of  the  property  by  a  mortgagee  before 
the  time  of  breach  and  foreclosure  would  ordinarily  be  a  conversion 
and  render  him  liable  to  the  mortgagor's  suit.^ 

§  440.     Payment,  Satisfaction,  etc.,  of  Mortgage  Debt. 

A  mortgage  debt,  like  any  other  debt,  may  be  extinguished,  as 
by  release  or  payment  and  satisfaction ;  and  generally  whatever 
extinguishes  a  mortgage  debt  extinguishes  the  mortgage  security 
also.  But  the  extinguishment  of  a  mortgage  debt  involves  ques- 
tions concerning  the  intent  of  parties.'^  The  payment  of  the  mort- 
gage debt  to  a  mortgagee,  by  some  thind  party  who  is  under  no 


It  is  held  that  a  mortgagee  may, 
in  the  absence  of  statutory  require- 
ment or  express  agreement  to  the  con- 
trary,  cut  off  the  right  of  redemption 
by  a  sale  upon  reasonable  notice  to 
the  mortgagor.  Jones,  §  707,  and 
cases  cited.  This  doctrine  is  upheld 
in  New  York,  and  New  Jersey,  and 
other  States.  In  the  case  of  a  pledge 
a  similar  right  exists.  Svpra,  §  407. 
But  this  statement  of  the  law  does 
not  apply  to  the  practice  in  various 
States,  where  the  mortgage  itself 
makes  no  such  provision.  Jones,  ib. ; 
Flanders  v.  Chamberlain,  24  Mich. 
305. 

A  sale  of  the  mortgaged  property 
upon  a  foreclosure  by  consent  of  the 
parties  excludes  the  equity  of  re- 
demption and  confirms  the  title  of 
the  hond  fide  purchaser.  Talman  v. 
Smith,  S?  Barb.  390.  But  an  irregu- 
lar foreclosure  sale  operates  substan- 


tially as  an  assignment  of  the  mort- 
gage.    Walker  v.   Stone,  20  Md.   195 

5.  Parish  v.  Wheeler,  22  N.  Y.  494 
And  see  Flanders  v.  Thomas,  12  Wis. 
410;  U.  S.  Dig.  Mortgage,  50;  Suppl 
ib.  425;  Alger  v.  Farley,  19  Iowa 
518 ;  Lipsohn  v.  Goldstein,  212  Mass, 
144,  98  N.  E.  703.  Nor  can  a  cred 
itor,  who  has  sold  chattels  under  a 
mortgage  from  a  corporation,  excuse 
himself  from  crediting  the  proceeds 
on  the  ground  that  the  transaction 
which  furnished  the  consideration  of 
the  mortgage  was  ultra  vires  on  the 
part  of  the  corporation.     Ib. 

6.  Spaulding  v.  Barnes,  4  Gray, 
330.  But  cf.  Schmittdiel  v.  Moore, 
101  Mich.  590,  60  N.  W.  279. 

7.  See  Harrington  v.  Brittan,  23 
Wis.  541;  Bryant  v.  Pollard,  10  Al- 
len, 81;  Packard  v.  Kingman,  11  Iowa, 
219;  Franklin  Bank  v.  Pratt,  31  Me. 
501;  Jones  Chatt.  Mort.,  §§  632-680. 


660 


CHAP.  VI.]  DEBTS    SECURED    BY    MORTGAGE,    ETC.  §    442 

obligation  to  make  it,  will  not  necessarily  operate  in  satisfaction 
of  it;  the  intention  of  this  third  party  in  making  the  payment 
being  regarded.^  In  these  and  many  other  respects,  the  doctrines 
applicable  to  debts  in  general  will  be  found  to  apply.' 

§  441.     Mortgage  of  a  Ship  or  Vessel. 

Before  we  leave  the  general  subject  of  chattel  mortgages,  it  may 
be  well  to  speak  briefly  concerning  the  mortgage  and  hypothecation 
of  ships  and  vessels.  These  are  sometimes  mortgaged  like  other 
personal  property;  in  which  case  they  appear  to  come  under  the 
usual  rules  concerning  registry,  save  so  far  as  statutes  of  any  State, 
in  this  respect,  may  be  thought  to  interfere  with  those  of  the 
United  States ;  the  navigation  laws  of  this  country  being  shaped 
and  controlled  more  immediately  by  the  federal  than  by  any  local 
government.^ 

§  442.     Hypothecation  of  a  Ship;    Bottomry  and  Respondentia 

Bonds. 

But  loans  on  the  security  of  ships  and  vessels  are  most  commonly 

effected  by  means  of  a  hottomry  bond,  and  instead  of  pledging  or 

mortgaging  the  vessel  we  hear  of  its  hypothecation.     These  terms 

8.  Walker  v.   Stone,  20»Md.   195.  followed;    yet   it   will   be   found   that 

9.  See,  further,  c.  3,  as  to  Debts,  requirements  of  this  sort  are  quite 
supra;  Thompson  v.  Van  Vechten,  27  lax  for  chattel  as  compared  with 
N.  Y.  568;  Packard  v.  Kingman,  11  real-estate  mortgages.  See  Jones 
Iowa,  219;  Hill  v.  Beebe,  3  Kern.  566;  Chatt.  Mort.,  §§  663-680. 

Jones  Chatt.  Mort.,  §§   632-657.     For  1.  See    1     Pars.     Shipping,     60-63; 

the  doctrines  of  merger  and  subroga-  Mattingly    v.    Darwin,    23    111.    618; 

tion  here  applicable,  see  Jones  Chatt.  Veazie    v.     Somerby,     5    Allen,    280; 

Mort.,  §§  658,  659.     If  the  Statute  of  Wood  v.  Stockwell,  55  Me.  76;  Clark 

Limitations  runs  long  enough  to  bar  v.  Wilson,  103  Mass.  219 ;  The  Trouba- 

a   debt    secured   by   a   mortgage,   the  dour,  L.  R.  1  Ad.  &  Ecc.  302;  supra. 

mortgagee's   title   is   not  thereby   de-  §§  307,  315,  317;  Jones  Chatt.  Mort., 

feated.     Crain  v.  Paine,  4  Cush.  483;  §§    520-554;    Provost    v.    Wilcox,    17 

Almy   V.    Wilbur,    2    W.    &    M.    371.  Ohio,  359;  ..Etna  Ins.  Co.  v.  Aldrich. 

Statutes    requiring   a   formal    instru-  26   N.    Y.    92.      Capture    of   a   vessel 

ment    for    discharge    of    a    mortgage  as  prize  overrides  a  mortgage.     The 

and    it«    record    should    be    carefully  Hampton,  5  Wall.  372. 

661 


§  442 


THE  LAW  OF  PERSONAL  PEOPEKTY. 


[part  III, 


are  derived  from  the  civil  rather  than  the  common  law;  and  the 
contract  of  bottomry  is  so  called  because  the  keel  or  bottom  of  the 
ship  is  made  the  security.^ 

Similar  to  bottomry  bonds  are  respondentia  bonds,  and  a  loan 
is  of  the  latter  description  where  the  security  is  not  the  ship,  but 
the  goods  laden  on  board  in  whole  or  in  part.  Here  it  is  said  that 
the  borrower's  personal  responsibility  is  deemed  the  principal 
security  for  the  performance  of  the  contract,  and  hence  the  origin 
of  the  term.-' 


2.  "  To  hypothecate "  is  much  the 
same  as  to  "  mortgage,"  if  the  terms 
of  the  civil  law  are  convertible  at 
all ;  and  certainly  it  is  quite  diflferent 
from  pledging  a  thing;  for  with  the 
Roman  pignus  and  the  English  pledge, 
the  possession  of  the  thing  passes  to 
the  pledgee,  while  in  a  case  of  hy- 
pothecation it  may  remain  in  the 
owner's  possession.  1  Pars.  Ship- 
ping, 132;  Just.  Inst.  lib.  4,  tit.  6, 
§  7;  Domat  Civil  Law,  §  1657;  The 
Atlas,  2  Hagg.  Adm.  48,  53.  The 
questions  arising  under  the  hypothe- 
cation of  vessels  by  bottomry  are  de- 
termined for  the  most  part  in  the 
courts  of  admiralty;  and  while  it  is 
a  matter  of  doubt  whether  such  courts 
can  take  jurisdiction  in  case  a  bot- 
tomry bond  is  made  by  the  owner  in 
a  home  port,  this  kind  of  security  is 
most  frequently  given  by  the  master 
abroad  in  ca.ses  of  necessity,  and  here 
the  admiralty  jurisdiction  is  ample 
and  exclusive.  Abb.  Shipping.  153 ; 
1  Pars.  Shipping,  133 ;  and  conflicting 
cases  cited ;  Bouv.  Diet.  "  Bottomry ;  " 
Blaine  v.  The  Carter,  4  Cr.  328;  3 
Ld.  Eaym.  982.  This  sort  of  hypothe- 
cation is  by  a  bottomry  bond,  the  con- 
tract itself  being  commonly  termed 
"  bottomry ;  "  and  by  such  a  contract 
the  owner  of  the  ship,  or  the  master 


as  his  agent,  borrows  money  for  the 
use  of  the  ship,  and  gives  as  se- 
curity a  sort  of  mortgage  upon  the 
ship  for  a  specified  voyage.  The  es- 
sentials of  a  bottomry  bond  are,  that 
it  shall  bind  the  ship  for  the  pay- 
ment of  the  money,  provided  the  ship 
perform  the  voyage  and  arrive  in 
safety;  while,  if  the  ship  is  lost,  no 
part  of  the  loan  is  to  be  paid,  and 
the  lender  loses  hi.s  money.  Here, 
it  is  evident,  the  lender  takes  a  risk 
similar  to  that  borne  by  insurers; 
and  for  this  reason  he  is  allowed  to 
stipulate  for  maritime  or  extraordi- 
nary interest  by  way  of  compensa- 
tion, without  falling  under  the  bar 
of  the  usury  laws.  1  Pars.  Shipping, 
134,  and  cases  cited;  Bright.  Fed.  Dig. 
Shipping,  793,  794;  The  Atlas,  2 
Hagg.  Adm.  48,  57.  Mr.  Parsons 
thinks  that  there  seems  no  good  rea- 
son why  a  bottomry  bond  may  not 
provide  for  common  interest,  and  for 
payment  by  the  owner  of  the  money 
borrowed,  whether  the  ship  be  safe 
or  lost.     See  1  Pars.  135. 

3.  1  Pars.  Shipping,  165-167;  Co- 
nard  v.  Atlantic  Ins.  Co.,  1  Pet.  386; 
Franklin  Ins.  Co.  v.  Lord,  4  Mass. 
248. 

The  whole  subject  of  chattel  mort- 
gages is  at  the  present  day  changed 


662 


CHAPTER    VII 

BILLS   AND    NOTES 

§  443.     History  of  Bills  and  Notes. 

Bills  of  exchange  are  supposed  to  have  first  come  into  use  with 
the  revival  of  commerce  in  the  Mediterranean  Sea  about  the  thir- 
teenth century,  and  promissory  notes  considerably  later:  though 
some  of  the  legal  principles  applicable  to  both  classes  of  instru- 
ments were  foreshadowed  in  the  Roman  civil  law.  They  are 
often  placed  together  under  the  general  heading  of  "  negotiable 
paper;  "  and  how  advantageous  it  was  to  merchants  in  the  earlier 
days  of  the  English  common  law  to  have  at  least  one  kind  of 
incorporeal  personal  property  with  the  characteristic  quality  of 
negotiability,  and  so  as  to  transfer  the  money  right  itself  from  one 
to  another,  we  have  already  shown. ^  The  doctrine  of  assignment 
as  applied  to  chattels  has  changed  wonderfully  since  the  day  when 
a  common  usage  among  British  merchants  found  its  first  regular 
sanction  in  the  legislation  of  Queen  Anne's  reign ;  yet  negotiable 
paper  is  still  found  of  the  greatest  convenience  in  trade  and  com- 
merce ;  furnishing  a  clear  test  of  the  mercantile  standing  of  indi- 
viduals and  firms,  and  enabling  any  business  man  to  secure  a 
concise  written  acknowledgment  of  an  outstanding  debt  due  him, 
which  may  be  placed  on  the  money  market  and  realized  at  its 
current  value  from  any  purchaser. 

and  regulated  by  local  statutes  both  Jones  upon  that  subject,  which  was 

in    Great    Britain    and    the    United  published   in   1881.      (See  edition   of 

States;    and    the    practitioner    should  1908.) 

rely  mainly  upon  the  judicial   prece-  1.  Supi-a,   §    83.      And   see   1   Pars. 

dents  and  legislation  of  his  own  juris-  Notes    and    Bills,    c.    1 ;    Story   Bills, 

diction,    general    rules   being    now    of  §§    5-11 ;    3    Kent    Com.    71-74.      See 

comparatively   little   moment.      When  Eaton    and    Gilbert    on    Commercial 

the    first    edition    of    this    work    was  Paper.      Judicial    knowledge    of    law 

publisihed,    no    trustworthy    textbook  merchant    as    to     negotiable     instru- 

upon     chattel     mortgages     could     be  ments.      See    Chamberlayne    Evid.,    § 

found  by  the  author.    He  now  recom-  592. 
mends  the  treatise  of  Mr.  Leonard  A. 

G63 


§  443a        THE  LAW  OF  PERSONAL  PROPEKTY.       [pART  III. 

"  Bills  of  exchange  "  are,  however,  to  be  distinguished  from 
"promissory  notes."  Instruments  of  the  former  class  are  found 
of  peculiar  importance  (though  not  exclusively  so  used)  in  foreign 
or  inter-State  transactions ;  ^  or  at  least  among  business  men  who 
carry  on  commerce  abroad,  or  otherwise  deal  from  a  distance,  if 
not  between  different  countries.  But  those  of  the  latter  class  are 
available  rather  when  the  dealings  are  inland  and  in  the  same 
neighborhood.  A  promissory  note  in  its  simplest  form  is  only  a 
written  promise  to  pay  money,  but  a  bill  of  exchange  is  a  written 
order  for  the  payment  of  money;  one's  own  credit  being  the 
primary  fund  in  the  one  instance,  and  a  special  credit  or  fund  in 
another  and  perhaps  some  distant  but  accessible  person's  keeping 
being  the  original  source  of  reliance  in  the  other.  And  while  but 
two  parties  —  the  debtor  and  creditor  —  are  essential  to  a  prom- 
issory note,  at  least  three  —  the  debtor,  the  creditor,  and  the 
accessible  fund-holder  of  the  debtor  —  are  necessary  where  the 
negotiable  instrument  is  a  bill  of  exchange.'' 

§  443a.     The  Negotiable  Instruments  Law. 

Under  the  direction  of  the  Commissioners  on  Uniform  Laws  a 
successful  attempt  has  been  made  in  recent  years  to  codify  the 
law  of  negotiable  instruments  and  have  it  passed  in  a  uniform 
shape  in  the  various  States.  This  codification  aims  to  harmonize 
the  rulings  in  various  States  as  to  such  controverted  points  as  the 
rights  of  purchasers  for  value  and  to  make  clear  various  doubtful 
points.'* 

"  It  is  matter  of  common  knowledge  that  the  negotiable  instru- 
ments act  was  drafted  for  the  purpose  of  codifying  the  law  upon 
the  subject  of  negotiable  instruments  and  making  it  unifoi*m 
throughout  the  country  through  adoption  by  the  legislatures  of  the 

2.  A  draft  drawn  in  Ohio  upon  a  by  the  same  party  it  may  be  declared 
bank  in  New  York  and  payable  in  on  as  a  promissory  note.  Willans  v. 
New  York  is   in  effect  a  foreign  bill      Ayres,  3  App.  Cas.  133. 

of    exchange.        Armstrong    v.     Am.  4.  See  Eaton  &  Greene's  Negotiable 

Exch.  Bank,  133  U.  S.  433.  Instruments   Law   and    article    in    26 

3.  If  a  bill  be  drawn  and  accepted      Harvard  Law  Review,  49'3. 

664 


CHAP.  VII.]  BILiS    AND    NOTES.  §    444 

several  States  and  by  the  Congress  of  the  United  States.  .  .  . 
Diversity  was  to  be  moulded  into  uniformity.  This  act  in  sub- 
stance has  been  adopted  by  many  States.  While  it  does  not  cover 
the  whole  field  of  negotiable  instrument  law,  it  is  decisive  as  to  all 
matters  comprehended  within  its  terms.  .  .  .  Approaching 
the  act  from  this  point  of  view,  it  is  apparent  that  no  relation  of 
principal  and  surety  is  established  or  contemplated  by  any  of  its 
sections."  ^ 

§  444.     Bills  of  Exchange  and  Promissory  Notes  Defined. 

But  to  be  more  precise  in  our  definitions.  A  hill  of  exchange 
is  a  written  order  from  one  person  to  another,  directing  the  person 
to  whom  it  is  addr^sed  to  pay  to  a  third  person  a  certain  sum  of 
money  therein  named.^  Bills  of  exchange  may  be  inland  or  for- 
eign :  they  are  inland  when  both  drawn  and  made  payable  within 
one's  own  country;  but  when  either  drawn  or  made  payable  in 
another  country,  they  are  foreign.  This  distinction  becomes  im- 
portant when  questions  arise  on  suit,  and  especially  those  which 
concern  the  protest  and  damages  for  non-payment;  and  it  has 
been  usual  to  draw  foreign  bills  in  sets  of  three,  that  duplicates 
may  be  at  hand  if  the  first  be  lost  or  destroyed ;  while  of  inland 
bills,  signed  copies  are  seldom,  if  ever,  furnished.^     A  promissory 

5.  Per  Rugg,  C.  J.,  in  Union  Trust  an  accommodation  to  all  parties.  A 
Co.  V.  McGinty,  212  Mass.  205,  207,  receives  his  debt  for  transferring  it 
grg  N.  E.  679.  to  C,  who  carries  his  money  across 

As  to  relations  of  suretyship  under  the  Atlantic,  in  the  shape  of  a  bill  of 

the   Negotiable   Instruments   Act,   see  exchange,  without  any  danger  or  risk 

30  Harvard  Law  Review,  141.  in  the  transportation ;  and  on  his  ar- 

6.  Byles  Bills,  1;  3  Kent  Com.  74;  rival  at  London  he  presents  the  bill 
1  Pars.  Notes  and  Bills,  52.  To  bor-  to  B,  and  is  paid.  3  Kent  Com.  74. 
row  the  familiar  illustration:  if  A,  7.  1  Pars.  Notes  and  Bills,  55-60; 
living  in  New  York,  wishes  to  receive  Downes  v.  Church,  13  Pet.  205 ;  Byles 
one  thousand  dollar-s,  which  await  his  Bills,  311;  Mahony  v.  Ashlin,  2  B.  4 
orders  in  the  hands  of  B,  in  London,  Ad.  478.  And  to  recur  to  our  illus- 
he  applies  to  C,  going  from  New  York  tration:  A,  who  draws  the  bill,  is 
to  London,  to  pay  him  one  thousand  called  the  draicer :  B,  to  whom  it  is 
dollars,  and  take  his  draft  on  B  for  addressed,  is  called  the  draioee :  and 
that  sum,  payable  at  sight.     This  is  C,  to  whom  the  bill  is  made  payable, 

665 


§  445  THE  LAW  OF  PEBSONAL  PEOPEETT.      [PAET  III. 

note,  which  is  a  simpler  sort  of  instrument,  may  be  defined  as  a 
written  promise  to  pay  a  certain  sum  of  money  at  a  certain 
specified  date  or  on  demand.^ 

§  445.     Leading  Essentials  of  Bills  and  Notes. 

The  essentials  of  notes  and  bills  are  frequently  made  the  sub- 
ject of  legal  discussion.  And  while  it  is  impossible  for  us  tx) 
pursue  minutely,  in  our  present  brief  investigation,  the  long  array 
of  cases,  often  conflicting,  upon  this  or  any  other  topic  relative  to 
negotiable  paper,  some  of  those  leading  essentials  may  be  pointed 
out  in  passing.  All  instruments  of  this  kind  are  expressed  in 
writing;   for  nothing  oral  can  here  serve  mercantile  convenience.' 

Substance,  rather  than  form  of  expression,  is  the  leading  regard 
in  such  instruments.  Thus  for  "  promise  to  pay,"  an  equivalent 
expression  may  be  substituted ;  though  an  "  I.  O.  U.,"  or  mere 
acknowledgment  of  a  debt,  without  an  accompanying  promise,  is 
declared  in  England  and  many  parts  of  this  country  not  to  be 
negotiable  paper,^  inasmuch  as  there  should  be  some  sort  of  prom- 
is  called  the  payee.  But  B,  on  ac-  A.  B.,  is  the  payee.  And  here,  again, 
cepting  the  bill,  takes  still  another  as  in  the  case  of  a  bill  of  exchange, 
relation,  that  of  acceptor;  while  C,  the  payee,  under  similar  circum-^ 
under  some  circumstances  to  be  pres-  stances  of  transfer  to  enable  another 
ently  noticed,  in  passing  the  instru-  party  to  receive  payment,  assumes 
ment  over  that  a  fourth  party  may  the  new  relation  of  indorser. 
receive    payment    instead    of    himself,  9.  What      are      promissory      notes, 

assumes  the  new  relation  of  indorser.      Book    26,    N.    Y.    Rpts.,    Bender    ed., 
8.  A  common  form,  in  use  with  us,      note,  p.  298.     Date  on  mortgage  and 
is  this:    "  New  York,  January  1,  1871.      note.      Book   3,   N.   Y.   Rpts.,   Bender 
I  promise  to  pay  A.  B.,  or  order,  one      ed.,  note,  p.  469. 

thousand    dollars    in    three    months.  1.  See  1  Pars.  Notes  and  Bills,  23- 

Value  received.  C.  D."  But  no  26,  and  cases  cited;  Tomkins  v.  Ashby, 
special  form  is  necessary;  and  slight  6  B.  &  C.  541;  Byles  Bills,  6th  ed., 
variations  are  to  be  found,  both  in  10.  Not  an  invariable  rule,  it  seems, 
collocation  of  words  and  the  general  in  the  United  States.  See  also  Huyck 
language.  Byles  Bills,  1;  3  Kent  v.  Meador,  24  Ark.  191;  Johnson  v. 
Com.  75;  1  Pars.  Notes  and  Bills,  Frisbie,  15  Mich.  286;  Hussey  v. 
c.  2.  The  person  who  makes  the  Winslow,  59  Me.  170;  Currier  v. 
promise,  C.  D.,  is  called  the  maker,  Lockwood,  40  Conn.  349;  Big.  2d  ed. 
and  he  to  whom  the  promise  is  made,      22;  2  R.  I.  319. 

666 


CHAP.  VII.]  BILLS    AND    NOTES.  §    445 

is©  to  paj,  as  the  style  "  promissory  note  "  indicates.  Certainty 
is  a  prerequisite  of  such  instruments;  certainty  as  to  the  payee, 
certainty  as  to  the  party  who  makes  himself  liable  for  payment, 
certainty  as  to  the  amount  to  be  paid  in  lawful  money,  certainty  as 
to  the  time  of  payment,  and  certainty  as  to  the  fact  of  payment ; 
with  this  qualification,  that  what  can  be  construed  into  certainty 
is  itself  certain. 

Certainty  as  to  the  payee  implies  that  one  should  be  designated, 
either  by  name  or  as  bearer.  A  note  or  bill  payable  to  the  order 
of  "the  administrators"  (already  appointed)  *' of  A"  is  suffi- 
ciently certain,  for  evidence  from  without  will  establish  it ;  but 
not  usually  an  instrument  to  persons  in  the  alternative,  or  "  to  the 
secretary  for  the  time  being"  of  a  society;  for  here  there  is  a 
contingency  as  to  the  person  entitled  to  payment.^  Negotiability 
as  between  the  original  parties  is  not  essential  to  a  note  or  bill: 
yet  the  usual  course  is  to  make  the  instrument  out  payable  to  "A, 
or  order,"  in  which  case  it  is  fully  negotiable  upon  A's  indorse- 
ment ;  or  else  to  make  it  payable  to  "A,  or  bearer,"  and  thus  have 
it  fully  negotiable  at  the  outset.  Even  a  fictitious  payee's  name 
is  in  the  latter  instance  sometimes  inserted,  or  more  generally  the 
payee's  name  is  left  blank,  the  maker  thereby  authorizing  any 
bond  fide  holder  to  insert  his  own  name.^  Certainty  as  to  the 
party  who  makes  himself  liable  for  payment  implies  not  only  that 
the  order  and  conditions  of  liability  should  be  clear,  but  that  the 
promising  party  should  put  his  name  to  the  instrument  in  such  a 

2.  Cf.  Musselman  v.  Oakes,  19  III.  &  Big.  Bills  and  Notes.  6.  What  may 
81;  Storm  v.  Stirling,  3  Ell.  &  B.  832;  be  filled  in  note  given  in  blank.  Book 
16  111.  169;  1  Pars.  Notes  and  Bills,  5,  N.  Y.  Rpts.,  Bender  ed.,  note,  p. 
30-35;  Osgood  v.  Pearsons,  4  Gray,  180.  Leaving  blanks  in  negotiable 
455.  But  see  Holmes  v.  Jacques,  paper.  Book  39,  N.  Y.  Rpts.,  Bender 
L.  R.  1  Q.  B.  376,  showing  that  there  ed.,  note,  p.  900.  A  bill  of  exchange 
may  be  an  alternative  expression  as  accepted  on  good  consideration,  but 
to  A  and  one  who  is  A'.s  agent.  with   the    drawer's   name   left   blank, 

3.  1  Pars.  ib. ;  Crutchly  v.  Mann,  may  be  completed  in  chancery  after 
5  Taunt.  529;  3  T.  R.  581;  Middle-  the  acceptor's  death.  Carter  v.  White, 
sex,  &c.,  V.  Davis,  3  Met.  133;   Redf.  20  Ch.  D.  225. 

667 


§  446 


THE  LAW  OF  PEESOXAL  PROPERTY. 


[part  III. 


way  as  to  manifest  his  intention  to  assume  the  liability.'*  Cer- 
tainty as  to  amount  is  a  requisite  strictly  enforced;  and  while  a 
particular  fund  might  sometimes  be  mentioned  in  the  instrument, 
or  the  payment  might  be  directed  in  gold  coin  instead  of  paper 
currency :  or,  in  other  words,  in  one  kind  of  lawful  money  rather 
than  another;  while,  too,  payment  with  interest  added  or  (in  bills 
of  exchange)  with  exchange  is  undoubtedly  proper;  yet,  as  a  rule, 
the  principal  sum  payable  must  be  stated  definitely,  and  must  be 
in  lawful  money,  and  must  not  be  connected  with  any  indefi.nite 
or  uncertain  stipulations.^ 

§  446.     The  Same  Subject. 

Certainty  as  to  time  of  payment  is  construed  more  liberally, 
but  yet  with  precision;  thus,  a  promise  to  pay  when  C  shall 
arrive  at  age  vitiates  an  instrument  as  a  note  or  bill  with  its 
peculiar  incidental  advantages,  for  C  may  die  a  minor.^     But  the 


4.  The  signature  may  be  by  agent; 
and  if  the  suitable  intention  clearly 
enough  appear,  the  promisor's  own 
name  signed  in  any  part  of  the  paper, 
or  even  his  initials,  will  make  the 
note  complete  and  binding;  though 
he  would  be  foolish  not  to  put  his 
signature  at  the  foot  of  the  promise, 
where  it  belongs,  and  write  it  out 
with  reasonable  fulness.  1  Pars.  35- 
37.  See  Sanders  v.  Anderson,  21  Mo. 
402;  Merchants'  Bank  v.  Spicer,  6 
Wend.  443;  Ferris  v.  Bond,  4  B.  & 
Aid.  679.  Whether  equity  may  sup- 
ply an  omission  to  sign  through  mis- 
take, see  Lancaster  Nat.  Bank  v. 
Taylor,  100  Mass.  18;  Brown  v.  Mc- 
Hugh,   35  Mioh.  50. 

5.  See  Dewing  v.  Sears,  11  Wall. 
379;  1  Pars.  Notes  and  Bills,  37,  38, 
45-47;  Redf.  &  Big.  1-6;  Kelley  v. 
Brooklyn,  4  Hill,  263;  Thompson  v. 
Sloan,  2'3  Wend.  71;  Shamokin  Bank 
V.  Street,  16  Ohio  St.  1 ;  Cook  v.  Sat- 


terlee,  6  Cowen,  108.  An  instru- 
ment may  be  payable  in  currency  or 
funds  which  are  shown  to  circulate 
as  money.  American  Emigrant  Co. 
V.  Clark,  47  Iowa,  671.  There  are 
other  American  eases  which  treat  a 
note  as  good,  for  some  purposes  at 
least,  though  not  expressed  as  pay- 
able in  what  would  be  called 
"  money ;  "  as,  e.  g.,  in  State  bank- 
notes, or  in  "  Canada  currency."  or 
even  in  specific  articles.  See  Big. 
2d  ed.  14;  Swetland  v.  Swetland,  15 
Ohio,  118;  Denison  v.  Tyson,  17  Vt. 
549 ;  Black  v.  Ward,  27  Mich.  191. 

6.  To  be  negotiable  a  note  must  be 
certain  in  time  and  unconditional. 
Mahoney  v.  Fitzpatrick,  133  Mass. 
151. 

So  a  note  expressed  to  be  in  con- 
sideration of  a  conditional  sale  is  not 
negotiable.  Molsons  Bank  v.  Howard, 
21  Ont.  Wkly.  Rep.  278. 


668 


CHAP.  VII.]  BILLS    AND    NOTES.  §    446 

date  need  not  be  written  in, a  note,  nor  is  a  note  vitiated  by  being 
dated  forward  or  antedated,  for  the  true  date  may  be  supplied. 
When  no  time  of  payment  is  mentioned,  the  presumption  is  that 
the  note  or  bill  is  payable  on  demand ;  and  where  a  note  is  pay- 
able on  demand,  it  is  clear  that  (subject  to  statutes  of  limitation) 
the  note  is  due  when  the  demand  is  made,  though  the  original 
parties  may  have  no  idea  when  that  time  will  come.''  Certainty 
as  to  the  fact  of  payment  implies  that  there  should  be  nothing 
contingent  or  conditional  in  the  promise  to  pay.  Where,  instead 
of  a  mere  reference  to  some  fund,  the  writing  directs  payment  out 
of  that  fund  only;  or  where  the  payment  depends  upon  the  per- 
formance of  some  corresponding  obligation;  or  where  it  is  con- 
tingent upon  expectations  which  may  not  be  realized;  in  these 
and  similar  instances  the  instrument  is  not  a  negotiable  note  or 
bill,  however  valuable  in  the  light  of  an  assignment.  But  it  is  no 
objection  to  a  note  or  bill  that  it  states  the  transaction  out  of 
which  it  arose,  the  consideration  for  which  it  was  given,  or  by  way 
of  memorandum  that  other  property  is  deposited  as  collateral 
security;  ^  nor  even  that  it  states  a  liability  to  become  due  before 
its  date  if  others  of  the  same  series  are  defaulted.' 

Liability   on   if   conditional.      Book  Guyman  v.   Burlingame,   36   III.   201; 

3,  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  11.  Ehrics    v.    De    Mill,    75    N.    Y.    370; 

7.  Kelley  v.  Hemmingway,  13  111.  Third  Nat.  Bank  v.  Armstrong,  25 
604;  Redf.  &  Big.  11-14;  1  Pars.  38-  Minn.  530;  Brill  v.  Hoile,  53  Wis. 
42;  Michigan  In.s.  Co.  v.  Leaven-  537;  Worden  v.  Dodge,  4  Denio,  159; 
worth,  30  Vt.  11;  Pasmore  v.  North,  Collins  v.  Bradbury,  64  Me.  37.  See 
13  East,  517.  See  Sayre  v.  Wheeler,  Griffin  v.  Weatherby,  L.  R.  3  Q.  B. 
31  Iowa,  112.  753.     An  order,  draft,  or  check  must 

As  to  bills,   &c.,   payable  at  sight,  be  drawn  upon  a  particular  fund  in 

there    should    be    presentment   within  order   to  constitute   an   equitable   as- 

a      reasonable     time.       Muilman     v.  eignment  thereof.    Attorney-General  v. 

D'Eguino,    2   H.   Bl.    565;    Big.   Bills  Continental   Life  Ins.   Co.,   71   N.   Y. 

and  Notes,  2d  ed.,  244.  325.     See  further  Big.  2d  ed.  20. 

8.  1  Pars.  Notes  and  Bills,  42-47,  Negotiability  is  not  essential  to 
and  numerous  oases  cited;  ib.  60-65;  constitute  an  instrument  a  bill  of 
Redf.  &  Big.  Bills  and  Note&,  8-10 ;  exchange  or  promissory  note ;  though 
Cook  V.  Satterlee,  6  Cow.  108 ;  one  hinders  thus  a  very  convenient 
Goshen  v.  Hurtin,  9  Johns.  217;  Cota  quality  of  such  instruments.  Big. 
V.   Buck,   7   Met.    588 ;    1   Burr.   323 ;  Bills  and  Notes,  2d  ed.,  12 ;  Arnold  v. 

669 


§  446 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


We  maj  add,  on  the  point  of  essentials,  that,  as  a  rule,  whenever 
it  is  doubtful  upon  the  face  of  an  instrument  whether  it  was 
intended  as  a  bill  of  exchange  or  a  promissory  note,  and  it  pos- 
sesses the  requisite  of  each,  the  holder  may  choose  to  treat  it  as 
one  or  the  other.  ^ 


Sprague,  34  Vt.  402;  2  Ld.  Kaym. 
1545;  Corbett  v.  Clark,  45  Wis.  403. 
If  the  instrument  be  payable  to  order, 
indorsement  makes  the  negotiability 
eflfective;  if  payable  to  bearer  gener- 
ally, the  title  will  pass  by  delivery. 
Supra,  §  84.  And  hence  any  such 
instrument  may  be  restricted  in  its 
practical  circulation.  As  to  the  effect 
of  making  an  instrument  payable 
"  before "  a  certain  date,  cf.  Stults 
V.  Silva,  119  Mass.  137;  Helmer  v. 
Krolick,  36  Mich.  371.  An  impor- 
tant word,  such  as  "  dollars,"  may 
sometimes  be  supplied  by  parol,  if 
accidentally  omitted.  Beardsley  V. 
Hill,  61  111.  354. 

The  mere  fact  that  the  seal  of  a 
corporation  is  added  does  not  make 
the  note  the  contract  of  the  corpora- 
tion. Button  V.  Marsh,  L.  R.  6  Q.  B. 
361.  As  to  the  effect  of  describing  as 
agents,  trustees,  etc.,  in  a  signature, 
and  whether  one  is  bound  thus  per- 
sonally, see  ib. ;  Story  Agency,  §§  266, 
267;  Big.  2d  ed.  46,  47;  Shoe  & 
Leather  Bank  v.  Dix,  123  Mass.  148; 
Gray  v.  Raper,  L.  R.  1  C.  P.  694; 
Haile  v.  Pierce,  32'  Md.  327.  And  as 
to  corporate  officers,  see  Falk  v. 
Moebs,  127  U.  S.  59'7.  Paper  given 
imder  seal  is  (independently  of  stat- 
ute) a  bond  or  specialty  debt,  and 
not  a  bill  or  note.  This  strict  rule  is 
sometimes  affected  by  legislation. 
Laidley  v.  Bright,  17  W.  Va.  779;  85 
N.  C.  166.     See  next  chapter. 

A   written  statement   on   the   note 


that  it  is  given  as  "  collateral  "  would, 
according  to  many  authorities,  re- 
strict its  negotiability;  though  there 
is  a  conflict  on  this  point.  Jury  v. 
Barker,  E.  B.  &  E.  459;  1  M.  &  W. 
232;  Treat  v.  Cooper,  22  Me.  203; 
Arnold  v.  Rock  River  R.  R.  Co.,  5 
Duer,  207;  Costello  v.  Crowell,  127 
Mass.  293. 

9.  Chicago  R.  v.  Merchants'  Bank, 
136  U.   S.  268. 

1.  See  Edis  v.  Bury,  6  B.  &  C.  435; 
1  Pars.  63 ;  Guyman  v.  Burlingame, 
36  111.  201;  Willans  v.  Ayers,  3  App. 
Cas.  133. 

A  bill  or  note  takes  effect  as  be- 
tween the  parties  from  the  time  of  its 
delivery  and  not  from  the  mere  date. 
Burr  v.  Becker,  264  111.  230,  106  N.  E. 
206,  L.  R.  A.  (1916)  1049,  n. ;  Young 
V.  Hayes,  212  Mass.  525,  9'&  N.  E. 
327.  And  see  Bainbridge  v.  Hoes,  163 
App.  Div.  870,  149  N.  Y.  S.  20  (mail- 
ing a  letter)  ;  Harris  v.  Clanton,  148 
Pac.  683  (Okla.  Sup.  1915)  (condi- 
tional delivery).  See  further  Burriss 
V.  Starr,  165  N.  C.  657,  81  S.  E.  929 
(note  under  seal)  ;  Seager  v.  Drayton, 
217  Mass.  571,  105  N.  E.  461  (renewal 
without  consideration)  ;  Quality  Car 
Co.  v.  Corkill,  182  111.  App.  175  (de- 
livery to  an  agent)  ;  Bombolaski  v. 
First  Nat.  Bank,  55  Ind.  App.  172, 
103  N.  E.  422 ;  Dies  v.  Wilson  County 
Bank,  129  Tenn.  89,  165  S.  W.  248 
(one  note  as  collateral  to  the  other)  ; 
Fessenden  v.  Coolidge,  114  Me.  147, 
95  Atl.  777    ("fof  value  received")  ; 


670 


CHAP.  VII.]  BILLS    AND    NOTES.  §    448 

§  447.     Principal  Parties,  etc.,  Compared  in  Bills  and  Notes. 

The  maker  of  a  note  and  the  acceptor  of  a  bill  have  nearly  the 
same  rights  and  duties ;  both  of  these  being  the  principal  parties, 
to  be  called  on  for  payment  before  any  other  parties  are  liable. 
And  so,  too,  the  drawer  of  a  bill  corresponds  mainly,  in  this  rela- 
tion, to  the  first  indorser  of  a  note.  Let  us,  then,  see  what  is 
acceptance ;  and,  somewhat  later,  what  is  indorsement. 

A  note  must  also  have  two  parties,  as  a  man  cannot  contract 
with  himself,  and  if  the  maker  and  payee  are  the  same  person  the 
note  is  a  nullity  until  indorsed."  So  there  can  be  no  recovery 
where  the  maker  is  one  of  two  joint  payees.^ 

§  448.     Acceptance  of  a  Bill  of  Exchange. 

Acceptance  is  the  engagement  to  comply  with  the  order  con- 
tained  in  a  bill  of  exchange.  Acceptance  may  be  constituted  in 
a  variety  of  ways.  The  usual  method  is  for  the  drawee  of  a  bill 
to  write  across  the  face,  perhaps  in  red  ink,  the  word  "Accepted," 
and  then  sign  his  name.  But  the  law  merchant  requires  less 
formality,  as  by  mere  signature  for  instance, —  regarding  evi- 
dently actual  intent,  in  such  cases,  as  of  far  more  importance  than 
the  method  of  expressing  that  intent;  and  so  lax  is  it,  indeed,  that 
local  statutes  are  sometimes  brought  in  to  stiffen  the  requirements. 

Leiter    v.    Poindexter,    220    Fed.    610  v.   Blake,   113   Me.   313,  93   Atl.   840; 

(Idaho   C.   C.   A.   1915)     (a   purchase  Justice   v.    Stonecipher,   267    111.   448, 

contract  and  not  a  note).  108  N.  E.  722;  Business  Men's  League 

See  Exchange  Nat.  Bank  v.  Little,  v.   Sragow,   153   N.   Y.    S.   231    (App. 

Ill  Ark.  263,  164  S.  W.  731   (adding  Term,    1915)     (executing    in    blank)  ; 

provisions    of    a    material    matter)  ;  Schnitzer  v.  Kramer,  268  111.  603,  109 

Anthony  V.  Brown,  214  Mass.  439,  101  N.    E.    695;    Crosier    v.    Crosier,    215 

N.    E.    1056    (duress    in   procuring)  ;  Mass.  535,  102  N.  E.  901   (delivery)  ; 

Noble  V.  Beeman  Co.,  65  Ore.  93,  135  Scantlebury  v.  Tallcott,  84  Misc.  400, 

Pac.  1006,  46  L.  R.  A.  N.  s.  162   (im-  146  N.  Y.  S.  184   (receipt  embodied), 
material   error)  ;    Cohn  v.   Lunn,   182  2.  Pickering    v.    Cording,    92    Ind. 

S.  W.  584   (Tenn.  Sup.  1916)    (illegal  306. 

as  against  a  penal  statute)  ;  Edwards  3.  Edison  Electric  Illuminating  Co. 

V.  Dealers'  Ice  Co.,   17  Ariz.  98,   148  v.  De  Mott,  51  N.  J.  Eq.  16,  25  Atl. 

Pac.  908   (note  with  invalid  mortgage  952. 
security)  ;  Bank  of  Boothbay  Harbor 

671 


§    448  THE    LAW   OF    PERSONAL    PROPERTY.  [pART  III. 

A  written  and  signed  acceptance  is  sometimes  made  essential,  then, 
bj  legislation;  but  in  the  absence  of  legislation  even  a  verbal 
acceptance  is  valid,  if  communicated  to  the  party  who  takes  the 
bill,  and  if  he  takes  it  on  the  credit  of  that  acceptance."^  It  be- 
hooves the  drawee  who  would  avoid  liability  as  an  acceptor  to 
refuse  acceptance  when  the  bill  is  presented  to  him;  though  the 
cases  do  not  make  it  absolutely  sure  that  simple  silence  and  delay 
on  his  part  would  render  him  liable;  and  if  he  once  accepts  in 
writing,  and  the  bill  is  delivered  back  to  the  person  presenting  it 
for  acceptance,  the  acceptor's  liability  to  all  holders  is  generally 
fixed  as  a  principal  party,  without  reference  to  the  person  who 
presented  the  bill.^  An  acceptor  is  liable  absolutely  on  his  ac- 
ceptance regardless  of  the  surrender  to  him  of  an  attached  bill  of 
lading.^  Where  a  corporation  draws  upon  itself,  or  a  partner  upon 
his  firm  for  partnership  purposes,  or  an  indi^adual  on  himself, — 
in  these  and  like  instances  the  instrument  seems  to  be  rather  a 
promissory  note  than  a  bill  of  exchange,  and  at  all  events  the  act 
of  drawing  is  deemed  a  sufficient  acceptance/     The  legal  effect  of 

4.  See  Spear  v.  Pratt,  2  Hill,  582;  125  Mass.  134.  But  as  to  extendiag 
In  re  Agra,  &c..  Bank,  L.  E.  2  Ch.  this  doctrine  so  as  to  treat  one  who 
39'1;  Spaulding  v.  Andrews,  48  Penn.  writes  on  the  back  as  though  he  had 
St.  411;  Ward  v.  Allen,  2  Met.  53;  written  on  the  face,  see  Indorsement, 
Rees  V.  Warwick,  2  B.  &  Aid.  113;  post;  Big.  2d  ed.  44,  and  conflicting 
Redf.  &  Big.  41-43;   1  Pars.  281-286;  cases  cited. 

Byles,  c.  6,  §  1.  Under  what  circum-stances,  it  may 

5.  1  Pars.  286-291;  Grant  v.  Hunt,  be  asked,  is  a  promise  to  accept 
1  C.  B.  44;  Redf.  &  Big.  43.  As  to  equivalent  to  acceptance?  since  it  so 
complete  or  incomplete  acceptance,  frequently  happens  that  prudent  men 
see  Bank  of  Van  Diemen's  Land  v.  in  business  arrange,  before  drawing 
Bank  of  Victoria,  L.  R.  3  P.  C.  526;  on  one  another,  to  what  an  amount 
Carson  v.  Russell,  26  Tex.  452.  and  in  what  sums  their  bills  shall  be 

6.  First  National  Bank  of  Seattle  v.  honored.  In  this  country  it  appears 
Gidden,  162  N.  Y.  Supp.  317.  to  be  well  settled  that  a  letter  written 

7.  Marion,  &c.,  R.  Co.  v.  Hodge,  9  within  a  reasonable  time  before  or 
Ind.  163 :  Dougal  v.  Cowles,  5  Day,  after  the  date  of  a  bill  of  exchange, 
511 ;  Hasey  v.  White  Pigeon  Sugar  describing  it  in  terms  not  to  be  mis- 
Co.,  1  Doug.  (Mich.)  193.  It  is  im-  taken,  and  promising  to  accept  it,  is, 
material  where  one  places  his  name,  if  sho^^^l  to  the  person  who  after- 
if  his  purpose  be  the  execution  of  the  wards  takes  the  bill  on  the  credit  of 
contract.      Rodocanachi    v.    Buttrick,  the  letter,  a  virtual  acceptance.    Cool- 

672 


CHAP.  YII.] 


BILLS    AND    NOTES. 


§    449 


acceptance  is  to  confirm  and  establish  the  bill  as  originally  drawn 
upon  the  acceptor;  it  signifies  that  the  bill  was  drawn  rightly 
upon  him  and  that  he  will  answer  for  its  due  payment. 

§  449.     The  Same  Subject. 

There  is  such  a  thing  as  a  conditional  or  qualified  acceptance; 
the  cases,  however,  running  pretty  closely  here,  and  the  law  being 
in  rather  an  unsatisfactory  state;  ^  though  the  principle  is  that 
any  acceptance  which  varies  the  original  tenor  of  a  bill  ought  to 
receive  the  sanction  of  the  drawer  and  all  other  prior  parties,  to 
make  the  bill  hold  good.  And  a  sort  of  conditional  or  qualified 
acceptance  is  that  of  an  acceptance  supra  protest  or  for  honor, 


idge  V.  Payson,  2  Wheat.  66.  And 
see  Townsley  v.  Sumrail,  2  Pet.  170; 
Whilden  v.  Merchants'  Bank,  64  Ala. 
1.  But  an  offer  to  accept  a  draft  may 
'be  withdrawn  by  letter,  provided  the 
letter  reach  the  drawer  before  pre- 
sentation of  the  draft  for  acceptance. 
Ilsley  V.  Jones,  12  Gray,  260.  Regret 
has  been  expressed  in  many  qviarters 
that  this  doctrine  of  a  virtual  accept- 
ance of  non-existing  bills  was  ever  ad- 
vanced;  and,  as  the  English  courts  do 
not  perhaps  go  so  far,  it  is  well  to 
consider  this  doctrine  as  restrained  in 
this  country  within  the  above  limita- 
tions, not  to  speak  of  legislation  to 
the  contrary.  In  fact,  virtual  accept- 
ance is  a  doctrine  of  common  law 
contract  rather  than  of  the  law  mer- 
chant. And  hence,  in  the  matter  of 
non-existing  bills,  a  distinction  may 
be  proper  between  the  rights  of  one 
who  afterwards  takes  on  the  faith  of 
a  promise  to  accept,  and  the  rights  of 
one  who  does  not ;  between  bills 
drawn  and  payable  within  a  reason- 
able time  after  the  promise,  and  bills 
which  are  not,  and  so  on.  See  Redf. 
&  Big.  49-51,  and  cases  cited;  Wildes 
V.   Savage,  1   Story,   22 ;    Plummer  v. 


Lyman,  49  Maine,  229;  Chitty  Bills, 
284-286;  Bank  of  Ireland  v.  Archer, 
11  M.  &  W.  383;  1  Pars.  292-300. 
And  see  Exchange  Bank  v.  Rice,  98 
Mass.  288;  Exchange  Bank  v.  Rice, 
107  Mass.  37;  Carr  v.  National  Se- 
curity Bank,  107  Mass.  45;  McCut- 
chen  V.  Rice,  56  Miss.  455.  And  in 
order  to  bind  as  acceptor  one  who  has 
promised  to  accept  a  non-existing  bill, 
the  bill  must  be  pointed  out  and  de- 
scribed in  terms  not  to  be  mistaken. 
Boyee  v.  Edwards,  4  Pet.  111.  Au- 
thority to  draw  at  sight  for  a  speci- 
fied amount  is  not  acceptance  of  a 
particular  draft,  but  it  implies  a 
promise  upon  which  any  bona  fide 
holder  may  rely.  Franklin  Bank  v. 
Lynch,  52  Md.  270.  But  authority 
to  draw  for  a  larger  amount  is  utterly 
inconsistent  with  such  promise. 
Brinkman  v.  Hunter,  73  Mo.  172. 
See  further.  Carter  v.  \Vhite,  20  Ch. 
D.  225. 

8.  See  Redf.  &  Big.  107,  108 ;  United 
States  v.  Bank  of  Metropolis,  15  Pet. 
377;  Newhall  v.  Clark,  3  Cush.  376; 
Wintermute  v.  Post.  4  Zabr.  420;  1 
Pars.  300-312.  and  cases  cited. 


43 


673 


§  449  THE  LAW  OF  PERSONAL  PKOPERTY.      [PART  III. 

which  may  be  given  where  the  drawee,  who  declines  to  accept  the 
bill  generally,  not  being  bound  to  do  so,  accepts  it  supra  protest 
for  some  one  or  more  of  the  parties,  and  stands  rather  as  indorser 
than  acceptor ;  or,  as  more  generally  happens,  where  some  stranger 
steps  in,  after  the  drawee's  refusal  to  accept  and  a  protest,  to  save 
the  bill  from  the  disastrous  consequences  of  being  publicly  dis- 
honored. The  law  on  the  subject  of  acceptance  supra  protest, 
which  is  derived  from  the  law  merchant,  constitutes  an  exception 
to  the  old  rule  that  no  man  can  make  himself  the  creditor  of 
another  without  the  latter's  authority  or  consent;  and  not  only 
has  it  no  recognized  application  to  a  promissory  note,  but  the 
stranger  who  would  thus  acquire  the  rights  of  a  hona  fide  holder 
must  pay  for  the  honor  of  all  the  parties,  and  of  no  particular  one, 
and  not  before  but  after  protest,  complying  likewise  with  certain 
formalities,  by  way  of  notice.^ 

Acceptance  admits  the  drawer's  signature  to  be  genuine,  and 
the  acceptor  is  liable  to  an  innocent  holder  for  value,  though  the 
signature  should  prove  a  forgery.  And,  further,  it  admits  that 
the  bill  is  drawn  on  funds  in  his  own  hands,  and  that  the  payee 
named  is  capable  of  indorsement,  though,  generally  speaking,  the 
acceptor  does  not  warrant  indorsements.^  But  an  acceptance 
supra  protest  does  not  seem  to  admit  the  genuineness  of  any  signa- 
ture, not  even  that  of  the  drawer.^  And  it  may  be  well  to  add  that 
a  certain  duty  rests  upon  the  holder  of  a  bill  in  the  matter  of 
seasonable  presentment  for  acceptance;  this  duty  being  inter- 
preted, however,  in  the  light  of  circumstances ;  and  due  diligence 
in  presentment  applying,  as  a  rule  of  necessity,  rather  to  bills 
payable  on  demand,  or  at  or  after  sight,  than  to  bills  payable  at  a 

9.  Konig   V.    Bayard,    1    Pet.    250;  1.  Horfsman  v.  Henshaw,  11  How. 

Kedf.  &  Big.  87,  88;  Gazzam  v.  Arm-  177;   Redf.  &  Big.  59-63;   Meacher  v. 

strong,  3  Dana,  554;  1  Pars.  313-320;  Fort,  3  Hill   (S.  C.)    227;   Beeman  v. 

Schimmelpennich    v.    Bayard,    1    Pet.  Duck,  11  M.  &  W.  251;  1  Pars.  320- 

264;  Phillips  V.  Thurn,  L.  R.  1  C.  P.  323. 

463.     For  an   unusual   acceptance  by  2.  Redf.    &   Big.    63;    Wilkinson   v. 

"  giving  credit  to  the  bill,"  see  Duna-  Johnson,  3  B.  &  C.  428.     See  Phillips 

van  V.  Flynn,  118  Mass.  537;  Hall  v.  v.  Thurn,  L.  R.  1  C.  P.  463. 
Steel,  6S  111.  231. 

6Y4 


CHAP.  VII.]  BILLS    AND    NOTES.  §    451 

certain  time  after  date.  If  the  drawee  refuses  to  accept,  imme- 
diate notice  should  be  given  to  all  prior  parties  on  the  incomplete 
bill  to  charge  them;  and  sometimes  in  the  case  of  foreign  bills  a 
formal  protest  will  be  necessary.'' 

§  450.  Rights  and  Duties  of  the  Holder  of  Negotiable  Paper  on 
Its  Maturity. 
Of  the  transfer  of  a  bill  or  note  bj  delivery  with  or  without 
indorsement  we  shall  speak  presently  at  some  length ;  and,  not  to 
make  the  subject  too  perplexing  at  the  outset,  we  take  now  the 
simplest  instance  of  a  presentment  for  payment  on  maturity  of 
negotiable  paper.  We  may  remark,  in  passing,  however,  that  one 
often  speaks  of  "  the  holder  "  of  negotiable  paper,  his  rights  and 
duties;  and  that  by  "the  holder,"  in  this  connection,  is  usually 
meant  in  law,  the  owner  of  it ;  since,  as  the  text-writers  have 
shown,  if  a  bill  or  note  be  in  one's  possession  without  title  or 
interest,  that  person  should  ordinarily  be  considered  only  as  the 
agent  of  the  owner ;  though  possession  of  the  instrument  in  regu- 
lar form  affords  a  prima  facie  title.'*  The  principal  right  of  the 
holder  of  negotiable  paper  at  its  maturity  is  to  demand  payment; 
while  his  principal  obligation  is  to  present  that  paper  properly 
for  acceptance  or  pa;>Tnent, —  for  one  or  the  other,  or  both,  as  the 
ease  may  be.^ 

§451.     Presentment  and  Demand ;  How  and  Where  Made. 

With  regard  to  the  presentment  of  a  bill  or  note,  and  demand 
for  its  payment  on  maturity,  and  as  respects  the  formalities  to  be 

3.  See  story  Bills,  §§  231,  273,  n.;  sideration,  from  a  party  capable  of 
Redf.  &  Big.  39-41;  1  Pars.  330-352;  transferring  it,  is  further  styled  a 
2  H.  Bl.  565;  Clarke  v.  Russel,  3  hona  fide  iiolder ;  and  the  rights  of  a 
Dall.  415;  Allen  v.  Suydam,  20  Wend.  lona  fide  holder  are  largely  consid- 
321;  Walker  v.  Stetson,  19  Ohio  St.  ered,  as  we  shall  soon  see,  in  cases 
400.  where   bills   or    notes    have   been   put 

4.  1  Pars.  253  et  seq.;  Pettee  v.  into  circulation  ^^Tongfully,  or  there 
Prout    3  Gray    502.  is  some  other   element   of   fraud   dis- 

5.  One  who  has  acquired  the  paper  coverable.  See  1  Pars.  254-280.  and 
in  good  faith,  and  for  valuable  con-  cases  cited ;  Redf.  &  Big.  165-289. 

675 


§  451 


THE  LAW  OF  PERSONAL  PEOPEKTY. 


[part  in. 


pursued  in  case  of  its  dishonor,  and  the  consequent  liability  of 
various  parties  in  their  proper  order,  where  all  these  preliminaries 
were  carried  out  as  they  should  have  been,  the  rules  of  law  are 
quite  peculiar,  though  their  analogy  is  to  be  found  in  the  doctrines 
of  guaranty.  The  general  rule  is  that  upon  the  holder,  either 
personally  or  by  his  agent,  rests  the  duty  of  presenting  and  mak- 
ing a  demand  of  payment.^  As  to  the  party  of  whom  demand 
should  be  made,  the  rule  is  sufficiently  liberal  for  the  holder ;  since 
parties  other  than  the  principal  one  may  be  charged,  on  non-pay- 
ment, if  the  presentment  and  demand  were  made  to  a  person 
authorized  to  pay  the  bill  or  note,  at  the  right  place  and  time,  and 
in  the  proper  way/ 


6.  The  agent,  if  any,  may  be  au- 
thorized without  any  writing;  and, 
indeed,  it  is  very  common  for  business 
men,  in  these  days,  to  put  into  the 
bank  such  bills  and  notes  as  they  may 
hold,  using  the  agency  of  the  bank, 
instead  of  presenting  the  paper  on 
maturity  themselves.  1  Pars.  357- 
361 ;  Sussex  Bank  v.  Baldwin.  2  Har- 
rison, 487;  Bank  of  Utica  v.  Smith, 
18  Johns.  230;  Seaver  v.  Lincoln,  21 
Pick.  267.  Drawee  of  bills  and  notes 
must  know  drawer's  signature.  Book 
10,  N.  Y.  Rpts.,  Bender  ed.,  note, 
p.  29. 

7.  1  Pars.  361;  Redf.  &  Big.  326- 
330;  Matthews  v.  Haydon,  2  Esp.  509, 
Presentment  of  a  partnership  note 
should  be  at  the  firm's  place  of  busi- 
ness, or  at  the  dwelling-house  of  either 
of  the  partners.  1  Pars.  362 ;  Erwin 
V.  Downs,  15  N.  Y.  575.  See  Granite 
Bank  v.  Ayers,  16  Pick.  392.  The 
paper  ought  to  be  presented  when 
payment  is  formally  demanded,  for 
the  payer  has  a  right  to  require  its 
delivery  up  to  him  before  he  pays; 
but  whether,  in  case  the  party  de- 
manding   has    the    paper    accessible. 


and  the  paper  is  not  shown  because 
it  is  not  asked  for,  the  demand  will 
be  vitiated,  is  a  point  on  which  the 
authorities  are  not  decisive.  See 
Musson  V.  Lake,  4  How.  262 ;  Ethe- 
ridge  v.  Ladd,  44  Barb.  69 ;  Arnold  v. 
Dresser,  8  Allen,  435;  Redf.  &  Big. 
296,  297.  Mr.  Parsons  says:  "The 
better  rule,  as  drawn  from  the  au- 
thorities, would  seem  to  be,  that  in 
order  to  destroy  the  validity  of  the 
demand,  on  the  ground  that  the  note 
was  not  exhibited,  the  maker  or  ac- 
ceptor should,  either  expressly  or  by 
implication,  refuse  to  pay  on  that 
account;  otherwise  he  will  be  deemed 
to  have  waived  his  right  to  require 
that  the  note  should  be  shown  to 
him."  1  Pars.  368,  with  authorities 
cited.  And  see  Ocean  Bank  v.  Fant, 
50  N.  Y.  474.  The  rule  of  present- 
ment is,  at  all  events,  considerably 
affected  by  local  custom,  and  par- 
ticularly by  bank  usage,  since  banks 
are,  after  all,  the  usual  collecting 
agents  of  negotiable  paper  in  this 
country.  If  a  bill  or  note  be  lost,  it 
is  sufficient  to  accompany  the  de- 
mand with  a  presentment  of  a  true 


676 


CHAP.  T 


II.] 


BILLS    AND    XOTES. 


§  451 


Where  a  promissory  note  is  not  made  payable  at  any  particular 
place,  or,  as  they  say,  is  "  payable  generally,"  the  rule  is  that,  in 
order  to  charge  the  other  parties,  demand  of  payment  must  be 
m.ade  of  the  maker  personally  at  his  place  of  business  or  else  at  his 
dwelling-house  or  other  place  of  abode.^  But  this  is  a  rule  sub- 
ject to  proper  qualifications ;  and,  under  various  circumstances,  a 
demand  in  any  form  or  manner  may  be  dispensed  with.  For, 
after  all,  it  is  a  question  of  due  diligence ;  and  wherever  a  demand 
is  found  to  be  impracticable,  proper  efforts  for  that  purpose  hav- 
ing been  made,  the  parties  subsequent  to  the  maker  may  be  held 
to  their  usual  liabilities.^  The  general  result  of  the  cases  is  that 
the  rule  in  this  respect  is  a  strict  one;  in  other  words,  that  a 
demand  must  be  made  or  a  proper  reason  shown  for  its  omission.^ 

What  has  been  said  above  applies,  mutatis  mutandis,  to  a  bill  of 
exchange.  And  if  the  maker  or  acceptor  had  neither  place  of 
business  nor  residence  in  the  city  or  town  in  which  the  paper  is 
payable,  it  is  sufficient,  in  order  to  charge  subsequent  parties,  that 


copy  of  the  lost  paper;  though  here 
it  would  be  fair  for  the  acceptor  or 
maker  to  require  a  bond  of  indem- 
nity before  making  payment.  1 
Pars.  368;  Hinsdale  v.  Miles,  5 
Conn.  331;  Posey  v.  Decatur  Bank, 
la  Ala.  802;  10  Ad.  &  E.  616.  Evi- 
dence of  presentment  for  collection, 
see  C'liamberlayne  Evid.,  §  2618,  n.  1. 

8.  Story  Prom.  Notes,  §  235; 
Woodworth  v.  Bank  of  America,  19 
Johns.   39'1. 

9.  See  Taylor  v.  Snyder,  3  Denio, 
145,  and  cases  cited  passim; 
Wheeler  v.  Field,  6  Met.  290;  Foster 
V.  Julien,  24  N.  Y.  28;  M'Gruder  v. 
Bank  of  Washington,  9  Wheat.   598; 

3  Kent  Com.  96;  1  Pars.  450:  Redf. 
&  Big.  313-330;  Adams  v.  Leland, 
30  N".  Y.  309 ;  Duncan  v.  McCuUough, 

4  S.  &  R.  480.     And  see  §  455,  post. 


1.  While  it  is  not  in  general  suffi- 
cient to  charge  a  subsequent  party 
that  presentment  and  demand  were 
made  in  the  street,  yet  under  some 
circumstances  demand  at  the  maker's 
place  of  business  or  residence  may 
be  treated  as  waived;  and  there  is 
even  some  reason  for  supposing  that, 
by  parol  agreement  of  all  the  par- 
ties concerned,  demand  might  be 
made  at  a  particuh\r  place,  though 
the  note  is  payabk'  gienerally. —  a 
proposition  which,  however,  admits 
of  dispute.  See  Redf.  &  Big.  326- 
32?,  citing  Pearson  v.  Bank  of  Me- 
tropolis, 1  Pet.  89 ;  Pierce  v.  Whit- 
ney, 29  Maine,  188.  and  other  cases. 
And  see  King  v.  Holmes,  11  Penn. 
St.  456;  Seaver  v.  Lincoln,  21  Pick. 
267;   1  Para.  359,  372,  424. 


677 


§  451  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

the  holder  was  there  on  the  day  of  payment  ready  to  receive  the 
money.^ 

A  bill  or  note  is  often  made  payable,  by  its  terms,  at  a  particular 
bank  or  other  place  specially  designated  on  its  face ;  and  when  this 
is  the  case,  the  rule  appears  fairly  settled  that,  in  order  to  charge 
subsequent  parties  to  the  instrument  the  paper  must  be  presented 
and  demand  made  at  that  place  and  none  other.''  Yet  even  here 
there  is  some  difference  in  the  cases  as  to  the  necessity  of  a  demand 
at  the  place  specified ;  while  it  is  clear  that  a  presentment  and 
demand  there  by  the  holder  will  be  suflficient  as  against  all  other 
secondary  parties  to  the  paper.'*  Nor  is  it  necessary  that  in  this 
case  the  holder  himself,  or  his  agent,  should  make  a  formal 
demand;  for  if  the  note  is  at  the  place  on  the  day  of  maturity, 
ready  to  be  delivered  up  to  any  party  who  may  be  entitled  on 
payment  of  the  amount  due,  it  is  sufficiently  dishonored  if  not 
taken  up  before  the  close  of  business  hours ;  though  the  customary 
and  more  prudent  course  for  charging  secondary  parties  is  to  make 
a  formal  presentment  notwithstanding.^     The  place  of  date  of  a 

2.  Boot  V.  Franklin,  3  Johns.  207 ;  465  ;  Bank  of  United  States  v.  Smith, 
Maiden  Bank  v.  Baldwin,  13  Gray,  11  Wheat.  171;  Redf.  &  Big.  329;  1 
154.     And  see  1   Pars.  421-425.  Pars.    426    et   seq.,    and    cases    cited; 

Demand  should  usually  be  verbal;  Sanderson  v.  Bowes,  14  East,  500. 
but    writing   will    sometimes    suffice;  4.  See   1   Pars.    434-436,   and    cases 

however,  the  demand  should  be  abso-  cited;  Bank  of  United  States  v.  Car- 

lutely  for  payment;   and  the  tenor  of  neal,  2  Pet.  543;   1  Esp.  3;   Bank  of 

the  note  or  bill  should  not  be  disre-  Syracuse  v.   Hollister,   17   N.   Y.   46; 

garded.      Story    Notes,    §    242;    Lan-  Wallace   v.   McConnell,    13   Pet.    136; 

genberger    v.    Kroeger,    48    Cal.    147.  Meyer    v.    Hibsher,    47    N.    Y.    265; 

Presentment   should  be   to   the   party  Maiden    Bank   v.    Baldwin,    13    Gray, 

liable,   or   else   his   authorized   agent.  154. 

Story  Notes,  §  251.  Demand  upon  5.  But  in  a  modern  case  it  is  ruled 
one  of  a  partnership  will  suffice.  that,  although  a  bill  or  note  pay- 
Gates  v.  Beecher,  60  N.  Y.  518.  able  at  a  certain  bank  be  in  point 
Otherwise  if  they  are  joint  makers.  of  fact  at  that  bank  when  matured, 
lb.  Demand  on  one  who  signs  as  yet  if  the  bank  officers  have  no 
agent  of  an  undisclosed  principal  is  knowledge  of  its  being  there,  a  suffi- 
sufficient.  Hall  v.  Bradbury,  40  cient  legal  presentment  and  demand. 
Conn.  32.  so    as    to    charge    secondary    parties 

3.  North  Bank  v.   Abbot,   13  Pick,  for  non-payment,   cannot  take  place. 

678 


CHAP.  VII.]  BILLS    AND    NOTES.  §    452 

promissory  note  payable  generally  is  only  prima  facie  the  place  of 
payment ;  and  the  maker's  true  residence,  if  the  holder  knows  it, 
would  control  so  as  to  oblige  him  to  demand  there  rather  than 
elsewhere.^  As  to  a  bill  of  exchange,  it  is  held  that  this  may  be 
accepted  payable  at  a  particular  place  in  the  city  or  town  in  which 
the  acceptor  resides,  though  it  be  not  his  place  of  business.^  And 
it  may  also  be  observed  that,  in  case  of  payment  designated  "  at 
any  bank  "  in  a  certain  city,  the  holder  may  elect  the  bank  at 
which  to  present  the  paper,  and  that  otherwise  he  is  allowed  his 
choice  in  case  of  alternatives.^ 

§  452.  Presentment  and  Demand,  When  Made ;  Days  of  Grace, 
etc. 
But  at  what  time  should  presentment  and  demand  be  made? 
The  general  rule  is  that,  in  order  to  charge  secondary  parties  to 
negotiable  paper,  demand  should  be  made  on  the  day  of  maturity 
of  the  bill  or  note,  not  later  in  general,  and  certainly  not  earlier ; 
and  demand  delayed  longer  can  only  be  justified  under  those 
special  circumstances  which  the  law  recognizes  as  a  valid  excuse.^ 
But  these  words,  "  day  of  maturity,"  should  not  be  regarded  in  a 
literal  sense ;   for  usage,  aided  to  no  little  extent  by  local  statutes, 

Here  a  letter  in  which  the  bill  was  6.  Taylor  v.  Snyder,  3  Denio,  145. 

transmitted  was  laid,  with  other  mail  Presentment   at    the    maker's    former 

matter,  upon  the  cashier's  desk,  but,  place  of  business,  without  inquiry  as 

before  being  taken  up  by  him,  slipped  to  his  residence,  is  insufficient.     Tal- 

through  a  crack  in  the  desk  and  dis-  bot  v.  Commonwealth  Bank,  129  Mass. 

appeared.    It  was  held  that  there  was  67.      But   the    place   of   date   may   be 

no     legal     presentment,     though     the  presumed   the   place  for   presentment, 

party  primarily  liable  had  not  funds  in  absence  of  other  agreement.    Witt- 

in  the  bank  and  did  not  mean  to  pay.  kowski  v.  Smith,  84  N.  C.  671. 

Chicopee  Bank  v.  Philadelphia  Bank,  7.  Troy  City   Bank  v.   Lanman,   19 

8    Wall.    641.      See   also   Huffaker   v.  N.    Y.    477.      But    see    comments    in 

National  Bank,   13   Bush,  644.     And,  Redf.  &  Big.  329,  and  cases  cited, 

we   may   add,   any   loss   of   this   kind  8.  See   1    Pars.    438-442,   and    cases 

carries     a     presumption    of    culpable  cited;    Maiden    Bank   v.    Baldwin,   13 

negligence  which  may  be  rebutted,  and  Gray,  154. 

it  rests  upon  the  bank  officers  to  shift  9.  1  Pars.  373,  374. 
the  blame  if  they  can.     lb. 

679 


§  452  THE  LAW  OF  PEESOXAL  PROPERTY.      [PART  III. 

establishes  an  extension  known  as  "  days  of  grace ;  "  and  it  is  now 
settled  that  demand  is  to  be  made  on  the  third  day  after  that 
limited  in  the  negotiable  instrument ;  or,  in  other  words,  that  the 
primary  party  is  entitled  to  his  three  days  of  grace.  Usage  some- 
times, though  rarely,  is  allowed  to  operate  a  still  further  exten- 
sion; but  three  days  is  the  almost  universal  limit. ^  Days  of  grace 
are  allowed  only  to  what  are  properly  bills  and  notes, —  not  to 
checks ;  nor  to  notes  payable  on  demand ;  though  as  to  bills  and 
notes  payable  at  sight,  it  now  appears  to  be  settled,  notwithstand- 
ing some  former  doubts  on  the  subject,  that  unless  local  statute 
directs  otherwise,  days  of  grace  enter  into  them.^  Both  inland 
bills  of  exchange  and  promissory  notes,  as  well  as  bills  drawn 
abroad,  are  subject  to  the  allowance  of  grace.^  And  while  the 
rule  appears  to  be  that  if  a  note  or  bill  without  grace  falls  due 
on  Sunday  or  a  recognized  holiday,  the  paper  is  not  payable  until 
the  next  secular  day,  it  is  certainly  settled  that,  on  behalf  of  a  note 
or  bill  with  allowance  of  grace,  no  such  extra  indulgence  can  be 
claimed ;  for  the  days  of  grace  are  counted  consecutively,  Sundays 
and  holidays  included,  and  if  the  third  day  of  grace  happens  to  be 
Sunday  or  a  holiday,  the  demand  is  to  be  made  the  day  before.'* 
With  respect  to  the  proper  time  of  day  at  which  presentment  and 
demand  should  be  made,  the  rule  is  that  it  must  be  made  within 
reasonable  hours;  and  this  generally,  though  not  invariably, 
means,  in  case  of  paper  payable  at  a  bank,  within  banking  hours ; 

1.  See  Renner  v.  Bank  of  Columbia,      presentment,   in  Herrick  v.   Woolver- 
9  Wheat.  581;   Cookendorfer  v.  Pres-      ton,  41  N.  Y.  581. 

ton,  4  How.  317 ;  1  Pars.  394-400,  and  3.  1  Pars.  393 ;  4  T.  R.  148 ;  Bank 

cases  cited.  of  Washington  v.  Triplett,  1  Pet.  25 ; 

2.  Story   Bills,   §   377 ;   Barbour  v.      Wood  v.  Corl,  4  Met.  203. 

Bayon,  5  La.  Ann.  304;   Story  Prom.  4.  Story  Bills,  §  337;   1  Pars.  400- 

Notes,    §    224;    Oridge    v.    Sherborne,  403,  and  cases  cited.     But  local  stat- 

11  M.  &  W.   374;   Redf.  &  Big.   307,  utes,   and   perhaps   even    local   usage, 

308;  1  Pars.  404-406.     For  a  demand  may  control  this  rule.     lb.     See  Mor- 

note,    three    months    after    date    was  ris  v.   Richards,   45  L.   T.   N.   s.   210, 

considered   an  unreasonable  delay  in  affirming  rule  of  text  as  to  limitation 

of  the  right  of  action. 

680 


CHAP.  VII.]  BILLS    AND    KOTES.  §    453 

while  as  concerns  a  maker  or  acceptor  personally  it  may  range 
through  the  whole  day  to  what  is  properly  his  bedtime.^ 

§  453.  Proceedings  on  Dishonor  of  the  Bill  or  Note ;  Notice  to 
Secondary  Parties,  etc. 
If  payment  of  the  bill  or  note  be  not  made  by  the  primary  party 
on  demand  and  presentment,  the  holder's  next  duty  is  to  take  such 
proceedings  as  to  completely  charge  the  secondary  parties.  Pre- 
sentment and  demand  is  often  made  by  a  notary  public,  and  banks 
usually  employ  such  officers,  so  that  we  often  hear  of  a  delinquent 
person's  paper  "  going  to  protest."  However  necessary  it  is, 
partly  for  affording  legal  evidence  of  proceedings,  that  foreign 
bills  should  be  regularly  protested  in  this  way,  and  however  con- 
veniently the  same  usage  may  be  applied  to  inland  bills  and  prom- 
issory notes,  it  is  settled  that  by  the  general  law  merchant  no  pro- 
test of  an  inland  bill  or  promissory  note  is  necessary.^  But  notice 
of  dishonor  must  at  all  events  be  sent  to  the  secondary  parties 
with  reasonable  expedition  for  fixing  their  liability,  so  that  each 
may  have  fair  opportunity  of  adjusting  what  he  owes,  and  secur- 
ing his  reciprocal  dues  against  the  other  parties  to  the  unpaid 
paper.     The  law  prescribes  no  particular  form  for  such  notice; 

5.  Redf.  &  Big.  311,  312;  Dana  v.  As  to  notice  of  dishonor  and   de- 

Bawyer,    22    Me.    244;     Story    Bills,  mand,   see    Bennett   v.    Tremont    Co., 

§    349;    Story    Prom.    Notes,    §    226;  221  Mass.  218.  108  N.  E.  891 ;  Dewees 

Cayuga  County  Bank  v.  Hunt,  2  Hill,  v.  Middle  States  Co.,  248  Pa.  202,  93 

635;    Farnsworth    v.    Allen,    4    Gray,  Atl.   ffSB.     Local  statutes  may  affect 

453 ;  1  Pars.  417-421,  and  cases  cited ;  the  rule. 

Bank  of  Utica  v.    Smith,   18    Johns.  6.  Union  Bank  v.  Hyde.  6   \\Tieat. 

230.  572:    Burke   v.    McKay,   2    How.    66; 

See  Ortli  v.  Anderson,  163  App.  1  Pars.  642-644.  The  rule  is  some- 
Div.  519,  146  N.  Y.  S.  689  (payment  times  regulated  by  statute.  Protest 
by  substituted  note)  ;  Craig  v.  Stew-  of  negotiable  instruments,  see  Cham- 
art,  163  N.  C.  531,  79  S.  E.  1100  (a  berlayne  Evid.,  §§  815,  2906.  Notice 
conditional  acceptance  applied)  ;  H.  of  protest  of  bills  and  notes.  Book 
J.  Murrell  &  Co.  v.  Edwards,  179  S.  7,  N.  Y.  Rpts.,  Bender  ed.,  note,  p. 
W.  532  (Tex.  Civ.  App.  1915)  (imper-  629.  Sufficiency  of  notice  to  charge 
feet  acceptance)  ;  Clayton  Town-Site  indorser  of  two  or  more  notes.  Book 
Co.  V.  Clayton  Drug  Co.,  20  N.  M.  2,  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  6. 
165,  147  Pac.  460. 

681 


§  45J 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


though  it  should,  either  expressly  or  by  just  and  natural  implica- 
tion, contain  in  substance  a  true  description  of  the  bill  or  note  so 
as  to  manifest  its  identity;  and  furthermore  an  assertion  that  it 
has  been  duly  presented  at  maturity  and  dishonored,  and  (what  is 
frequently  left  to  mere  implication)  that  the  holder  or  other 
person  giving  the  notice  looks  to  the  person  to  whom  the  notice  is 
given  for  reimbursement  and  indemnity/ 

Presentation,  of  a  bill  for  payment  to  a  secondary  party  is  not 
per  se  notice  of  dishonor ;  nor  can  such  a  party  be  made  liable  on 
a  mere  notice  of  non-payment  which  does  not  express  or  imply 
demand  and  dishonor.^  There  is  some  confusion  in  the  cases  on 
this  point,  and  as  mercantile  methods  vary,  so  do  judicial  rules; 
but  the  tendency  is  towards  a  broad  construction  in  matters  of 
mere  form,  especially  in  the  matter  of  informing  a  party  that  he 
is  looked  to  for  payment,  where  it  might  be  well  enough  implied 
from  the  fact  that  the  bill  was  protested.'  Due  diligence  and  care 
in  directing  the  notice  is  of  course  to  be  expected.^ 


7.  Story  Prom.  Notes,  §  348,  and 
cases  cited;  Bank  of  Alexandria  v. 
Swann,  9  Pet.  33;  Hartley  v.  Case,  4 
B.  &  C.  339;  1  Pars.  466  et  seq. ;  Ar- 
tisans' Bank  v.  Backus,  36  N.  Y.  100. 
See  Smith  v.  Mercer,  L.  R.  3  Ex.  51. 
And  hence  notice  to  an  indorser  is 
not  defective  by  reason  of  not  stat- 
ing the  name  of  the  holder,  or  by 
reason  of  a  misdescription  of  the  date 
of  the  note  in  question,  or  its  amount, 
provided  there  was  no  other  note  pay- 
able at  the  same  place  and  made  and 
indorsed  by  the  same  parties.  Mills 
V.  Bank  of  United  States,  11  Wheat. 
431 ;  Bank  of  Alexandria  v.  Swann, 
9  Pet.  33;  Redf.  &  Big.  362,  363; 
Bank  of  Cooperstown  v.  Woods,  28 
N.  Y.  545.  And  a  misdescription  of 
the  acceptor's  name  is  not  fatal,  if 
the  indorser  cannot  be  thereby  mis- 
led ;  but  if  the  name  were  omitted, 
the  notice  would   be   vitiated.      Den- 


nistoun  v.  Stewart,  17  How.  606; 
Home  Ins.  Co.  v.  Green,  19  N.  Y.  518. 
And  see  Brooks  v.  Blaney,  62  Me. 
456.  A  misdescription  which  misleads 
in  fact  is  fatal  to  the  notice. 

Protest  should  usually  be  made  in 
the  place  of  dishonor.  See  2  Daniel 
Neg.  Instr.,  §  935;  Big.  Bills  and 
Notes,  2d  ed.,  275.  Notice  of  protest 
must  be  correctly  dated  and  must 
state  maker's  name.  Book  2,  N.  Y. 
Rpts.,  Bender  ed.,  note,  p.  6. 

8.  Leeds  Banking  Co.,  In  re,  L.  R.  1 
Eq.  1;  Gilbert  v.  Dennis,  3  Met.  495; 
Juniata  Bank  v.  Hale,  16  S.  &  R.  157. 
And  see  Cook  v.  Warren,  88  N.  Y.  37. 

9.  See  1  Pars.  471  and  n. ;  Caunt  v. 
Thompson,  7  C.  B.  400;  Story  Prom. 
Notes,  §  353;  Redf.  &  Big.  371-376, 
and  numerous  authorities  cited.  The 
notice  of  dishonor  is  usually  given 
in  writing,  or  by  filling  up  printed 
blanks;   but  it  seems  to  be  suflScient 


682 


CHAP.  VII.] 


BILLS    AND    NOTES. 


§  454 


§  454.    The  Same  Subject. 

Notice  of  dishonor  cannot  be  given  by  a  mere  stranger  and  out- 
side party,  but  it  may  be  given  by  the  notary  or  any  agent  of  the 
holder;  and  notwithstanding  some  former  cases  to  the  contrary, 
it  is  also  settled  at  this  day  that  the  holder  may  avail  himself  of  a 
notice  of  dishonor  given  in  due  time  by  any  party  to  the  bill  whose 
liability  to  him  has  been  fixed:  whence  we  find  the  custom  sanc- 
tioned for  the  holder  to  notify  the  person  from  whom  he  took  the 
note  and  rely,  if  he  choose,  upon  that  person  for  notifying  the  prior 
party,  and  so  on.^     As  concerns  the  parties  to  whom  notice  should 


if  oral  only,  though  oral  notices  would 
certainly  be  objectionable  on  many 
accounts.  Personal  service  is  not 
necessary,  since  due  diligence  is  all 
that  the  sender  is  bound  to  use.  And 
hence,  putting  a  letter  into  the  post- 
ofEce,  where  sender  and  indorser  re- 
side in  different  towns,  is  sufficient, 
if  properly  directed,  to  fix  the  liabil- 
ity of  the  indorser,  though  the  latter 
never  receives  it.  Munn  v.  Baldwin, 
6  Mass.  316;  Jones  v.  Wardwell,  6 
W.  &  S.  399 ;  Scott  V.  Liflford,  9  East, 
347;  Story  Prom.  Notes,  §  328;  ib. 
Bills  of  Exchange,  §  300;  1  Pars.  477- 
485;  Shaylor  v.  Mix,  4  Allen,  351. 
But  where  both  parties  live  in  the 
same  town,  the  American  cases  have 
very  generally  held  that  the  mail  is 
not  the  appropriate  means  of  convey- 
ing notice,  or  at  least  not  better  than 
the  emplojTnent  of  messengers.  Ib. 
And  see  Redf .  &  Big.  377  et  seq. ;  Bow- 
ling V.  Harrison,  6  How.  248 ;  Shel- 
burne  Falls  Nat.  Bank  v.  Townsley, 
102  Mass.  177;  1  Am.  Lead.  Cas.  403; 
Warren  v.  Oilman,  17  Me.  360.  Here, 
again,  it  is  not  unlikely  that  new 
modifications  may  have  arisen,  with 
the  progress  of  those  improvements 
in  our  po.tal  system,  whereby  city 
and  rural  carriers  are  employed;  and 


if  80,  it  will  be  more  convenient  to 
the  sender,  since  the  employment  of 
one's  own  private  messenger  makes 
him  personally  responsible  until  the 
notice  is  delivered  either  personally 
to  the  party  to  be  charged,  or  at  his 
place  of  business  or  residence.  Ib. ; 
Van  Vechten  v.  Pruyn,  13  N.  Y.  541T. 
That  notice  through  the  post-oftice  is 
reasonable  where  the  carrier  system 
prevails,  see  Prideaux  v.  Criddle,  L. 
R.  4  Q.  B.  455.  And,  again,  with 
increased  telegraphic  and  telephonic 
facilities,  the  mode  of  giving  notice 
may  be  subject  to  still  further 
changes.  See  Cabot  Bank  v.  Warner, 
10  Allen,  522;  Shaylor  v.  Mix,  4  Allen, 
351. 

1.  1  Pars.  483,  485,  487-499 ;  Story 
Prom.  Notes,  §  323;  ib.  Bills,  §§  289, 
382.  See,  besides  authorities  supra. 
Bank  of  Utica  v.  Bender,  21  Wend. 
643 ;  Bank  of  Columbia  v.  Ivawrence, 
1  Pet.  578;  Walker  v.  Stetson.  14 
Ohio  St.  89;  Gladwell  v.  Turner,  L. 
R.  5  Ex.  59. 

2.  See  1  Pars.  503-506,  and  cases 
cited;  Story  Prom.  Notes,  §§  301,  302; 
ib.  Bills  of  Exchange,  §§  294,  303;  3 
Kent  Com.  108;  Lysaght  v.  Bryant.  9 
C.  B.  46;  Redf.  &  Big.  384-388;  Beale 
V.  Parish,  20  N.  Y.  407.    See  Simpson 


683 


§  454 


THE  LAW  OF  PERSONAL  PROrEETY 


[part  III. 


be  given,  Mr,  Parsons  states  the  rule  (subject  to  some  exceptions) 
to  be  that  every  person  who,  by  and  immediately  upon  the  dishonor 
of  the  bill  or  note,  ajid  only  upon  such  dishonor,  becomes  liable  to 
an  action,  either  on  the  paper  or  on  the  consideration  for  which 
the  paper  was  given,  is  entitled  to  immediate  notice.^ 

Many  nice  questions  have  arisen  as  to  the  time  when  notice  of 
dishonor  should  be  sent;  and  formerly  a  "reasonable  time"  was 
often  pronounced  the  true  limit.  But  the  courts  have  now  fixed 
this  period  quite  definitely.* 


V.  Turney,  5  Humph.  419;  West  River 
Bank  v.  Taylor,  34  N.  Y.  128. 

3.  1  Pars.  499-503,  and  cases  cited. 

4.  The  rule  therefore  is,  that  notice 
of  the  dishonor,  when  sent  between 
parties  residing  in  different  places, 
should  be  put  into  the  post-oflSce 
early  enough  to  be  sent  by  the  mail 
of  the  day  succeeding  the  last  day  of 
grace ;  and  if  two  mails  leave  on  such 
succeeding  day,  it  is  sufficient  to  de- 
posit the  notice  in  time  to  go  by 
either  mail ;  or  if  there  be  no  mail  on 
such  succeeding  day,  or  perhaps,  too, 
if  the  mail  of  that  day  be  closed  be- 
fore a  reasonable  time  after  early 
business  hours,  then  in  season  for  the 
next  regular  mail.  Thus  much  dili- 
gence is  essential ;  though  notice  may, 
of  course,  be  sent  on  the  day  of  dis- 
honor. Where  sent  between  parties 
residing  in  the  same  placo,  notice  may 
be  given  at  any  time  before  the  ex- 
piration of  the  day  after  dishonor. 
And  in  the  case  of  several  successive 
indorsements,  the  rule  is  that  each 
indorser  has  the  same  allowance  of 
time  within  which  to  notify  antece- 
dent parties,  after  himself  receiving 
notice,  that  the  holder  has,  as  just 
stated.  But  the  party,  whether  holder 
or  iudorser,  who  notifies,  must  in  all 


cases  send  his  notices  to  antecedent 
parties  at  the  same  time  that  he 
would  to  his  immediate  indorser; 
and  he  cannot  be  allowed  as  many 
days  as  there  are  intermediate  parties. 
See  Redf.  &  Big.  390-396,  and  cases 
cited;  Bank  of  Alexandria  v.  Swann, 
9  Pet.  33;  1  Pars.  506-520,  and  cases 
cited;  Story  Prom.  Notes,  §  319'  et 
seq.;  Howard  v.  Ives,  1  Hill,  263; 
Downs  V.  Planters'  Bank,  1  Sm.  &  M. 
261;  Chick  V.  Pillsbury,  24  Me.  458. 
The  rule  allowing  a  day  does  not 
apply  as  between  agent  of  the  holder 
and  the  holder  residing  at  a  distance. 
Leeds  Banking  Co.,  In  re,  L.  R.  1 
Eq.  1. 

The  rule  concerning  giving  notice 
of  dishonor  is  well  stated  by  Brett, 
•J.,  in  a  modern  English  case.  Home 
V.  Rouquette,  3  Q.  B.  Div.  514.  And 
see  King  v.  Crowell,  61  Me.  244; 
Shelburne  Falls  Bank  v.  Townsley, 
102  Mass.  177;  Smith  v.  Poillon,  87 
N.  Y.  590.  Notice  of  dishonor  sent 
upon  a  demand  too  late  will  not 
charge  an  indorser.  Stanley  v.  Farm- 
ers' Bank,  17  Kans.  592.  As  to  charg- 
ing an  indorser  by  a  notice,  notwith- 
standing his  recent  removal,  see 
Rowland  v.  Rowe,  48  Conn.  432  ;  First 
Nat.  Bank  v.  Wood,  51  Vt.  471. 


684 


CHAP.  VII.]  BILLS    AND    XOTES.  §    455 

§  455.     Strict  Presentment  and  Notice,  When  Excused. 

Under  some  circumstances  the  holder  of  a  bill  or  note  is  excused 
from  presentment  and  notice  within  the  period  usually  prescribed. 
For  the  general  rule  imposes,  as  we  have  already  seen,  only  reason- 
able diligence  on  the  holder's  part;  and  wherever  it  was  not  in 
the  holder's  power,  by  the  exercise  of  reasonable  diligence,  to  pre- 
sent the  paper  and  demand  payment  at  the  usual  time,  he  is  ex- 
cused from  the  consequences,  provided  he  still  exercised  such 
reasonable  diligence  as  the  circumstances  of  the  case  permit.^ 
Thus,  inevitable  or  unavoidable  accident,  war,  epidemic  or  other 
legal  obstacle,  not  attributable  to  the  holder's  fault,  excuses  the 
failure  of  presentment,  provided  he  make  presentment  as  soon 
aftei'ward  as  he  is  able.^  A  familiar  instance  where  immediate 
presentment  is  found  impossible  occurs  in  case  of  the  maker's  or 
acceptor's  death  previous  to  the  maturity  of  the  paper;  though 
here  notice  to  the  executor  or  administrator,  if  there  be  one,  would 
be  proper;  and,  while  the  decisions  are  not  quite  clear  on  this 
point,  it  would  seem  advisable,  if  not  absolutely  necessary,  to  pre- 
sent the  paper  at  maturity,  so  far  as  may  be,  and  give  notice  to 
the  parties  chargeable  with  a  secondary  liability  that  such  death 
has  occurred,  and  of  the  matter  of  administration,  so  that  each  of 
these  parties  may  take  all  suitable  precautions  on  his  own  behalf ; 
and  this,  too,  even  where,  as  is  generally  the  case  in  our  several 
States,  the  personal  representative  would  be  exempt  from  suit  for 
a  considerable  time.''  The  death  of  the  holder  before  the  paper 
matures  affords  still  better  excuse  for  a  delay  in  presentment; 
and  the  holder's  executor  or  administrator  is  allowed  in  such  cases 
a  reasonable  time  after  appointment,  within  which  to  make  the 

5.  When  indorser  himself  is  to  7.  See  Redf.  &  Big.  429.  and  case* 
blame  for  failure  to  get  notice  of  non-  cited;  Jimiata  Bank  v.  Hale,  16  S.  & 
payment  of  bills  and  notes  he  is  not  R.  157;  1  Pars.  445;  Union  Bank  v. 
discharged.  Book  4,  N.  Y.  Rpts.,  Ben-  Magruder,  7  Pet.  287;  Gower  v. 
der  ed.,  note,  p.  75.  Moore,  25  Me.  16 ;  Pierce  v.  Gate,  12 

6.  Windham  Bank  v.  Norton,  22  Gush.  190.  Demand  on  the  day  ought 
Conn.  213.  See  Redf.  &  Big.  414-422 ;  to  be  excused  where  the  deatli  oc- 
Schofield  V.  Baker,  3  Wend.  488;  1  curred  so  near  the  time  of  payment 
Pars.  442  et  seq.  that    it   was   impossible    to   take    out 

685 


§  45i 


THE  LAW  OF  PERSONAL  PKOPEKTY. 


[PAET  lU. 


presentment.^  The  better  opinion  is  that  any  drawer  who  had  no 
funds  in  the  drawee's  hands  at  the  time  of  drawing,  and  no  right 
to  draw,  and  who  ought  reasonably  to  have  believed  that  his  draft 
would  not  be  paid,  is  not  entitled  to  strict  notice  of  dishonor.^ 
The  absconding  of  the  maker  or  acceptor,  his  removal  into  another 
jurisdiction,  or  sailing  abroad  leaving  no  usual  place  of  business, 
home,  or  known  agent  in  the  State,  or  the  continuance  of  war, —  all 
of  these  are  instances  in  which,  if  the  accompanying  circumstances 
be  such  as  to  justify  absence  or  delay  in  presentment,  the  excuse 
of  tardiness  or  non-presentment  is  considered  sufficient,  especially 
if  presentment  was  attempted  in  vain.^     But  it  should  be  observed 


letters  of  administration  or  executor- 
ship. See  Haslett  v.  Kunhardt,  Rice, 
189 ;  Oriental  Bank  v.  Blake,  22  Pick. 
206;  Caunt  v.  Thompson,  7  C.  B.  400. 
As  to  death  of  the  party  entitled  to 
notice  of  dishonor,  see  Goodnow  v. 
Warren,  122  Mass.  79;  Mathewson  v. 
Strafford  Bank,  45  N.  H.  104. 

8.  1  Pars.  444;  White  v.  Stoddard, 
11  Gray,  258. 

9.  Hopkirk  v.  Page,  2  Brock.  20; 
Orear  v.  McDonald,  9  Gill,  350 ;  Kins- 
ley V.  Robinson,  21  Pick.  327;  Rheti 
V.  Poe,  2  How.  457 ;  Oliver  v.  Bank 
of  Tennessee,  11  Humph.  74 ;  Wood 
V.  Price,  46  111.  435;  Redf.  &  Big. 
441-443,  and  cases  pro  and  con  cited; 
1  Pars.  532  et  seq. 

1.  See  Williams  v.  Bank  of  United 
States,  2  Pet.  96;  Barton  v.  Baker,  1 
S.  &  R.  334;  Lehman  v.  Jones,  1 
W.  &  S.  126;  McGruder  v.  Bank  of 
Washington,  9  Wheat.  598;  Redf.  & 
Big.  447-467,  and  cases  cited;  1  Pars. 
446-465.  Though  the  party  promising 
has  become  bankrupt  or  in.solvent, 
demand  should  be  made  upon  him; 
but  a  demand  in  such  case  upon  his 
assignee  would  also  be  proper,  if  he 
refused.     Barton  v.  Baker,  1  S.  &  R. 


334;  Story  Notes,  §  286;  Big.  2d  ed 
244,  378;  Fugitt  v.  Nixon,  44  Mo.  295 
Cedar  Falls  v.  Wallace,  83  N.  C.  225 

Where  a  note  is  made  by  a  resi 
dent  of  the  State,  who,  before  it  ma 
tures,  moves  permanently  elsewhere, 
leaving  no  one  to  represent  him,  the 
holder  need  not  follow  him  to  present 
the  note  for  payment.  Adams  v. 
Leland,  30  N.  Y.  309;  Taylor  v. 
Snyder,  3  Denio,  145;  Whitely  v. 
Allen,  56  Iowa,  224.  Qu.  whether 
pre.sentment  at  former  place  of  abode 
in  the  State  is  needful  in  such  case; 
it  is  certainly  desirable,  so  far  as 
testing  whether  the  party  removing 
left  fvmds  and  an  agent  behind.  Cf. 
6  Met.  290;  contra,  3  Ohio,  308,  and 
24  N.  Y.  28.  As  to  an  absconding 
maker,  there  should  be,  according  to 
Pierce  v.  Gate,  12  Gush.  190,  some 
demand  or  inquiry  for  him ;  though 
former  cases  ruled  less  stringently. 
The  reason  is,  that  justice  to  the  in- 
dorser  who  has  not  waived  his  own 
rights  requires  that  proper  means  be 
taken  to  charge  the  principal  party. 

See,  further,  Gwin  v.  Moore,  79  Ind. 
103 ;  Cox  v.  National  Bank,  100  U.  S. 
704. 


686 


CHAP.  VII.]  BILLS    AND    NOTES.  §    455 

that  circumstances  sucli  as  we  have  mentioned  will  not  necessarily 
excuse  notice  to  an  indorser;  for  in  general  the  secondary  parties 
should  have  their  notice,  and  opportunity  to  pursue  remedies  as 
among  themselves,  even  though  the  excuse  holds  good  as  regards 
the  party  primarily  liable.^  Where  the  collecting  bank  fails  there 
is  authority  that  the  bank  is  the  holder's  agent,  and  he  may  be 
charged  with  its  negligence  in  not  collecting  the  note.^ 

Excuses  for  the  usual  demand  or  notice,  then,  are  often  because 
it  was  sufficiently  impossible  to  make  such  demand  or  give  such 
notice;  sometimes,  again,  because,  owing  to  his  misconduct,  the 
party  had  no  right  to  expect  it;  and  sometimes  because  the  right 
to  a  demand  or  notice,  though  once  existing,  had  been  substan- 
tially waived  by  the  party's  knowledge  of  the  circumstances  in  the 
case  or  by  his  own  acts  and  admissions.'*  A  party,  for  instance, 
will  not  unfrequently  indorse  a  note  "  waiving  demand  and  no- 
tice." But  concerning  any  such  waiver,  the  holder  should  not 
expect  too  much  from  the  courts ;  for,  at  least,  a  waiver  of  notice 
simply  does  not  embrace  a  waiver  of  demand ;  while  an  indorser's 
agreement  to  pay  absolutely  should  be  clear  and  distinct,  and  with 
full  understanding  of  essential  circumstances,  in  order  that  the 
usual  demand  and  notice  be  dispensed  with.^     And  whether  a 

As  to  due  time  for  presenting  an  and  it  was  held  that  the  holder  could 
instrument  payable  "  on  demand "  not  recover  against  the  maker.  Bald- 
er "  at  sight,"  see  supt-a,  §  452.  And  win's  Bank  of  Penn  Yan  v.  Smith,  215 
see,  as  to  laches  in  presenting  a  note  N.  Y.  76,  109  N.  E.  138. 
"payable  on  demand  after  date,"  4.  See  1  Pars.  443,  521  et  seg. ;  Ford 
Crim  V.  Starkweather,  88  N.  Y.  211.  v.   Dallam,   3    Cold.   67.      See  the    re- 

2.  Redf.  &  Big.  443;  Byles  Bills,  cent  case  of  Yeager  v.  Farwell,  13 
10th  Eng.  ed.,  293;   1  Pars.  446,  523  Wall.  6. 

et  seq.  5.  Berkshire  Bank  v.  Jones,  6  Mass. 

3.  Thus  in  a  recent  case  the  holder  524;  Backus  v.  Shipherd,  11  Wend. 
sent  a  note  for  collection  to  a  bank  629;  Lane  v.  Steward,  20  Me.  98; 
which  had  funds  of  the  maker  to  pay  Redf.  &  Big.  468-476,  and  cases  cited; 
it,  but  did  not  do  so,  and  after  seven  17  Pick.  332;  2  T.  R.  713;  Sigerson 
days'  delay,  during  which  the  holder  v.  Mathews,  20  How.  49'6 ;  1  Par«.  575 
made   no   inquiries,   the    bank    failed,  et  seg.;  Voorhies  v.  Attee,  29  Iowa,  49. 

687 


§  456  THE  LAW  OF  PERSONAL  PROPERTY.       [PAET  IH. 

waiver  of  protest  will  excuse  both  demand  and  notice  is  a  matter 
of  some  uncertainty.^ 

§  456.     Negotiability;   Transfer  by  Indorsement. 

And  now,  to  come  more  directly  to  those  negotiable  qualities 
which  bills  and  notes  possess.^  Of  the  peculiarities  which  attend 
the  easy  transfer  of  such  instruments,  thereby  giving  them  an  im- 
mense popularity  among  business  men,  we  have  spoken  elsewhere.* 
This  transfer  is  sometimes  with,  and  sometimes  without,  indorse- 
ment. The  word  "  indorsement,"  as  applied  to  bills  and  notes,  has 
a  sort  of  technical  significance,  peculiar  to  mercantile  dealings ;  and 
while  one  who  indorses  is  naturally  supposed  to  write  on  the  back  of 
some  instrument,  he  who  indorses  negotiable  paper,  in  a  full  sense, 
indorses  and  transfers;  he  not  only  so  writes,  but  he  also  passes 
the  bill  or  note  over  by  way  of  something  similar  to  an  assignment, 
leaving  himself  as  a  rule  liable  somewhat,  though  not  altogether, 
like  a  surety  or  guarantor,  for  the  value  of  the  paper  and  its  final 
payment  according  to  the  terms  therein  expressed.^ 

So  far  as  the  mere  transfer  of  title  in  a  bill  or  note  is  concerned, 
the  rule  is  that  no  precise  form  of  words  is  necessary  —  delivery 
of  the  paper  with  suitable  intent  being  the  main  essential  to  make 
that  title  complete;  but  when  we  come  to  consider  the  matter  of 
indorsement,  we  find  the  rule  rather  more  strict ;  since  for  one  to 
assume  the  character  of  an  indorser  is  to  incur  certain  perilous 
risks  which  he  might  desire  to  have  avoided,  unless  by  his  writing 

6.  See  Union  Bank  v.  Hyde,  6  9.  See  2  Pars.  1,  2.  Promise  to  pay 
Wheat.  572,  and  other  cases  cited;  cures  want  of  notice  of  protest  of 
Redf.  4  Big.  469;  1  Pars.  584,  585;  bills  and  notes.  Book  15,  N.  Y.  Rpta., 
Wilkins  v.  Gillis,  20  La.  Ann.  538.  Bender  ed.,  note,  p.  8.     Endorsements 

As  to  the  notarial  charges,  expenses,  on  negotiable   instruments  as  entries 

interest,    re-exchange,    &e.,    allowable  in    regular    course    of    business,    see 

on  protested  paper,  see  1  Pars.  633-  Chamberlayne  Evid.,  §  29'02.    Whether 

664;  2  Kent  Com.  95-120.  corporation   liable   upon    indorsement 

7.  Negotiability  of  corporate  note  of  bills  and  notes.  Book  3,  N.  Y. 
under  seal.  Book  30,  N.  Y.  Rpts.,  Rpts.,  Bender  ed.,  note,  p.  56.  Trans- 
Bender  <4d.,  note,  p.  917.  fer   of    bill    of    exchange.      Book    34, 

8.  Sujn-a,  §§  84,  85.  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  983. 

688 


CHAP.  VII.]  BILLS    AND    NOTES.  §    456 

he  negatives  such  liability.  To  charge  one  as  indorser,  there  must 
be  an  intent  manifested  on  his  part  to  stand  in  that  relation.  It 
is  certain  that  a  person  cannot  be  held  as  indorser  at  law  merchant, 
by  a  mere  promise  to  indorse,  or  unless  his  name  is  written  in 
some  way  on  the  paper;  and  yet  a  liberal  principle  of  construction 
is  applied  under  the  influence  of  common  law  contracts  in  deter- 
mining what  shall  constitute  a  legal  indorsement;  the  manifest 
intent  of  the  parties  controlling,  rather  than  the  form  of  words 
or  the  manner  of  the  signature,  as  in  determining  upon  the  validity 
of  the  instrument  itself.^  The  signature  should  be  in  the  hand- 
writing of  the  indorser,  or  by  some  one  whom  he  has  thereunto 
authorized.^  Indorsement  is  usually,  and  perhaps  universally, 
and  always  properly,  on  the  back  of  the  bill  or  note,  as  the  term 
imports ;  and  any  number  of  persons  may  indorse  successively  the 
same  instrument,  beginning  with  the  original  payee.  An  indorse- 
ment is  sometimes  expressed  in  a  sort  of  formula,  and  the  indorser 
will  often  write,  over  his  own  name,  a  direction  to  pay  to  a  certain 
person  or  his  order,  or  in  other  ways  make  his  indorsement  restrict- 
ive, special,  or  with  enlarged  effect.^ 

But  the  most  common  method  of  indorsing  is  in  blank, —  that 

1.  2  Pars.  14-22,  and  cases  cited;  Cush.  291;  Redf.  &  Big.  164.  As  to 
Fenn  v.  Hairison,  3  T.  R.  757;  indorsement  of  partnership  paper  by 
Haskell  v.  Mitchell,  53  Me.  468 ;  a  partner  in  his  own  name,  see  Esta- 
Partridge  v.  Davis,  20  Vt.  499;  Redf.  brook  v.  Smith,  6  Gray,  570;  Redf. 
&  Big.  110-112;  Brown  v.  Butchers'  &  Big.  160,  161.  And  see  Michigan 
Bank,  6  Hill,  443.     Mr.  Parsons  con-  Bank  v.  Eldred,  9  Wall.  544. 

siders  the  decisions  more  lax  than  3.  Thus,  to  indorse  "  without  re- 
they  should  be,  in  this  respect.  Hall  course  "  implies  that  the  indorsement 
V.  Newcomb,  7  Hill,  416;  Denton  v.  is  merely  a  formal  one.  and  that  the 
Peters,  L.  R.  5  Q.  B.  475.  One  whose  holder  must  not  regard  the  person 
indorsement  has  been  fraudulently  indorsing  as  subjecting  himself  to  the 
procured  to  negotiable  paper,  and  who  usual  responsibilities  of  an  indorser. 
was  not  guilty  of  fraud  or  negligence.  But  by  indorsing  "  demand  and  no- 
is  not  liable  even  to  a  bond  fide  tice  waived,"  the  indorser  enlarges  hifl 
holder.  Foster  v.  McKinnon,  L.  R.  liability,  by  declining  to  stand  upon 
4  C.  P.  704.  strict  formalities.     Indorsements  aw 

2.  a  Pars.  16;  Weed  v.  Carpenter,  sometimes   "in    trust   for,"   "to   the 
10  Wend.  403.     As  to  the  wife's  in-  use  of,"  &c.    See  2  Pars.  21. 
dorsement,   see   Stevens  v.   Beals,   10 

44  689 


§  456  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

is,  by  writing  the  name  and  nothing  more :  and  the  effect  of  this  is 
to  give  the  transferee  of  the  paper  an  unqualified  power  of  dis- 
position over  it,  while  the  transferring  party  himself  abides  by 
his  full  legal  liability  as  an  indorser.  The  immediate  effect  of 
an  indorsement  in  blank  is  to  make  the  paper  payable  to  the  trans- 
feree as  bearer,  rather  than  as  indorsee ;  and  notes  indorsed  in 
blank,  like  those  originally  payable  to  bearer,  go  by  delivery ;  mere 
possession  evincing  prima  facie  ownership  in  both  cases,  and  the 
only  important  difference  being  that  the  paper  indorsed  in  blank 
carries  the  safeguard  of  a  secondary  party,  who  is  liable  as 
indorser.'^  In  general,  the  holder  of  a  bill  or  note  upon  which 
there  is  a  blank  indorsement  has  the  right  to  restrict,  though  not 
to  enlarge,  the  indorser's  liability;  thus,  over  the  indorser's  sig- 
nature, he  may  write  "  without  recourse,"  which  restricts  such 
liability,  or  a  direction  to  pay  to  his  own  order,  whereby  the 
negotiability  of  the  instrument  would  become  restrained  accord- 
ingly; while  he  cannot  write  the  words  "demand  and  notice 
waived."  But  a  holder  cannot  alter  the  directions  or  restrictions 
already  given  or  made  by  indorsers  themselves,  and  must  make 
out  the  chain  to  himself  through  them,  until  there  is  a  blank 
indorsement;  this  he  may  fill,  payable  to  himself,  and  disregard 
or  strike  out  those  that  follow.^  The  indorser,  properly  speaking, 
should  be  a  regular  party  to  the  negotiable  paper;  though  if  one 
not  a  party  to  a  bill  or  note  places  his  name  on  the  back  of  it,  he 
incurs  a  liability  which,  according  to  the  rule  of  some  States,  is 
substantially  that  of  an  indorser,  while  in  other  States  he  is 
treated  like  a  maker,  or  surety,   or  guarantor  of   the  paper. ^ 

4.  Big.  2d  ed.  168;  Gurney  v.  Wo-  48;  Cower  v.  Tatum,  24  Ark.  13; 
mersley,  4  E.  &  B.  133;  Merriam  v.  Elliott  v.  Chesnut,  30  Md.  562. 
Wolcott,  3  Allen,  258;  Allen  v.  Clark,  6.  See  Redf.  &  Big.  155,  156,  and 
49  Vt.  39'0.  But  as  to  whether  this  cases  cited;  Rey  v.  Simpson,  22  How. 
rule  has  limitations  sustained  upon  150;  Greenough  v.  Smeed,  3  Ohio  St. 
actual  proof,  see  Big.  168  et  seq.,  and  415 ;  Hall  v.  Newcomb,  7  Hill,  416. 
oases  cited.  Indorser  before  delivery  of  bills  and 

5.  2  Pars.   19.     And   see  ib.   14-22,  notes.     Book  39,  N.  Y.  Rpts.,  Bender 
and  cases   cited;    Peacock  v.   Rhodes,  ed.,  note,  p.  423. 

Z  Doug.  633 ;  Cole  v.  Cushing,  8  Pick. 

690 


CHAP.  VII.]  BILLS    AND    NOTES.  §    457 

Such  an  indorser  is  oommoiily  called  an  anomalous  indorser,  and 
if  lie  pays  the  note  he  is  commonly  allowed  to  stand  in  the  shoes 
of  the  party  from  whom  he  took,  even  although  under  the  Negotia- 
ble Instruments  Law  such  an  indorser  is  remitted  to  his  rights 
before  he  paid.  As  he  had  no  rights  against  prior  parties  to  the 
note  before  he  paid  it  he  could  acquire  none  strictly  by  taking  it 
up;  but  the  courts  have  avoided  this  injustice  by  holding  that  the 
Negotiable  Instruments  Law  does  not  apply  to  this  case.^ 

Paper  indorsed  in  blank,  then  carries  all  the  advantage  which 
sale  with  a  clear  title  can  give ;  but,  on  the  other  hand,  the  easier 
it  may  be  for  a  stranger  to  acquire  title,  the  more  slippery  becomes 
the  holder's  own  grasp;  and  hence  the  precautions  by  way  of 
restriction  upon  negotiability  often  adopted.  As  to  restriction, 
upon  an  indorser's  liability,  a  further  discussion  is  suggested. 

§  457.     The  Same  Subject. 

By  the  act  of  indorsement,  whether  in  blank  or  to  some  particu- 
lar person's  order,  provided  it  be  unqualified,  the  party  indorsing 
makes  a  new  contract  with  the  indorsee  or  holder  and  the  parties 
following;  and  to  this  effect,  that  the  paper  is  due  and  payable 
according  to  its  tenor;  that  the  acceptor,  maker,  or  previous  in- 
dorsers  will  pay  the  same  at  maturity,  when  called  upon  and  noti- 
fied ;  and  that  he,  the  present  indorser,  will  pay  the  same  if  they 
do  not.^ 

The  rights  and  liabilities  of  an  indorser,  as  one  of  the  secondary 

7.  Lill  V.  Gleason,  92  Kan.  754,  142  88  Conn.  185,  90  Atl.  369,  as  to  in- 
Pac.  287.  See,  however,  Quimby  v.  dorsement  for  collection,  etc.;  Shea  v. 
Varnum,  190  Mass.  211,  76  N.  E.  671.      Vahey,  215  Mass.   SO,   102  N.   E.   119 

8.  2  Pars.  23.  (contribution    of    indorser)  ;    W.    H. 
The  maker's  indorsement  of  his  own      Carsey    v.    Swan,    150    Ky.    473,    150 

note  is  a  mere  warranty  of  his  own  S.  W.  534    (liability  as  guarantors)  ; 

contract.     Sabine  v.  Paine,  166  App.  Curtis   v.    David.son,   215    N.   Y.    395, 

Div.  9,  151  N.  Y.  S.  735.     See  as  to  10  N.  E.  481    (suit  by  holder  against 

a  co-maker,  Lindsay  v.  Parrott,   108  both  maker  and  indorser);  Bennett  v. 

Miss.  161,  66  So.  412;  Bank  of  Booth-  Tremont  Co.,   221   Mass.   218,  108   N. 

bay   Harbor   v.    Blake,    113    Me.    313,  E.  891    (notice  of  hishonor)  ;   Dowees 

93  Atl.  840.  V.  Middle  States  Co.,  248  Pa.  202,  93 

See  further,  Lippitt  v.  Thames  Co.,  Atl.  9-55   (primary  party). 

691 


§  458  THE  LAW  OF  PERSONAL  PROPERTY.      [PAET  III. 

parties  who  may  be  held  responsible  in  case  of  the  dishonor  of  a 
bill  or  note,  we  have  already  incidentally  considered;  and  there 
are  other  mutual  obligations,  as  between  himself  and  his  indorsee, 
which  differ  not  from  those  attending  the  simple  transfer  of  nego- 
tiable paper  by  delivery.  But  here  it  should  be  said  that,  an 
indorsement  being  a  new  and  independent  contract,  every  indorser 
of  a  bill  or  note  makes  a  new  contract  with  his  indorsee,  which 
may  in  any  case  be  different  from  that  which  he  received;  that 
his  implied  admission  of  signature  and  capacity  applies  to  every 
party  to  the  paper,  prior  to  the  date  of  his  own  indorsement ;  and 
that  as  to  the  indorsee,  he  has  all  the  rights  of  his  immediate 
indorser,  and  sometimes  more.^  And  indorsement,  we  should 
bear  in  mind,  may  be  made  after  maturity  of  the  paper  as  well  as 
before ;  the  only  essential  difference  being  that  in  the  one  case  the 
date  of  payment  is  fixed  expressly  by  the  parties,  while  in  the 
other  the  law  assumes  a  reasonable  time  on  demand.^ 

§  458.     Effect  of  Transfer  by  Mere   Delivery:    Title  of  Bona 
Fide  Holder  for  Value. 

The  rule  concerning  paper  transferable  by  mere  delivery  is, 

9.  See    2    Pars.    23-27,    and    oases  that    the    paper    is    genuine.      State 

<;ited.    What  is  value  for  indorsement  Bank  v.  Fearing,  16  Pick.  533;  Rem- 

of  fraudulently  issued  negotiable  pa-  sen  v.  Graves,  41  N.  Y.  471 ;   Condon 

per.     Book  6,  N.  Y.  Rpts.,  Bender  ed.,  v.  Pearce,  43  Md.  83 ;  Braithwaite  v. 

note,  p.  144.     Negotiation  of  note  for  Gardiner,    8    Q.    B.    473 ;    Turner    v. 

corporate    officers    no    benefit.      Book  Keller,  66  N.  Y.  66;  Big.  2d  ed.  166. 

30,    N.    Y.    Rpts.,    Bender    ed.,    note.  And   it  is  a  well-settled   rule  of   law 

p.  976.  that  in  an  action  upon  the  indorse- 

1.  Leavitt  v.  Putnam,  3  Comst.  494 ;  ment  the  plaintiff  need  not  prove  the 

Story  Prom.  Notes,   §   178 ;   ib.  Bills,  genuineness  of  prior  signatures  or  of 

§§   220-223.     See   2  Pars.  9-14,  as  to  the  paper  itself;   for  it  is  enough  to 

presumptions   in  case  of  indorsement  prove  the  indorsement.     But  as  to  an 

when  the  paper  is  overdue.     Indorse-  action   brought   against   the   acceptor 

ment  of   past-due  paper.      Book   33,  of  a  bill,  or  the  maker  of  a  note,  an 

N.  Y.  Rpts.,  Bender  ed.,  note,  p.  953.  indorsee  may  have  to  prove  the  in- 

Indorsement  is  a  warranty   to  all  dorsements    he     relies    upon;     hence 

but  guilty  holders,  or  at  least  a  con-  forgery  may  be  alleged  by  such  de- 

clusive  admission,  that  the  signatures  fendants.      State    Bank    v.    Fearing, 

are  genuine  and  made  by  parties  hav-  supra. 
ing  authority  to  pass  the  title,  and 

692 


CHAP.  VII.]  BILLS    AND    NOTES.  §    458 

that  all  bills  and  notes  payable  to  bearer,  or  indorsed  to  bearer, 
or  indorsed  in  blank  and  not  afterwards  restricted  by  the  holder, 
can  be  transferred  by  mere  delivery;  and  title  is  obtainable 
accordingly,  by  any  lorm  fide  transferee  for  value  without 
notice  of  infirmity  of  title  though  he  should  purchase  it  of  a 
thief.  And,  as  a  general  rule,  one  who  transfers  paper  by  deliv- 
ery only  is  no  longer  a  party  to  that  paper,  but  his  liability  ceases 
with  his  interest  therein.  He  is,  to  be  sure,  responsible,  on  the 
usual  principle  of  sales,  for  the  genuineness  of  the  instrument  and 
its  existing  signatures,  and  in  fact  has  been  said  to  warrant  the 
title  to  be  that  purported ;  but  beyond  this,  and  as  to  any  future 
honor  or  dishonor  of  the  paper,  or  solvency  of  the  parties,  he 
promises  nothing  and  is  held  for  nothing.^ 

On  the  other  hand,  the  party  who  takes  negotiable  paper  trans- 
ferable by  delivery  acquires  in  general  an  absolute  property 
therein  and  may  recover  upon  the  instrument,  provided  only  he 
took  it  in  good  faith  and  for  a  valuable  consideration  before  it 
became  overdue,  without  notice  of  adverse  title.^     The  presump- 

2.  2  Pars.  37-41,  and  cases  cited;  ulent  paper.  Book  29,  N.  Y.  Rpts., 
Aldrich  v.  Jackson,  5  R.  I.  218;  Gom-  Bender  ed.,  note,  p.  1165.  Bona  fide 
pertz  V.  Bartlett,  2  Ell.  &  B.  849.  holder  of  bills  and  notes  before  ac- 
Rights  of  transferees  without  indorse-  ceptance.  Book  21,  N.  Y.  Rjjt.*.,  Ben- 
ment.  Book  34,  N.  Y.  Rpts.,  Bender  der  ed.,  note,  p.  26.  Value  to  con- 
ed., note,  p.  874.  Presumption  of  stitute  a  bona  fide  purchaser  of  bills 
ownership  from  possession  of  promis-  and  notes.  Book  14,  N.  Y.  Kpts., 
eory  note.  Chamberlayne  Evid.,  §  Bender  ed.,  note,  p.  707;  Book  25, 
1192.  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  537. 

3.  3  Pars.  42  et  seq.,  and  cases  cited.  What  constitutes  value,  debts.  Book 
See,  further,  §§  84,  85,  supra.  Fraud  26,  N.  Y.  Rpts.,  Bender  ed..  note, 
as  a  defence  to  bond  fide  purchaser  p.  973.  Bond  fide  purchaser  of  bilk 
of  bills  and  notes.  Book  14,  N.  Y.  and  notes  —  suspicions.  Book  9,  N. 
Rpts.,  Bender  ed.,  note,  p.  84.  What  Y.  Rpts.,  Bender  ed.,  note,  p.  758. 
are  sufficient  to  put  purchaser  ot  Circumstances  to  put  upon  inquiry, 
bills  and  notes  upon  inquiry.  Book  Book  11,  N.  Y.  Rpts.,  Bender  ed., 
8,  N.  Y.  Rpts.,  Bender  ed.,  note,  note,  p.  682.  Bond  fide  purchaser  — 
p.  159.  Purchase  of  note  at  a  dis-  wrongful  use  of  notes.  Book  30, 
count  as'  evidence  of  bad  faith.  Book  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  689. 
35,  N.  Y.  Rpts.,  Bender  ed.,  note,  Whether  the  paper  in  any  case 
p.  379'.    Bond  fide  purchasers  of  fraud-  was  transferred  for  a  new  or  an  old 

693 


§  458 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  in. 


tion  of  good  title  in  the  holder,  under  such  circumstances,  is  in 
these  days  very  strong,  and  it  is  generally  deemed  sufficient  for 
him  to  produce  the  paper  which  he  sues  upon,  and  leave  the  par- 
ties thus  presumably  liable  to  impeach  his  title  if  they  can.'*  Even 
as  to  overdue  paper,  so  long  as  it  is  ordinarily  current,  the  case9 
are  somewhat  lenient;  forbearance  stopping  apparently  at  the 
point  of  discredit  or  dishonor,  whatever  that  point  may  be.^  Even 
a  payee  may  be  a  holder  in  due  course,  as  in  case  of  theft.^ 


consideration,  in  payment  of  some 
pre-existing  debt  or  as  security 
merely, —  these  and  analogous  ques- 
tions which  have  much  disturbed  the 
judicial  mind  for  years  bear  some- 
times heavily  upon  a  holder's  rights; 
and  as  the  matter  is  one  of  consider- 
able detail  and  greater  perplexity,  we 
merely  allude  to  it  in  passing.  See 
supra,  chapter  on  Debts ;  1  Pars.  ^18- 
228.  And  see  Swift  v.  Tyson,  16 
Pet.  1,  and  other  cases  cited  in  valua- 
ble note,  Redf.  &  Big.  186-217. 

4,  Redf.  &  Big.  213-217,  and  cases 
cited;  Pettee  v.  Prout,  3  Gray,  502 
Davis  V.  M'Cready,  17  N.  Y.  230 
Craig  V.  Sibbett,  15  Penn.  St.  238 
Brewster  v.  McCardel,  8  Wend.  478 
Jones  v.  Gordon,  2  App.  Cas.  616 
Brooklyn  City  R.  v.  Republic  Bank, 
102  U.  S.  14. 

5.  Redf.  &  Big.  ib. 

Of  course  the  bona  fide  holder  of 
negotiable  paper  is  not  affected  by 
any  knowledge  acquired  after  the 
perfection  of  his  own  title.  Hoge  v. 
Lansing,  35  N.  Y.  136.  But  one 
must  have  paid  value  for  a  note  or 
bill  in  order  to  maintain  his  stand- 
ing as  a  bona  fide  holder ;  and  equita- 
ble defences  in  this  respect  are  not  to 
be  excluded.  See  Harpham  v.  Haynes, 
30  111.  404;  Livingston  v.  Littell,  15 
Wis.  218;  Redf.  &  Big.  214,  215. 
And    if,    too,    the    party    presumably 


liable  can  show  that  the  purchaser  of 
current  negotiable  paper  acted  in  bad 
faith,  believing  at  the  time  of  the 
purchase  that  there  was  some  infirm- 
ity about  the  paper,  he  can  impeach 
the  title;  though,  according  to  the 
later  English  and  American  decisions, 
the  burden  of  proof  is  upon  him. 
Goodman  v.  Harvey,  4  Ad.  &  Ell. 
870;  overruling  Gill  v.  Cubitt,  3  B. 
&  C.  466,  which  is  constantly  pro- 
nounced bad  law  in  this  country. 
Redf.  &  Big.  216,  257;  Hamilton  v. 
Vought,  5  Vroom,  187;  Jones  v. 
Gordon,   2  App.   Cas.   616. 

While  a  failure  of  consideration, 
partial  or  total,  or  even  fraud  between 
the  prior  parties,  is  thus  seen  to  be 
no  defence  to  the  title  of  a  bond  fide 
holder  for  value,  taking  the  paper 
before  it  was  discredited  or  overdue, 
without  notice  of  infirmity  therein; 
so,  too,  it  appears  to  be  well  settled 
that  one  who  purchases  commercial 
paper  for  value,  with  notice  of  defect 
in  its  inception,  from  a  bond  fide 
holder  without  such  notice,  may  re- 
cover, inasmuch  as  he  stands  upon 
the  rights  of  the  latter.  Hascall  v. 
Whitmore,  19  Me.  102;  Lickbarrow 
V.  Mason,  2  T.  R.  63;  Story  Prom. 
Notes,  §  191;  Redf.  &  Big.  262.  See 
Fisher  v.  Leland.  4  Cush.  456.  If 
the  paper  bears  on  its  face  the  evi- 
dence of  its  own  infirmity,  the  holder 


694 


CHAP.  VII.] 


BILLS    AND    NOTES. 


§    459 


§  459.     Rules  Appliable  to  Accommodation  Paper. 

We  hear  sometimes  of  "  accommodation  paper."  By  this  phrase 
is  denoted  those  bills  of  exchange  or  promissory  notes  which  are 
drawn,  made,  accepted,  or  indorsed  without  any  consideration, — 
for  the  "  accommodation,"  as  it  were,  or  convenience  of  some  party, 
and  generally  in  order  to  enable  him  to  raise  money  on  the  credit 
of  the  person  thus  affording  the  use  of  his  name.  Accommodation 
paper  in  the  hands  of  the  party  to  whom  it  is  made,  or  for  whose 
benefit  the  accommodation  is  given,  is  open  to  the  defence  of  a 
want  of  consideration;  but  when  taken  by  third  persons  in  the 
usual  course  of  business,  it  is  governed  by  the  usual  rules  of  nego- 


may  be  denied  the  right  to  recover, 
■because  sufficiently  warned  before  he 
took  it;  but  in  general,  and  where  the 
paper  itself  is  free  from  suspicion, 
the  title  of  the  holder  for  value  is 
only  to  be  overcome  by  proof  of  bad 
faith.  Cf.  Goodman  v.  Simonds,  20 
How.  343 ;  Fowler  v.  Brantly,  14  Pet. 
318.  See  Redf.  &  Big.  239',  257.  The 
effect  of  a  statute  declaring  certain 
paper  void  ab  inito  —  supposing  the 
statute  to  be  constitutional,  of  course, 
—  is  more  sweeping;  and  such  paper 
would  be  valueless  even  in  the  hands 
of  a  bond  fide  holder.  Though  this 
is  to  be  distinguished  from  statutes 
which  make  a  certain  consideration 
illegal,  and  no  more.  See  Bayley  v. 
Taber,  5  Mass.  286;  Paton  v.  Coit, 
5  Mich.  505 ;  Story  Prom.  Notes, 
§  192;  Aurora  v.  West,  22  Ind.  88. 
And  see  Brown  v.  Tarkington,  3 
Wall.  377.  As  to  equities  against 
one  who  takes  an  "  overdue  "  bill  or 
note,  see  2  Pars.  Bills  and  Notes,  603, 
604;  Burrough  v.  Moss,  10  B.  &  C. 
558;  Britton  v.  Bishop,  11  Vt.  70; 
Redf.  &  Big.  275,  276.  And  as  to 
the  extent  of  "  set  off  "  in  such  cases, 
see  Redf.  &  Big.  ib. ;  Baxter  v.  Little, 


6  Met.  7.  For  further  applying  thia 
rule  of  protecting  a  bond  fide  holder 
to  lost  and  stolen  negotiable  instru- 
ments, see  post,  vol.  ii.,  part  iv.,  c.  1. 

An  agent,  trustee,  pledgee,  &c., 
may  usually  sue  in  his  own  name, 
so  favorably  is  any  rightful  holder's 
convenience  regarded.  Pearce  v.  Aus- 
tin, 4  Whart.  489;  Dugan  v.  United 
States,  3  Wheat.  172;  Big.  394,  and 
cases  cited.  See  Dodge  v.  Brown,  113 
Mass.  323 ;  Hayes'  v.  Hathorn,  74  N.  Y. 
486. 

See,  further,  §  83,  supra;  Williams 
V.  Weekley,  100  S.  C.  27,  84  S.  E. 
299;  Equitable  Co.  v.  Harger,  258  111. 
615,  102  N.  E.  209  (no  extrinsic 
facts)  ;  Des  Moines  Bank  v.  Arthur, 
163  Iowa,  205,  143  N.  W.  556;  Wil- 
liams v.  McCormack,  88  N.  J.  L.  170, 
95  Atl.  978;  Adams  v.  Thurmoud, 
149  Pac.  1141  (Okla.  Sup.  1915.  at- 
torney's fee)  ;  Commonwealth  v.  Lowe, 
116  ky.  335,  76  S.  W.  119 ;  McCowen 
V.  Barnett,  136  La.  994,  68  So.  102. 

6.  See  Boston  Steel  &  Iron  Co.  v. 
Steyer,  183  Mass.  140,  66  N.  E.  646. 
See,  however.  Empire  Trust  Co.  v. 
Manhattan  Co.,  162  N.  Y.  Supp.  629. 


695 


§  459  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

tiable  paper/  Hence,  though  the  accommodation  indorser  has  a 
good  defence  against  the  payee  for  whose  benefit  he  indorsed,  it  is 
usually  no  defence  against  the  indorsee  purchasing  for  value 
before  maturity,  that  the  latter  knew,  when  he  purchased,  that  it 
was  accommodation  paper.^ 

But  there  are  some  peculiar  doctrines  which  grow  out  of  a  mis- 
appropriation of  paper  given  for  accommodation:  where,  for 
instance,  it  is  given  for  a  special  purpose  and  is  used  otherwise; 
and  while  the  holder's  rights,  under  such  circumstances,  are  not 
clearly  defined  in  the  decisions,  it  seems  clear  that  if  the  holder 
took  the  paper  with  notice  of  a  fraudulent  diversion  to  the  accom- 
modating party's  injury,  the  accommodating  party  can  relieve 
himself  of  liability ;  ^  while  it  is  equally  certain  that  to  defend 
successfully  against  any  such  misappropriation,  the  accommodat- 
ing party  must  prove  that  the  holder  had  prior  notice  of  the  mis- 
application.^ Yet  that  the  holder  can  recover  in  any  event  what 
he  actually  advanced  for  the  note  and  no  more,  is  sustained  by 
numerous  authorities.^ 

7.  See  2  Kent  Com.  86;  1  Pars.  off  his  credit  at  an  insolvent  bank 
256,  327;  2  ib.  27,  437.  Right  of  against  a  note  which  the  bank  has 
holder  of  accommodation  paper  taken  discounted  for  him  with  l-mowledge 
after  maturity.  Book  9,  N.  Y.  Rpts.,  that  it  is  an  accommodation  note. 
Bender  ed.,  note,  p.  88.  Liability  of  Building  and  Engineering  Co.  v. 
one  who  indorses  note  before  utter-  Northern  Bank,  206  N.  Y.  400,  99" 
anee.  Book  8,  N.  Y.  Rpts.,  Bender  N.  E.  1044.  Bank  entitled  to  recover 
ed.,  note,  p.  901.  Liability  of  ae-  on  accommodation  note  diverted, 
commodation  indor.ser  and  indorser  Book  4,  N.  Y.  Rpts.,  Bender  ed.,  note, 
before  delivery.     Book  8,  N.  Y.  Rpts.,  p.  209. 

Bender  ed.,  note,  p.  428.  1.      Stoddard    v.    Kimball.    6    Gush. 

8.  Ib.;  Grant  v.  Ellicott,  7  Wend.  469;  Mohawk  Bank  v.  Corey,  1  Hill, 
227;  Charles  v.  Marsden,  1  Taunt.  513;  Small  v.  Smith,  1  Denio,  583. 
224.  See  Chester  v.  Dorr,  41  N.  Y.  See  Farmers'  Bank  v.  Rathbone,  26 
279,  as  to  the  transfer  of  aecommo-  Vt.  19.  And  see  Davidson  v.  Lanier, 
dation  paper  after  its  maturity.  And  4  Wall.  447;  Spitler  v.  James,  32  Ind. 
see  Jones  v.  Berryhill,  25  Iowa,  289.  202. 

Accommodation   paper   and   bond  fide  2.  See  Allaire  v.  Hartshorne,  1  Zabr. 

pudchaser.       Book    24,    N.    Y.    Rpts.,  665,   and   other   cases   cited;    Redf.   & 

Bender  ed.,  note,  p.  79.  Big.   270.      The  question   how   far   an 

9.  An  accommodated  payee  may  set-  indorsement  of  paper  not  yet  issued, 

696 


CHAP.  VII.]  BILLS    A^TD    NOTES,  §    460 

The  holder  of  accommodation  paper  has  a  duty  of  equitable 
conduct  towards  an  accommodation  indorser,  and  it  may  be  a 
breach  of  that  duty  for  a  bank  to  allow  the  accommodated  party 
to  withdraw  deposits  which  would  have  covered  the  note  after 
its  maturity.^ 

The  Negotiable  Instruments  Act  has  changed  the  law  as  to 
sureties,  and  now  an  extension  of  time  given  by  the  holder  to  any 
other  party  to  the  note  does  not  affect  the  liability  of  the  accom- 
modation maker.'^ 

§  460.     Discharge  of  Drawer  or  Indorser  from  Liability. 

There  are  various  instances  in  which  a  drawer  or  indorser  may 
be  discharged  from  liability  by  the  acts  of  prior  parties,  whether 
it  be  by  some  satisfaction  of  the  demand  represented  by  the  bill 
or  note,  or  because  the  effect  of  such  acts  was  to  prejudice  his  own 
rights  and  remedies.  It  is  a  familiar  principle  of  law  that  the 
release  of  the  principal  operates  to  discharge  the  surety ;  indorse- 
ment is  much  in  the  nature  of  a  contract  of  suretyship ;  and  if  the 
holder  of  a  promissory  note  release  the  first  indorser,  this  dis- 
charges, presumptively  at  least,  the  subsequent  indorsers.^  But 
the  mere  agreement  by  the  holder  with  the  drawer  of  a  bill,  for 
delay,  made  without  consideration  and  not  communicated,  and 
hence  not  valid,  does  not  discharge  the  indorser.^     Each  successive 

which   indorsement   was   requested  by  Bank,    76    W.    V.    635,    87    S.    E.   94 ; 

a  p€rson  contemplating  taking  it  as  First  State  Bank  v.  Kelly,  30  N.  D. 

an    "accommodation"   to   him,   binds  84,  152  N.  W.  125;   Conners  v.  Sulli- 

the  indorser,  is  considered  in  Yeager  van,  220  Mass.   600,   108  N.   E.   503. 

V.   Farwell,   13   Wall.    6.     And   as   to  3.  Tatum  v.  Bank,  193  Ala.  120,  69 

the   rights  of  one   who  takes  accom-  So.  508. 

modation  paper  which  is  overdue,  see  4.  Union    Trust    Co.    v.    McGinty, 

conflicting    cages    cited    in    Redf.    &  2ia  Mass.  205,  98  N.  E.  679. 

Big.  216,  217.  5.  Newcomb  v.    Raynor,    21    Wend. 

See  Houser  v.  Fayssoux,  168  N.  C.  108. 

1,   83   S.   E.   692    (accommodation   in-  6.  McT^more  v.   Powell.   12   Wilieat. 

dorsers    entitled    to    notice    of    dis-  554.     See,  further,  as  to  discharge  of 

honor)  ;   Phillips  v.  Bridges,   144  Ga.  indorser,    drawer,    Ac,    Redf.    &    Big. 

703,  87  S.  E.  1059    (unrecorded  mort-  544-596.  617-642.  and  cases  cited  and 

gage  security)  ;  Plumley  v.  First  Nat.  examined;    2    Pars.    208-254;    Smith 

097 


§461  THE    LAW    OF    PERSONAL   PROPERTY.  [PART  III. 

indorser  to  negotiable  paper  stands  as  a  surety  not  only  of  the 
maker  or  acceptor,  but  also  for  all  parties  indorsing  before  him; 
though  not,  of  course,  for  any  indorser  subsequent  to  himself ;  and 
hence  prior  indorsers  are  sureties  together  of  the  holder  of  the 
paper  and  entitled  to  subrogation  as  among  themselves. 

At  common  law  a  binding  agreement  between  the  holder  and 
the  maker  for  an  extension  of  time  discharged  the  indorsers,  as 
they  lost  their  right  to  buy  the  instrument  and  proceed  against 
the  maker ;  ^  but  where  this  agreement  is  between  the  holder  and 
a  third  party  this  reason  does  not  apply  and  the  indorsers  are  not 
discharged.^  Under  the  iN'egotiable  Instrument  Act  providing 
for  the  discharge  of  the  maker  by  any  agreement  binding  on  the 
holder  for  extension,  the  indorser  is  not  discharged  where  the 
holder  after  maturity  deposits  the  note  with  a  third  party  as 
security  for  a  debt.^  However,  the  consent  of  the  indorser  to  an 
extension  of  time  constitutes  a  waiver  of  demand  and  notice  even 
at  the  extended  time  of  maturity.' 

§  461.     Failure  of  Consideration  as  Between  Original  Parties. 

We  may  here  add  that,  in  an  action  on  negotiable  paper  between 
the  original  parties,  a  total  or  partial  failure  of  the  consideration 
can  be  set  up  in  defence  to  the  same  extent  as  if  the  action  were 
founded  on  the  consideration.^  But  an  original  lender  or  payee 
upon  an  accepted  bill  of  exchange  is  not  affected  in  his  rights  and 
remedies  by  want  or   failure  of   consideration   as   between   the 

V.  Morrill,  54  Me,  58;   Okie  v.  Spen-  8.  Wright     v.     Independence     Nat. 

cer,  2  Whart.  253 ;  Anderson  v.  Bank,  Bank,  96  Va.  728,  32  S.  E.  459. 

144   Iowa,   251,   122   N.   W.   918.     As  9.  Brosemer  v.  Brosemer,  162  N.  Y. 

to  extension  of  time  by  a  mere  delay  Supp.  1067. 

to  sue,  see  Allen  v.  Brown,  124  Mass.  1.  First  National  Bank  of  Hender- 

77.      But   difficulty   arises   as    to   the  son      v.      Johnson,       (N.      C),      86 

eflfect   of   taking   additional    security.  S.  E.  360;  Jenkins  v.  White,  147  Pa. 

See  Overend  v.  Oriental  Co.,  L.  R.  7  St.  303,  23  Atl.  556. 

H.  L.  348;  Barron  v.  Cady,  40  Mich.  2.  WyekofT    v.    Runyon,    4    Vroom, 

259;  Big.  2d  ed.  606,  608.  107.       And    see    1    Pars.    Notes    and 

7.  Siebeneck     v.     Anchor      Savings  Bills,  175-203,  and  cases  cited. 
Bank,  111  Pa.  St.  187,  —  Atl.  485. 

698 


CHAP.  VII.]  BILLS    AND    NOTES.  §    462 

acceptor  and  the  drawer.^  And  the  rule  is  a  familiar  one  that  one 
who,  bond  fide,  purchases  or  advances  upon  negotiable  paper,  ac- 
cording to  its  purport  and  without  previous  notice  of  infirmity  in 
title,  is  entitled  to  protection  accordingly,  notwithstanding  the 
equities  that  might  be  good  as  between  the  original  parties.* 
Even  one  who  buys  from  an  innocent  holder  with  notice  of  the 
defence  (as  usury)  and  for  less  than  its  face  value  can  recover 
the  face  of  the  note  against  the  maker,  as  he  has  the  rights  of  the 
innocent  holder.^ 

§  462.     Questions  Relative  to  Forged  or  Altered  Paper. 

Questions  of  forgery  often  arise  in  connection  with  bills  and 
notes,  since  commercial  paper  is  peculiarly  liable  to  fraudulent 
making  ^  and  alteration ;  and  the  equities  of  innocent  parties  con- 
cerned in  the  circulation  of  the  paper  being  equal,  it  is  often  a 
delicate  matter  to  decide  who  shall  bear  the  loss.  As  a  rule,  a 
payment  received  in  forged  paper  is  not  good,  and  if  there  has 
been  no  negligence  in  the  receiving  party  he  may  recover.  But 
where  one  of  two  innocent  parties  must  suffer,  he  who  has  misled 
the  other,  or  has  omitted  his  duty,  must  bear  the  loss.^ 

3.  A  bank  discounting  such  a  bill  induced  by  fraud.  Book  12,  N.  Y. 
stands  towards  the  acceptor  in  the  Rpts.,  Bender  ed.,  note,  p.  47. 
position  of  original  lender.  Goetz  v.  7.  McKleroy  v.  Southern  Bank,  14 
Kansas  City  Bank,  119  U.  S.  551;  La.  Ann.  458;  Mather  v.  Lord  Maid- 
Hoffman  V.  Bank  of  Milwaukee,  12  stone,  18  C.  B.  273;  Bank  of  United 
Wall.  181.  States  v.  Bank  of  Georgia,  10  Wheat. 

4.  King  V.   Doane,   139   U.    S.    166.  333;   Hortsman  v.  Henshaw,  11  How. 

5.  Burnes  V.  New  Mineral  Fertilizer  177;  Kedf.  &  Big.  643-665;  Mer- 
Co.,  218  Mass.  300,  105  N.  E.  1074.  chants'  Nat.  Bank  v.  Nat.  Eagle 
Note  not  avoided  by  non-performance  Bank,  101  Mass.  281 ;  Goddard  v. 
of  contract  for  which  it  was  given.  Merchants'  Bank,  4  Comst.  149;  Col- 
Book  4,  N.  Y.  Rpts.,  Bender  cd.,  note,  son  v.  Arnot,  57  N.  Y.  253.  And 
p.  246.  Notes  in  payment  of  pre-  thus  the  Supreme  Court  of  the  United 
existing  debt  are  given  for  value.  States  decides  tliat  the  loss  occurring 
Book  38,  N.  Y.  Rpts.,  Bender  cd.,  by  the  acceptance  of  a  bill  of  ex- 
note,  p.  2.92.  Valuable  considerations.  change,  wrtb  forged  bills  of  lading 
Book  34,  N.  Y.  Rpts.,  Bender  ed.,  attached,  fall*  on  the  acceptor,  and 
note,  p.   275.  not  on   a  bank  which   bond  fide  a"nd 

6.  Validity  of  note  when  signature  in  course  of  business  afterwards  dis- 

699 


§  462  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  IIT. 

A  good  illustration  of  this  rule  is  shown  in  Price  v.  Neal,^ 
which  holds  that  a  drawee  who  pays  a  bill  under  a  mistake 
as  to  the  genuineness  of  the  drawer's  signature  cannot  recover 
from  an  innocent  holder  the  money  he  paid.^  So,  where  a  bank 
negligently  pays  a  check,  disregarding  notice  from  the  maker  to 
stop  payment  of  the  check,  on  which  the  payee's  indorsement  is 
forged  to  a  holder  in  good  faith  and  for  value,  the  bank  cannot 
recover  from  the  holder.^  But  even  a  holder  in  due  course  will 
not  be  protected  when  he  takes  a  negotiable  instrument  signed  by 
one  in  a  state  of  complete  intoxication.^ 

Akin  to  the  topic  of  forgery  is  that  of  alterations  in  negotiable 
paper,  which,  if  fraudulently  made  in  material  particulars,  should 
vitiate  the  instrument.^  But  alterations  honestly  made  by  mutual 
consent  of  the  parties,  or  to  correct  errors,  or  in  immaterial 
respects,  are  treated  by  the  courts  with  indulgence.'*  Where  a 
blank  has  been  wrongfully  filled  by  one  who  received  the  paper 
with  power  to  fill,  as  in  case  of  trusting  one  with  a  blank  note,  the 
violation  of  confidence  cannot  be  set  up  against  bond  fide  holders 

counts  the  drafts.     Hoffman  v.  Bank  Banking  Co.  v.  Fourth  National  Bank, 

of    Milwaukee,    12    Wall.    181.      And  10  Ga.  App.  1,  72  S.  E.  52&. 

see,  further.  Brook  v.  Hook,  L.  R.  6  2.  Gunsten  v.  Green,  153  Wis.  413, 

Ex.  S9 ;  Grant  v.  Chambers,  1  Vroom,  142  N.  W.  2&1. 

323.  In  Garrard  v.  Haddan,  67  Penn.  3.  Alterations  in  promissory  notes, 
St.  82,  the  rule  is  announced  that  validity  of.  Book  28,  N.  Y.  Rpts., 
where  a  negotiable  note  is  impercept-  Bender  ed.,  notes,  p.  618.  Negotia- 
ibly  altered  as  to  amount  after  de-  bility,  additions  and  alterations,  con- 
livery,  the  maker  having  carelessly  ditions,  special  clauses.  Book  15, 
left  a  blank  space  which  was  made  N.  Y.  Rpts.,  Bender  ed.,  note,  p.  79'2. 
available  for  the  alteration,  the  maker  Adding  signature  to  note  as  altera- 
and  not  the  innocent  holder  must  suf-  tion.  Book  6,  N.  Y.  Rpts.,  Bender 
fer.  But  see  Wade  v.  Withington,  ed.,  note,  p.  637.  Alteration  by  sig- 
1  Allen,  561.  nature.     Book  6,  N.  Y.  Rpts.,  Bender 

8.  3  Burrow  (Eng.)   1354.  ed.,  note,  p.  213. 

9.  See  Title  Guarantee  &  Trust  Co.  4.  See  2  Pars.  544-582,  and  cases 
V.  Haven,  139  N.  Y.  Supp.  207.  See  cited,  where  this  subject  is  fully  dis- 
also  notes  in  26  Harvard  Law  Re-  cussed.  And  see  Kountz  v.  Kennedy, 
view,  634.  63    Penn.    St.    187;     Lancaster    Nat. 

1.  National   Bank  of  Commerce  v.      Bank  v.  Taylor,  100  Mass.  18;  Mur- 
First       National       Bank,        (Okla.),      ray  v.  Graham,  2Q  Iowa,  520. 
152  Pac.  oP^G.    See,  however,  Yatesville 

700  / 


CHAP.  VII.] 


BILLS    AND    NOTES. 


§    462 


for  value;    but  authority  to  alter  so  as  to  commit  an  essential 
forgery  is  not  to  be  predicated  of  any  one.^ 

A  renewal  note  is  subject  to  most  of  the  defences  to  which  the 
original  note  is  subject,  as  in  case  of  illegality  ^  or  lack  of  consid- 
eration ;  ^  but  the  defence  of  fraud  may  be  waived  by  renewing  the 
note  with  knowledge  of  the  fraud ;  ^  and  so  of  the  defence  of  failure 
by  the  defendant  to  perform,^  or  a  right  of  recoupment.' 


5.  See  Wood  v.  Steele,  6  Wall.  80; 
Brooke  V.  Allen,  62  Ind.  401 ;  Woor- 
all  V.  Green,  39  Penn.  St.  388;  ^tna 
Nat.  Bank  v.  Winchester,  43  Conn. 
S'^l;  Belknap  v.  National  Bank,  100 
Mass.  376.  As  to  lost  and  stolen  ne- 
gotiable instruments  in  questions  of 
title,  see  post,  vol.  ii.,  part  iv.,  c.  1. 
A  bank  in  discounting  commercial 
paper  does  not  guarantee  the  genuine- 
ness of  documents  attached  thereto  as 
collateral  security.  Goetz  v.  Kansas 
City  Bank,  119  U.  S.  551. 

For  text-books  which  treat  fully  of 
bills  and  notes',  citing  English  and 
American  cases,  the  reader  is  re- 
ferred to  the  latest  editions  of  Judge 
Story's  Works  on  Bills  of  Exchange 
and  Promissory  Notes  ( in  which,  un- 
wisely for  a  later  generation,  the  two 
subjects    were     treated    separately)  ; 


Pansons  on  Bills  and  Notes;  and  the 
more  recent  and  comprehensive  work 
of  Mr.  John  W.  Daniel  on  Negotiable 
Instruments  (edition  of  1913).  Of 
Redfield  &  Bigelow's  Leading  Cases  on 
Bills  and  Notes,  a  second  edition,  re- 
vised by  Prof.  M.  M.  Bigelow,  the  sur- 
viving author,  and  known  as  Bigelow'.s 
Bills  and  Notes,  has  also  been  issued. 

6.  Chapman  v.  Black,  2  B.  &  A. 
588. 

7.  First  National  Bank  v.  Black, 
108  Ga.   538,  34   S.  E.  143*. 

8.  Edison  General  Electric  Co.  v. 
Blount,  96  Ga.  272',  23  S.  E.  306. 

9.  American  Car  Co.  v.  Atlanta 
City  St.  Ky.  Co.  100  Ga.  254,  28 
S.  E.  40. 

1.  Stewart  v.  Simon,  111  Ark.  358, 
163  S.  W.  1135. 


701 


CHAPTER  VIII 

MISCELLANEOUS  NEGOTIABLE  AND  QUASI-NEGOTIABLE  INSTRUMENTS 

§  463.     Miscellaneous  Instruments  More  or  Less  Negotiable. 

That  distinguishing  quality  which  the  law  terms  "  negotiability  " 
belongs  not  alone  to  bills  and  notes,  but  in  a  greater  or  less  degree 
to  various  other  instruments.  Of  bank-bills,  which  under  one 
aspect  are  a  sort  of  promissory  note  payable  to  bearer  on  demand, 
we  have  already  had  occasion  to  speak.  ^  And  now  as  to  the 
remaining  classes  of  negotiable  or  gwasi-negotiable  instruments. 

§  464.     Checks  and  Their  Characteristics. 

I.  Checks  (or  "  cheques  ")  are  found  in  common  use  between 
banks  or  banks  and  their  customers ;  and  an  instrument  of  this 
sort  may  be  defined  as  a  written  order  or  request,  addressed  to  a 
bank  or  banker,  requesting  the  payment  of  a  certain  sum  of  money 
to  a  person  therein  named,  or  to  such  person  "  or  bearer,"  or  to 
such  person  "  or  order."  ^  Upon  the  addition  of  the  words  "  or 
bearer,"  or  those  other  words  "  or  order,"  or  (what  seldom  occurs) 
the  simple  designation  of  a  person,  depends  the  question  of  nego- 
tiability; since  in  the  matter  of  delivery  and  a  transfer  of  legal 
title,  with  or  without  requiring  indorsement,  the  rule  is  substan- 

1.  Supra,  §  351.     A  writing  which  BANK. 

indicates   no   payee    is   not   a    check.  Boston 188  . 


Dolls Cts. 

Pay  to [or  bearer   or  else  or 

order] Dollars  /lOO 

Paper.  No 


Mcintosh    V.    Lytle,    26    Minn.    336. 
See  Eaton  and  Gilbert  on  Commercial 


2.  See    2    Pars.    Bills    and    Notes,  A"  instrument  drawn  upon  a  bank, 

57    et    seq.;    Bouv.    Diet.    "Check;  "      ''"^^^^  directing  payment,  to  a  party 

named,  of  a   specified  sum   of  money 

Chitty    Bills,     18th     ed.     545.       The  ,         ..       -A  *i,     ^  -^.u     * 

v./    K.VJ,     ^1     ,       ^i,       cvi.     ui^  ^      ^^  deposit  with  the  drawei ,  without 

printed  blank  of  an  American  check      designating  a  future  day  of  payment 

is  usually  as  follows:  is    a    check.      Bull    v.    Kasson    Nat. 

Bank,  123  U.  S.  105. 

702 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS.  §    465 

tially  that  applicable  to  bills  and  notes  which  we  described  in  the 
preceding  chapter;  and  a  check  after  its  existing  tenor  may  be 
non-negotiable,  negotiable  by  indorsement,  or  transferable  by  mere 
delivery,  according  as  it  is  made  payable  to  a  particular  person, 
or  to  him  or  order,  or  to  bearer,  or  is  indorsed  either  in  blank  or 
with  corresponding  words  of  restriction. 

§  465.  Checks  Distinguished  from  Bills  of  Exchange,  Drafts, 
etc. 
Some  have  written  and  spoken  rather  confusedly  of  checks ;  as 
though  they  were  but  a  species  of  bill  of  exchange  payable  on 
demand.  But  there  are  important  distinctions  between  a  check 
and  a  bill ;  and  while  bills  and  notes  are  usually  intended  for  debt 
negotiations  and  postponing  a  settlement,  the  main  purpose  of  a 
check  is  to  make  immediate  and  expeditious  payment  by  a  means 
more  convenient  to  the  parties  concerned  than  the  transfer  of  coin, 
legal-tender  currency,  or  bank-notes.  In  England  the  use  of  checks 
is  regulated  considerably  by  statute;  but  with  us  the  unwritten 
law  of  business  usage  shapes  the  principles  suitable  to  such  instru- 
ments with  more  freedom;  and  our  whole  banking  system,  too, 
differs  from  that  of  the  mother  country.-'  A  view  prevailing  in 
some  States  was  that  a  check  is  an  assignment  of  the  fund ;  "*  but 
this  has  been  changed  by  the  Negotiable  Instruments  Act,  which 
provides  that  a  check  is  a  bill  of  exchange.  It  seems  that  under 
either  view  a  bank  will  be  protected  in  paying  a  check  presented 
after  the  death  of  the  drawer.^  A  check  is  not  an  assignment, 
and  therefore  one  who  attaches  the  deposit  after  the  check  is  drawn, 

3.  See  Morrison   v.  Bailey,   5  Ohio  4.  Simmons  v.  Bank  of  Greenwood, 

St.   13;   2   Pars.  Notes  and  Bills,  57,  41  S.  C.   177,  19  S.  E.  502;   Wasgatt 

58;    In   re   Brown,   2   Story,   502,   per  v.  First  National  Bank,  117  Minn.  9, 

Story,  J.     And  see  Barker  v.  Ander-  134  N.  W.  224. 

son,    21    Wend.    372,    disapproved    by  5.  Billing   v.    Devaux,    3    M.    &    G. 

Little   V.   Phoenix   Bank,   2   Hill.   425;  565;  Wasgatt  v.  First  National  Bank, 

Woodruff     V.     Merchants'     Bank,     25  (Minn.),     134     N.     W.     224,     though 

Wend.  673;  Merchants'  Bank  v.  Wood-  the  bank  had  notice  of  the  death, 
ruff,  6  Hill,  174.     See,  as  to  banking 
system,  supra,  §§  350,  351. 

703 


§  465  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  IIL. 

and  before  it  is  presented  for  payment,  has  a  claim  superior  to 
the  rights  of  the  holder  of  the  check.^ 

But  if  a  check  resembles  any  one  kind  of  negotiable  paper  more 
than  another,  it  is  certainly  that  of  a  bill  of  exchange,—  of  a  bill 
payable  on  demand,  though  the  check  itself  expresses  no  "  demand." 
And  one  of  the  essentials  of  a  check,  indeed,  appears  to  be  that  it 
shall  be  payable  when  presented ;  for  which  reason  a  draft  for  an 
amount  made  payable  on  some  future  day  designated  would  not 
be  a  check  at  all.''  The  word  "  draft "  we  take  to  have  a  broader 
signification,  sufficient  to  cover  the  drawing  for  a  designated  sum 
upon  any  individual  or  corporation,  not  upon  a  banker  or  a  bank 
merely.  Drafts,  too,  are  spoken  of  as  payable  at  some  future  day, 
as  well  as  on  demand  or  at  sight;  the  term  "  draft "  is  applied  to 
bills  of  exchange  and  checks,  and  even  to  more  doubtful  instru- 
ments ;  and  perhaps  the  element  of  distance  may  usually  be  found 
whenever  the  word  "  draft "  is  contrasted  with  "  check,"  rather 
than  meant  to  include  it ;  for  a  check,  being  payable  at  one's  bank, 
is  almost  invariably  drawn  and  dated  in  the  neighborhood  of  the 
bank,  whereas  a  draft  proper  might  be  made  in  a  foreign  country 
upon  one's  agent  at  home.^ 

The  leading  points  of  diiference  between  bills  of  exchange  and 
checks  are  these:  First,  a  check  is  drawn  upon  an  existing  and 
sufficient  fund,  and  is  an  absolute  transfer  or  appropriation  to  the 
holder  of  so  much  money  on  deposit  in  the  hands  of  the  drawee; 
whereas  a  bill  of  exchange  is  not  always  or  necessarily  drawn  upon 
actual  funds  in  the  hands  of  the  drawee,  but  very  frequently  drawn 

6.  O'Connor  v.  Mechanics'  Bank,  an  inland  bill.  For  the  drawer  may 
124  N.  Y.  324;  Kuhn  v.  Warren  Sav-  reside  in  one  State  or  country  (e.g. 
ings  Bank  (Pa.)  11  Atl.  440;  Bos-  New  York),  and  draw  upon  his  bank 
well  V.  Citizens'  Savings  Bank,  123  in.  another  State  or  country  (e.  g. 
Ky.  485,  96  S.  W.  797  (iholding  that  New  Jersey)  ;  and  yet  the  instrument 
the  Negotiable  Instruments  Act  had  is  a  check.  Heywood  v.  Pickering, 
changed  what  had  been  the  previous  L.  R.  9  Q.  B.  428;  Roberts  v.  Cor- 
Kentucky  rule) .  bin,    26    Iowa,    315.      See    Rapalje's 

7.  Morrison  v.  Bailey,  5  Ohio  St.  Diet.  "  Draft ;  "  Bouvier,  ib. ;  1  Story, 
13.  U.  S.  22. 

8.  A  cheek  is  not,  however,  literally 

704 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS.  §    466 

in  antieipatioii  of  funds,  or  upon  some  credit  previously  arranged. 
Second,  the  drawer  of  a  check  is  always  the  principal;  whereas 
the  drawer  of  a  bill  frequently  stands  in  the  position  of  a  mere 
surety.  Third,  days  of  grace  are  allowed  on  bills  of  exchange; 
but  checks  are  always  payable  without  any  allowance  of  grace. 
Fourth,  in  case  of  a  bill  of  exchange,  the  drawer  is  discharged  by 
default  of  a  due  presentment;  whereas  mere  delay,  as  between 
the  holder  and  drawer  of  a  check,  in  presenting  the  check  in  due 
time  for  payment,  would  not  discharge  the  drawer,  unless  he  had 
been  thereby  injured,  and  even  then  only  to  the  extent  of  his  loss. 
Fifth,  a  check  requires  no  acceptance,  and  the  only  presentment 
made  is  that  for  payment ;  with,  perhaps,  a  modern  exception  in 
the  matter  of  certifying  checks,  of  which  we  shall  speak  presently.^ 

§  466.     The  Same  Subject. 

As  to  the  drawing  of  a  check  against  an  existing  fund,  we  may 
add  that  the  existence  of  a  fund  for  drawing  is  always  to  be  sup- 
posed ;  but  whether  the  appropriation  of  the  fund  is  made  absolute 
in  every  instance  by  the  act  of  drawing  a  check  is  a  matter  of 
doubt,  to  say  the  least;  for  though,  as  a  rule,  the  drawer's  bank 
is  bound  to  pay  his  check  whenever  it  is  presented,  yet,  as  the 
agent  of  the  drawer,  the  bank  ought  usually  to  refuse  payment  if 
so  directed  by  the  principal  in  good  season ;  for  the  duty  which 
the  bank  owes  in  honoring  checks  is  rather  to  its  depositor  than 
the  public.  Where,  however,  a  wanton  or  fraudulent  refusal  of 
the  bank  to  pay  any  check  can  be  shown  by  the  holder,  such  refusal, 
if  operating  to  the  holder's  injury,  might  perhaps  constitute  a 
good  foundation  for  an  action  against  the  bank.^     The  drawer,  if 

9.  See  Bartley,  J.,   in  Morrison  v.  cited;    Bellamy    v.    Marjoribanks,    7 

Bailey,  5  Ohio  St.  13;   Redf.  &  Big.  Ex.     389;     Mandeville    v.     Welch,    5 

718-720;    Keene    v.    Beard,    8    C.    B.  Wheat.    277;    Chapman    v.    White,    2 

N.  s.  372.    But  see  Andrew  v.  Blachly,  Seld.  412;  St.  John  v.  Homans,  8  Mo. 

11  Ohio  St.  89.     As  to  the  points  of  382;   .T^tna  National  Bank  v.  Fourth 

similarity  between  a  bill  and  a  check,  National  Bank,  46  N.  Y.  82.     But  se« 

see  vtifra,  §  469.  Roberts  v.  Corbin,  26  Iowa,  315. 

1.  See    2    Pars.    59-61,    and    cases 

45  705 


§  466 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


wronged,  has  his  own  cause  of  action  against  the  bank  for  the 
breach  of  an  implied  contract  to  honor  promptly  the  customer's 
checks;  which  of  itself  is  good  reason  why  the  bank  should  not 
ordinarily  be  compelled  to  respond  to  the  holder.^  And  it  is  set- 
tled in  this  country  that,  as  a  rule,  the  holder  of  a  bank  check 
cannot  sue  the  bank  for  refusing  payment,  in  the  absence  of  proof 
that  the  check  was  accepted  by  the  bank  or  charged  against  the 
drawer;  ^  nor  does  such  unaccepted  or  uncertified  check  create 
any  enforceable  lien  on  the  drawer's  bank  deposit."^ 

Days  of  grace,  we  have  said,  are  not  allowed  on  checks ;  yet  as 
authorities  differ  somewhat  in  marking  the  limits  between  bills 
and  checks,  so  do  they  likewise  differ  in  their  statements  on  this 
point,  and  as  to  the  general  doctrine  of  post-dated  checks.^ 

Since  checks  are  payable  on  presentment,   the  rule  requiring 


2.  2  Pars.  62-64,  and  cases  cited; 
Marzetti  v.  Williams,  1  B.  &  Ad.  415; 
133  U.  S.  566. 

8.  See  Bapk  of  Republic  v.  Millard, 
10  Wall.  152;  Attorney-General  v. 
Continental  Life  Ins.  Co.,  71  N.  Y. 
325;  Col.  Nat.  Bank  v.  Boettcher,  5 
Col.  185;  St.  Louis  R.  v.  Johnston, 
133  U.  S.  566.  A  check,  according 
to  the  now  accepted  view,  is  only  a 
request  of  the  customer  of  a  bank 
to  pay  the  whole  or  part  of  the  cus- 
tomer's deposit  to  a  particular  person, 
or  to  order,  or  to  bearer.  Until  pre- 
sented and  accepted  it  is  inchoate ; 
it  vests  no  title  or  interest,  legal  or 
equitable,  to  the  fund.  Before  ac- 
ceptance, the  drawer  may  withdraw 
his  deposit.  The  bank  owes  no  duty 
to  the  holder  of  a  check  until  it  is 
presented  for  payment.  Knowledge 
that  cheeks  have  been  drawn  does  not 
render  it  obligatory  upon  the  bank 
to  retain  the  deposit  to  meet  them. 
Church,  C.  J.,  in  Attorney-General  v. 


Continental   Life   Ins.   Co.,   71   N.   Y. 
325. 

An  order,  check,  or  draft  must  be 
drawn  upon  a  particular  specified 
fund,  in  order  to  operate  even  as  an 
equitable  assignment  of  that  fund, 
lb.  And  see  Hopkinson  v.  Forster, 
L.  R.  19  Eq.  74.  Still  less  is  there  an 
equitable  assignment  of  the  fund,  by 
the  mere  act  of  giving  a  check,  where 
the  deposit  is  much  less  than  the 
amount  of  the  check.  Florence  Co. 
V.  Brown,  124  U.  S.  385.  Cf.  as  to 
right  of  the  holder  of  a  check  to  sue 
the  bank,  Case  v.  Henderson,  23  La. 
Ann.  49 ;  Union  Bank  v.  Oceana  Bank, 
80  111.  212. 

4.  Florence  Co.  v.  Brown,  124  U.  S. 
385. 

5.  2  Pars.  Notes  and  Bills,  67-69', 
and  cases  cited.  Days  of  grace  are 
not  allowed  on  a  check  payable  at  a 
future  day  named.  Champion  v.  Gor- 
don, 70  Penn.  St.  474.  A  post-dated 
check  is  not  invalid.  Frazier  v.  Trow, 
24  Hun,  281. 


706 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS. 


§    466 


acceptance,  as  in  the  case  of  bills,  must  be  necessarily  inapplicable 
as  a  rule.  Undoubtedly  a  check  ought  to  be  presented  within  a 
reasonable  time  for  payment;  for  it  is  inconvenient,  if  not  injuri- 
ous, to  the  drawer  to  have  to  keep  funds  waiting  for  uncertain  or 
lengthy  delays  on  the  holder's  part,  and  with  incidental  risk  of  the 
bank's  continuous  solvency.  But  as  to  the  exact  period  within 
which  a  check  must  necessarily  be  presented  at  the  bank  for  pay- 
ment, there  is  no  definite  rule  which  either  mercantile  usage  or  the 
modern  authorities  sustain;  while  there  is  abundant  reason  to 
believe  that  a  drawer  at  least  would  not  be  wholly  or  in  part  dis- 
charged in  the  courts  at  this  day  from  payment  of  his  check,  be- 
cause of  any  delay  of  presentment  on  the  holder's  part,  unless  he 
could  show  that  he  had  suffered  some  material  injury  by  the  delay, 
sufficient  to  offset  correspondingly  the  value  of  the  check.^  A 
failure  of  the  drawee,  meanwhile,  would  seem  sufficient,  under 
circumstances  of  unreasonable  delay  on  the  holder's  part,  to  dis- 
charge the  drawer.^     But  a  check,  generally  speaking,  is  not  due 


6.  Alexander  v.  Burchfield,  7  Man. 
&  G.  1061;  Little  v.  Phoenix  Bank,  2 
Hill,  425;  2  Pars.  73,  74.  See  Wil- 
letts  V.  Paine,  43  111.  432;  Hopkins 
V.  Ware,  L.  R.  4  Ex.  268;  Smith  v. 
Miller,  43  N.  Y.  171 ;  Pack  v.  Thomas, 
13  Sm.  &  M.  11. 

7.  In  an  English  case  the  failure 
to  present  a  check  for  nearly  four 
weeks  —  there  being  "  a  reasonable 
chance,  though  not  a  certainty,"  that 
it  would  have  been  paid  if  presented 
at  once  —  was  held  to  discharge  a 
debtor  whose  agent  had  meantime  ab- 
seeonded.  Hopkins  v.  Ware,  L.  R.  4 
Ex.  268.  The  general  rule  is  here 
maintained,  that  a  creditor  who  takes 
from  his  debtor's  agent,  on  account 
of  the  debt,  the  check  of  the  agent, 
is  bound  to  present  it  for  payment 
■within  a  reasonable  time;  and  that, 
if  he  fails  to  do  so,  and  by  his  delay 
alters  for  the  worse  the  debtor's  posi- 


tion, the  debtor  is  discharged,  al- 
though he  was  not  a  party  to  the 
check.  lb.  And  see  the  strict  rule 
laid  down  by  a  majority  of  the  court, 
on  a  state  of  facts  somewhat  similar, 
in  the  case  of  Smith  v.  Miller,  43 
N.  Y.  171.  But  immediate  presenta- 
tion is  not  requisite  as  a  rule.  Burk- 
halter  v.  Second  Bank,  42  N.  Y. 
538;  Simpson  v.  Pacific  Ins.  Co.,  44 
Cal.  139. 

The  drawer  of  a  check,  it  is  held,  is 
not  released  by  a  mere  want  of  no- 
tice, although  he  has  the  funds  on 
depo.sit.  Daniels  v.  Kyle,  1  Ga.  304; 
Little  V.  Phn?nix  Bank.  7  Hill.  359. 
See  Laws  v.  Rand,  3  C.  B.  N.  s.  442. 
And  if  a  check  is  presented  a  long 
time  after  date,  and  payment  thereof 
is  refused,  not  on  account  of  a  fail- 
ure, but  because  the  drawer  has 
closed  his  account  or  withdrawn  his 
funds,  the  latter  is  still  liable.     Rob- 


707 


§  467  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

until  its  presentation,  and  both  bank  and  drawer  may  derive  an 
actual  advantage,  in  some  instances,  bj  way  of  interest  upon  the 
deposit,  where  the  check  is  presented  tardily. 

§  467.     Effect  of  Certifying  a  Check. 

While,  in  strictness,  a  check  is  not  capable  of  "  acceptance,"  as 
the  term  is  applied  to  ordinary  bills  of  exchange,  there  is  a  sort  of 
marking  or  certifying  of  checks  quite  common  in  the  large  cities, 
as  modern  business  is  conducted,  recognized  by  the  Negotiable 
Instruments  Act.  Here  a  check  is  presented  to  the  bank,  to  be 
certified  as  "  good  "  by  the  cashier  or  other  suitable  officer  of  the 
bank:  and,  upon  the  certificate  being  given,  the  check  circulates 
longer  as  cash  or  its  substitute,  with  that  additional  credit  which 
the  name  of  the  bank  gives  it.  Such  checks  are  to  be  found  both 
in  England  and  America ;  the  name  applied  to  them  with  which 
we  are  most  familiar  is  that  of  "  certified  checks ;  "  and  the  usual 
mode  of  certifying  is  by  the  bank  officer  writing  upon  the  face  of 
the  check  the  word  ''  good  "  or  "'  certified  "  over  his  signature.^ 

What  is  the  effect  of  a  certificate  like  this  ?  And  to  what 
extent  shall  the  bank  be  considered  as  bound  by  such  acts  of  its 
officers  ?  There  are  earlier  conflicting  decisions  on  this  point  in 
some  of  the  State  courts.^     During  our  civil  conflict,  substitutes 

inson   v.    Hawksford,    9    Q.   B.    52;    2  the    present    instance    go    free,    was 

Pars.   72.      See   Skillman   v.   Titus,   3  based  upon  the  assumption  that  only 

Vroom,  96.  the    president    and    directors    of    the 

8.  Certification  of  checks,  Chamber-  bank  could  exercise  an  authority  so 
layne  Evid.,  §  815.  extensive,   unless  specially  delegating 

9.  This  subject  was  considered  by  it  to  others;  and  that  a  teller,  as 
the  Supreme  Court  of  Massachusetts  such,  had  no  implied  authority  to 
in  1845.  Here  a  check  had  been  certify  a  check  so  as  to  bind  the  bank 
drawn  on  a  bank  which  had  no  funds  for  payment.  Evidence  of  a  limited, 
of  the  drawer  on  deposit;  and  the  but  not  a  general  usage,  for  the  bank- 
teller  of  the  bank,  nevertheless,  cer-  teller  to  certify  in  this  manner,  was 
tified  the  check  to  be  good.  The  deemed  insufficient  to  render  the  bank 
court  manifestly  regarded  a  power  of  liable.  Mussey  v.  Eagle  Bank,  '1 
certifying,  like  this,  to  be  in  fact  a  Met.  306.  But  some  twelve  years 
power  to  pledge  the  credit  of  the  bank  later,  a  similar  question  came  before 
to  its  customers ;  and  their  decision,  the  Court  of  Appeals  in  New  York ; 
to  the  effect  that  the  bank  should  in  and  here  it  was  decided  that  a  hon4 

708 


CHAr.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS. 


§  467 


for  monej  circulated,  and  a  national  banking  system  superseded 
the  old  local  banks  of  State  creation ;  so  that  finally  the  Supreme 
Court  of  the  United  States  was  called  upon  to  settle  for  the 
country  the  legal  status  of  such  instriunents.  This  was  done  in 
Merchants'  Bank  v.  State  Bank;  ^  and  the  decision  was,  in  sub- 
stance, that  cashiers  of  banks  have  power,  when  acting  bona  fide 
and  in  the  ordinary  course  of  business,  to  certify  as  ''  good  '' 
checks  drawn  upon  their  respective  banks,  and  to  bind  the  banks 
thereby,  though  no  such  general  usage  appear, —  this  rule  being 
applied  to  national  banks.  And  concerning  the  cashier's  general 
powers,  it  was  held  that  evidence  of  powers  habitually  exercised 
by  him,  with  the  knowledge  and  acquiescence  of  the  bank,  defines 
and  establishes  those  powers  as  to  the  public ;  provided  those 
powers  were  such  as  the  directors  might,  without  violation  of  the 
bank  charter,  confer  on  the  cashier.^  This  important  decision  will 
probably  be  accepted  by  the  State  tribunals  hereafter,  as  conclu- 
sive of  the  law  of  "  certified  checks  "  in  the  United  States,  so  far 


fide  holder,  for  value,  of  a  negotiable 
chack,  certified  to  be  good  by  tlie  pay- 
ing teller  of  the  bank  on  which  it  is 
dra«Ti,  whose  authority  to  certify  is 
limited  to  cases  where  the  bank  has 
funds  of  the  drawer  to  meet  the 
check,  can  recover  of  the  bank  the 
amount  of  the  check,  though  the 
drawer  had  no  funds  in  the  bank,  and 
though  the  certification  by  the  teller 
was  in  violation  of  his  duty,  and  for 
the  drawer's  accommodation.  Farm- 
ers' Bank  v.  Butchers'  Bank,  16  N.  Y. 
125j  Comstock,  J.,  dissenting.  And 
see  Irving  Bank  v.  Wetherald,  36 
N.  Y.  335;  Pope  v.  Bank  of  Albion, 
Sff  Barb.  226;  2  Pars.  74-77.  In  the 
opinion  here  pronounced,  the  Massa- 
chusetts doctrine  was  unfavorably 
criticized ;  yet  the  evidence  now  ad- 
duced appeared  much  stronger  than 
before;  for  it  was  shown  not  only 
that  the  teller  was  in  the  habit  of 


certifying  the  checks  of  customers, 
with  the  knowledge  of  the  officers  of 
the  bank,  but  that  he  was  furnished 
with  a  book  for  the  express  purpose 
of  keeping  a  memorandum  of  certi- 
fied checks. 

1.  Merchants'  Bank  v.  State  Bank. 
10  Wall.  604,  a  famous  case  which 
grew  out  of  transactions  in  Boston, 
and  which  was  decided  in  1S71.  The 
doctrine  of  New  York  was  in  this 
case  adopted,  in  preference  to  that 
of  Massachusetts.  But  the  power  to 
pledge  a  bank's  credit  was  affirmed 
of  a  higher  agent  than  a  teller; 
though  resting  upon  an  implied  or 
express  agency  from  the  bank's  di- 
rection to  one  subordinate  officer  or 
another. 

2.  Merchants'  Bank  v.  State  Bank. 
10  Wall.  604.  The  opinion  was  de- 
livered by  Swayne.  J.;  Clifford  and 
Davis,  JJ.,  dissenting. 


709 


§  467 


THE  LAW  OF  PEESONAL  PROPERTY. 


[part  III. 


as  concerns  the  liability  of  national  banks  and  their  officers  upon 
such  instruments.  A  certification  of  a  check  in  short,  by  the 
proper  bank  agency,  pledges  the  bank's  credit  for  payment  of  the 
check,  in  favor  of  an  innocent  holder  for  value,  though  in  point  of 
fact'  the  drav^er  had  at  the  time  no  fund  on  deposit. 

But  certified  checks,  though  they  may  pass  from  hand  to  hand 
as  cash,  are  still  neither  cash  nor  currency,  strictly  speaking ;  and 
some  payment,  reasonably  sooner  or  later,  should  be  made  thereon. 
And  it  is  held  that  the  bank  upon  vt^hich  a  certified  check  is  drawn 
cannot  set  off  a  claim  on  the  holder  against  the  amount  of  deposit 
transferred  by  the  check;  for  their  only  privity  consists  in  the 
bank's  guaranty  that  the  check  will  be  duly  honored  for  payment.^ 
But  if  the  certification  was  made  by  the  bank  in  violation  of  an 
order  to  stop  payment  on  it,  the  banlc  can  still  recover  from  the 
payee  if  the  latter  has  suffered  no  loss  on  account  of  the  certifica- 
tion.'* Where  the  check  is  certified  at  the  instance  of  the  holder 
the  maker  is  discharged,^  but  not  where  it  is  certified  for  the 
maker.  ^ 


3.  Brown  v.  Leckie,  43  111.  497.  On 
the  point  whether  the  effect  of  certify- 
ing a  check  is  (unlike  that  of  accept- 
ing a  bill)  to  discharge  the  drawer, 
the  later  State  cases  are  discordant. 
First  Nat.  Bank  v.  Leach,  52  N.  Y. 
350;  contra,  Bickford  v.  First  Nat. 
Bank,  42  111.  238.  But  the  true  rule 
appears  to  depend  upon  whether  the 
bank's  certification  was  or  was  not 
at  the  instance  and  for  the  benefit  of 
the  holder,  without  the  drawer's  in- 
tervention. See  Minot  v.  Russ,  156 
Mass.  458;  Born  v.  First  Nat.  Bank, 
123  Ind.  78;  First  Nat.  Bank  v.  Whit- 
man, 94  U.  S.  343.  After  certifying 
a  check  the  bank  is  bound  to  pay  it, 
regardless  of  later  instructions  from 
the  drawer  to  the  contrary.  Freund 
V.  Importers'  Bank,  76  N.  Y.  352. 

See  Security  Savings  Co.  v.  King, 
69    Ore.    228,    138    Pac.    465    (prompt 

7 


and  timely  correction  of  mistake  in 
certifying;  Winlock  v.  Munday,  156 
Ky.  806,  162  S.  W.  76.  And  see  El- 
liott V.  First  Bank,  105  Tex.  547, 
152  S.  W.  808  (certifying  by  tele- 
gram) ;  Davenport  v.  Palmer,  ISZi 
App.  Div.  761,  137  N.  Y,  S.  796 
(effect  of  certifying). 

As  to  checks,  see,  also.  Usher  v. 
Tucker  Co.,  217,  Mass.  441,  105  N.  E. 
360    (a  stopped  check). 

4.  Baldinger,  etc.,  Co.  v.  Manufac- 
turers Citizen-s'  Trust  Co.,  156  N.  Y. 
Supp.  445. 

5.  Metropolitan  National  Bank  v. 
Jones,  137  111.  634,  27  N.  E.  533; 
First  National  Bank  of  Jersey  City 
V.  Leach,  52  N.  Y.  350. 

6.  Born  v.  First  National  Bank  of 
Chicago,  123  Ind.  78,  24  N.  E.  173. 
Davenport  v.  Palmer,  137  N.  Y.  Supp. 
796. 


10 


CHAP.  VIII.]  NEGOTIABLE,    ETC,    INSTRUMENTS.  §    468 

§  468.     Payment  of  Checks;    Duties  of  Banker,  etc. 

Although  a  check  ought  to  be  always  drawn  upon  funds,  banks 
are  sometimes  in  the  habit  of  sustaining  the  credit  of  such  of  their 
customers  as  are  in  good  standing,  by  honoring  their  checks  even 
when,  through  inadvertence  or  something  worse,  the  corresponding 
funds  are  wanting.  But  any  such  habit  is  so  bad  that  it  ought 
never  to  grow  into  a  recognized  legal  or  binding  usage.^  W'hile 
the  check  first  presented  for  payment  ought  to  be  first  paid,  and 
the  first  payment  applied  to  wiping  out  a  depositor's  balance,  and 
so  on ;  yet  if  all  the  checks  presented  at  once  go  beyond  the  funds 
in  hand,  or  there  are  funds  for  a  partial  but  not  a  complete  pay- 
ment of  any  single  check  which  may  have  been  presented,  the  bank 
apparently  is  not  obliged  to  make  any  pro  rata  or  partial  payment ; 
nor  is  a  holder  bound  to  receive  it.^  A  banker  of  both  holder  and 
drawer  will  be  presumed,  if  he  take  a  check  of  the  latter  from  the 
former,  to  receive  it  as  the  former's  agent ;  and  the  mere  retention 
of  a  check  after  deposit  for  a  reasonable  time,  sufficiently  long  to 
enable  the  bank  to  ascertain  whether  the  check  is  good  or  not, — 
say  until  the  next  day, —  constitutes  no  conclusive  acceptance  or 
promise  of  payment  on  the  part  of  the  bank,  whether  both  drawer 
and  holder  are  its  customers,  or  the  holder  alone.^  A  bank  should 
not  pay  a  check  after  notice  that  it  was  lost ;  nor  before  it  is  due, 
if  on  time;  nor  after  notice  of  the  drawer's  insolvency;  nor 
(since  a  bank  is  the  drawer's  agent)  after  notice  of  the  drawer's 
death.  ^  The  bank  is  further  bound  to  follow  with  care  all  the 
directions  of  the  depositor  in  disbursing  funds,  and  may  be  liable 
where  it  exceeds  its  authority.^ 

7.  See  2  Pars.  77;  Lancaster  Bank  see  Peterson  v.  Union  Nat.  Bank,  52 
V.  Woodward,  188  Penn.  St.  257;  Penn.  St.  206,  where  some  element 
Houghton  V.  First  National  Bank,  26  of  fraud  on  the  holder's  part  ap- 
Wis.  663.  peared;  69  Ind.  479. 

8.  In  re  Brown,  2  Story,  502;  2  1.  2  Pars.  81,  82,  and  cases  cited, 
Pars.  78.  And  see  Carew  v.  Duck-  mostly  English.  See  Tate  v.  Hilbert, 
worth,  L.  R.  4  Ex.  313.  2   Ves.   Jr.    118 ;    Bearing  v.   Hocker- 

9.  2  Pars.  77,  n.;  Boyd  v.  Emmer-  smith,  25  Idaho,  140,  136  Pac.  994. 
son,  2  A.  &  E.  184;  Overman  v.  Ho-  2.  National  Bank  of  Commerce  v. 
boken  City  Bank,  1  Vroom,  61.     And  United  States,  224   Fed.   679,  140  C. 

711 


§  469  THE  LAW  OF  PERSONAL  PROPEETY.       [PART  III. 

§  469.  Points  of  Resemblance  Between  Check  and  Bill  of 
Exchange;  Effect  of  Indorsement,  etc. 
But  while  a  check,  in  many  respects,  is  found  to  be  unlike  an 
inland  bill  of  exchange,  payable  on  demand,  in  others  they 
strongly  resemble  one  another.  A  check,  like  a  bill  or  note,  may 
be  indorsed;  and  the  method  of  conferring  the  quality  of  nego- 
tiability, or  of  restraining  or  taking  it  quite  away,  is  much  the 
same  in  all  negotiable  instruments.  Checks  may  be  drawn  to 
a  person  by  name,  in  which  case  it  is  at  least  prudent  for  the  bank 
to  take  his  indorsement  before  making  payment;  or  to  a  person 
"  or  bearer,"  being  thereby  made  capable  of  passing  from  hand  to 
hand,  by  a  simple  delivery;  or  to  a  person  "  or  order,"  in  which 
case  the  check  can  be  transferred,  and  should  be  paid  after  the 
person  has  written  his  name  on  the  back  and  not  before.  And 
subsequent  holders  by  means  of  a  restrictive  indorsement  may  con- 
vert a  check  once  payable  to  bearer  to  one  payable  on  order.  The 
writing  on  the  back  of  a  check,  however,  may  or  may  not  be  an 
"  indorsement,"  in  the  strict  legal  sense ;  and  whether  the  party 
who  writes  his  name  there  is  made  subject  to  the  surety  liabilities 
which  were  considered  in  our  last  chapter  will  depend  upon  cir- 
cumstances. For  the  usual  object  aimed  at  where  checks  are 
drawn  payable  to  "  order  "  rather  than  to  "  bearer  "  is  simply  to 
guard  against  loss  of  the  fund ;  and,  besides,  to  secure,  on  return 
of  the  cancelled  check  from  the  bank,  a  sort  of  receipt  of  the 
payee,  for  the  drawer's  convenience.  But,  certainly,  a  check  is 
capable  of  indorsement  in  the  full  legal  sense;  and  one  who 
indorses  it  with  the  intent  of  making  himself  an  indorser  to  his 
transferee  is  chargeable  as  such  at  the  suit  of  a  subsequent  bond 
fide  holder,  and  ought  to  be  notified  when  the  check  is  dishonored, 
on  the  usual  principles.^     And  the  rule  is  that  a  check  expressed 

C.  A.  219;  Mechanics'  National  Bank  3.  See  Keene  v.  Beard,  8  C.  B.  N.  S. 

V.  Harter,  63  N.  J.  L.   578,  44  Atl.      372;  2  Pars.  58,  59,  71. 

715. 

712 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS. 


§  470 


payable  to  bearer  or  indorsed  in  blank  confers  the  usual  presump- 
tive title  upon  the  holder."* 

Where  the  indorsement  of  a  check  was  intended  merely  to  trans- 
fer one's  legal  rights,  not  to  incur  the  responsibility  of  an  indorser, 
that  intention  will  be  given  effect.^  And  in  general  the  courts 
appear  less  inclined  to  fasten  liabilities  upon  the  indorser  of  a 
check  than  upon  the  indorser  of  a  bill  or  note;  while  the  holder 
of  a  check  finds  considerably  more  favor  as  against  a  drawee,  who 
ought  not  to  have  drawn. ^ 

§  470.     Effect  of  Paying  a  Forged  or  Altered  Check. 

The  better  opinion  is,  that  where  the  drawer's  own  negligence 


4.  lb. 

5.  Kimmel  v.  Bittner,  62  Penn.  St. 
203. 

6.  Thus,  the  mere  fact  that  one  in 
regular  course  of  business  in  good 
faith  and  for  value  receives  a  check 
at  some  brief  period,  such  as  ten 
days  after  it  was  drawn  and  dated, 
does  not  subject  him  to  the  equities 
which  prevail  between  the  original 
parties  to  the  check;  though  a  de- 
mand bill  or  note  might  perhaps, 
under  the  same  circumstances,  be 
considered  as  overdue.  Ames  v.  Mer- 
riam,  98  Mass.  29'4.  And  see,  further, 
Hare  v.  Henty,  10  C.  B.  n.  s.  65; 
Prideaux  v.  Griddle,  L.  R.  4  Q.  B. 
455.  And  it  is  a  rule  that  the  drawer 
of  a  draft  or  check,  in  case  he  hasi 
drawn  against  no  funds,  is  not  en- 
titled to  notice  of  its  dishonor  before 
he  can  be  held  liable  for  non-accept- 
ance or  non-payment.  Even  though 
there  were  some  funds  in  the  bank 
to  his  credit,  so  long  as  they  were 
insufficient  to  meet  the  check,  and 
the  drawer  had  no  reasonable  expecta- 
tion that  the  check  would  he  paid, 
the    holder    is    excused    from    giving 


strict  notice  of  dishonor.  Carew  v. 
Duckworth,  L.  R.  4  Ex.  313.  And 
see  Lawrence  v.  Schmidt,  135  111.  440, 
which  was  a  case  where  only  depre- 
ciated currency  was  in  the  drawee's 
hands.  Prinm  facie,  the  drawer  of 
a  check  should  have  early  notice  of 
its  dishonor:  hence  legal  excuse  for 
omission  to  give  such  notice  ought  to 
be  shown  where  the  holder  has  failed 
to  give  it;  still,  if  the  holder  can 
sliow  that  the  drawer  has  suffered  no 
prejudice  by  his  omission,  he  can 
maintain  his  action  against  him.  2 
Big.  Bills  and  Notes,  2d  ed.  116, 
and  cases  cited;  Kinyon  v.  Stanton, 
44  Wis.  479 ;  Hey^vood  a*.  Pickering, 
L,  R.  9  Q.  B.  428.  And  see  Fletcher 
v.  Pierson,  69   Ind.  281. 

For  an  action  against  the  indorser 
of  a  check,  who  indorsed  "  waiving 
demand  and  notice,"  see  Emery  v. 
Hobson,  62  Me.  578.  That  a  check 
was  dishonored  when  transferred  does 
not  discharge  tihe  drawer.  Loss  to 
the  drawer  by  delay  in  presentment 
is  matter  of  defence.  Cowing  v.  Alt- 
man,  79  N".  Y.  167. 


713 


§  470a        THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

causes  the  drawee,  who  exercises  reasonable  care,  to  believe  that  a 
forged  or  altered  check  was  genuine  and  payable  according  to  its 
face,  and  the  drawee  accordingly  pays  the  check  in  good  faith,  the 
drawer  must  suffer  loss/  But  where  a  bank  pays  a  forged  check, 
without  some  such  excuse,  whether  the  forgery  be  that  of  the 
drawer's  name,  or  of  some  indorser  (the  check  being  made  payable 
to  order),  the  loss  falls  upon  the  bank.  And  if  a  bank  pays  a 
foi'ged  check,  without  the  excuse  of  the  drawer's  negligence,  pay- 
ment cannot  be  charged  against  him;  though,  if  the  check  was 
altered,  the  drawer  will  be  liable  for  the  original  amount.^ 

Where  a  depositor  discovers  that  his  bank  has  charged  to  his 
account  a  forged  or  altered  check,  he  must  notify  the  bank  at  once, 
and  his  failure  to  do  so  relieves  the  bank  from  liability,  although 
the  bank  may  not  be  able  to  show  any  direct  loss  on  account  of  the 
delay.^  For  the  same  reason,  although  a  check  is  not  complete 
until  delivered,  still,  if  a  corporation  treasurer  carelessly  leaves 
checks  on  his  desk  blank  except  for  his  signature,  and  a  thief  takes 
them  and  puts  on  them  the  name  of  a  payee  and  the  amount,  and 
obtains  their  payment  by  the  bank,  the  amount  paid  is  properly 
charged  to  the  corporation.  The  depositor  is  under  a  duty  of  care 
not  to  impose  liability  on  the  bank  through  incomplete  instru- 
ments.^ 

§  470a.     Memorandum  Checks. 

A  peculiar  class  of  checks  may  be  found  in  modem  business, 
known  as  memorandum  checks.     In  form  they  differ  from  ordi- 

7.  See  Young  v.  Grote,  4  Bing.  2=53 ;  whose  name  was  forged.  Shaffer  v, 
Lickbarrow  v.  Mason,  S  T.  R.  63 ;  a  McKee,  IQ'  Ohio  St.  526.  See,  further, 
Pars.  80.  Thomson  v.  British  Bank,  82  N".  Y.  1. 

8.  2  Pars.  80,  81,  and  cases  cited;  9.  Connors  v.  Old  Forge  Discount 
Morgan  v.  Bank  of  N.  Y.,  1  Kern.  &  Deposit  Bank,  245  Pa.  97,  91  Atl. 
404;  Robarts  v.  Tucker,  16  Q.  B.  560;  210. 

Orr  V.  Union  Bank,  1  H.  L.  Gas.  513.  1.  S.  S.  Allen  Grocery  Co.  v.  Bank 

And   see  last  chapter.     One  who  has  of  Buchanan,  192  Mo.  App.   476,  182 

collected  funds  from  the  drawee  on  a  S.  W.  777;  Snodgrass  v.  Sweetser,  15 

forged   indorsement  may  be  sued  for  Ind.  App.  682. 
the    money    obtained    by    the    person 

714 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS.  §    471 

nary  checks  only  in  the  usual  insertion  of  the  abbreviation 
"  mem."  in  the  heading  with  perhaps  a  cancellation  of  the  printed 
name  of  the  bank.  The  effect  of  such  a  check  is  to  create,  on  the 
drawer's  behalf,  an  absolute  contract  to  pay  the  bond  fide  holder 
of  the  paper  unconditionally,  waiving  the  condition  of  presentment 
at  the  bank  and  other  formalities.^  A  check  drawn  in  the  ordinary 
form  cannot  be  shown  to  be  a  memorandum  check.'' 

§  471.     Bills  of  Lading;    How  Far  Negotiable. 

II.  Besides  bills,  notes,  and  checks,  there  are  other  instru- 
ments which  resemble  them  in  the  characteristic  of  negotiability; 
and  the  strong  tendency  of  modem  times  is  to  introduce  new  or 
modified  kinds  of  personal  property,  which  may  present  this  nego- 
tiable advantage  to  parties  seeking  investment.  Bills  of  lading, 
as  we  have  said,  are  sometimes  considered  negotiable ;  though  the 
better  opinion  is  that  they  are  gwo^t-negotiable  only.'^  And  such 
is  the  language  usually  applied  to  them  in  the  later  cases. ^  The 
word  "  assigns  "  is  commonly  used  instead  of  "  order;  "  and  then, 
again,  the  bill  of  lading  is  evidence,  not  of  an  incorporeal  right, 
but  of  corporeal  property,  the  goods  or  cargo  on  transit  —  which, 
after  all,  is  what  one  feels  particularly  interested  in  obtaining,^ 
It  is  true  that  the  law  merchant  makes  a  bill  of  lading  so  far 
transferable  by  indorsement  (and  this  notwithstanding  the  use  of 
the  word  "  assigns  ")  that  an  indorsee  may  sue  the  owner  or  ship- 
master, founding  his  title  to  the  goods  on  his  possession  of  the  bill 
of  lading ;   yet  the  property  in  goods  for  which  a  bill  of  lading  is 

2.  Franklin  Bank  v.  Freeman,  16  And  see,  as  to  paying  a  forged  check. 
Pick.  535;  American  Emigrant  Co.  Nat.  Bank  v.  Bangs,  106  Mass.  441. 
V.  Clark,  47  Iowa,  672 ;  2  Daniel,  Neg.  The  question  of  the  contributing 
Instr.,  §§  1583,  1584.  fraud  or  negligence  of  a  payee  appears 

3.  lb.  material  here.     lb. 

4.  Supra,  §  85.  And  see  1  Ld.  5.  1  Pars.  Shipping,  193;  cases 
Raym.    271;     Lickbarrow    v.    Mason,  post. 

2  T.  R.  63;   The  Water  Witch,  1  Bl.  6.  Supra,   §   321.     It  is  both   a  ro- 

494.       The    bank,    having    paid    on   a  ceipt  and  a  contract  as  to  the  goods 

"  raised "     check,     may     recover     the  described.     lb. 
amount  from  the  payee.    67  Ind.  500. 

715 


§  4-71  THE  LAW  OF  PERSONAL  PROPEETT,       [PART  III. 

given  may  be  legally  transferred  for  consideration,  without  indors- 
ing and  delivering  the  bill  at  alL''  This  latter  course,  to  be  sure, 
is  an  unusual  one ;  but,  furthemiore,  the  holder  of  a  bill  of  lading 
cannot  generally  sue  upon  it  at  law,  in  his  own  name,  more  than 
any  ordinary  assignee  of  incoi*poreal  property,  though  he  is  per- 
mitted to  do  so  in  courts  of  admiralty ;  ^  and  local  statute  at  this 
day  often  confers  such  right.  While,  then,  bills,  notes,  and  checks 
not  only  evince  money  rights,  but  float  them,  as  it  were,  that 
which  a  bill  of  lading  represents  may  be  styled  a  right  to  take, 
hold,  and  enjoy  certain  corporeal  chattels ;  so  that  in  some  respects 
the  primitive  bill  of  lading  would  appear  like  a  mere  scrap  of 
written  evidence,  to  be  produced  in  proof  of  one's  title,  much  as 
the  purchaser  of  chairs  would  show  the  receipted  bill  of  the  furni- 
ture dealer,  to  establish  that  the  goods  were  his,  and  not  the 
dealer's. 

But,  on  the  whole,  bills  of  lading  are  more  decidedly  negotiable 
in  their  character  than  ordinary  bills  of  sale;  and  to  a  great 
extent  the  method  of  selling  cargoes  and  goods  on  transit  or  of 
raising  money  by  their  pledge  must  be  sui  generis;  so  it  is  fit  that 
such  instruments  should  occupy,  as  they  unquestionably  do,  the 
m^idway  position  of  quasi-negotmhle.  A  bill  of  lading  may  be 
indorsed  with  restrictions  or  conditions  which  will  be  construed  to 
much  the  same  effect  as  the  corresponding  indorsement  of  a  bill 
or  note.^     Such  an  instrument  is,  in  short,  at  once  a  receipt  and  a 

7.  Cf.  1  Pars.  Shipping,  193,  IffS;  as  the  pri/tna  facie  owner  of  the  goods 
Allen  V.  Williams,  12  Pick.  297;  therein  specified.  He  can  even  sue 
Stanton  v.  Eager,  16  Pick.  467.  in   admiralty   in   his  own  name;   but 

8.  Thompson  v.  Dominy,  14  M.  &  this  is  on  the  equitable  view  of  an 
W.  402;  Tindall  v.  Taylor,  4  Ell.  &  assignment,  apparently,  since  in  the 
B.  219;  Cobb  v.  Howard,  3  Blatch.  common-law  courts  he  is  not  gener- 
524 ;  1  Pars.  Shipping,  193 ;  Gurney  ally  allowed  to  do  so.  See  Howard 
V.  Behrend,  3  Ell.  &  B.  633;  The  Re-  v.  Shepherd,  9  C.  B.  297;  Thompson 
becca,  5  Rob.  Adm.  102.  v.  Dominy,  14  M.  &  W.  402 ;   Cobb  v. 

9.  The  law  merchant  establishes  an  Howard,  3  Bl.  C.  C.  524 ;  1  Pars 
exception  in  favor  of  bills  of  lading,  Shipping,  192,  193;  The  Figlia  Mag- 
so  that  upon  the  indorsement  and  de-  giore,  L.  R.  2  Ad.  &  Ecc.  106.  That 
livery  of  such  an  instrument  an  in-  the  consignee  for  value  who  is  in- 
dorsee can  sue  the  owner  or  master  dorsee    of    the    bill    of    lading    may 

716 


CHAP.  VIII.]  :JfEGOTIABLE,    ETC.,    INSTKUME^'TS. 


§    471 


contract  of  carriage;  it  acknowledges  the  receipt  of  the  property 
(which  receipt  is  liable  to  correction)  and  contracts  to  carry  and 
deliver  over.^ 

There  are  various  modem  enactments,  both  in  England  and  this 
country,  tending  to  invest  the  transferee  of  a  bill  of  lading, 
whether  by  way  of  pledge  or  sale,  with  the  substantial  advantages 
of  a  holder  by  indorsement.^     And  title  to  the  goods,  either  abso- 


maintain  a  libel  for  tortious  collision, 
by  which  the  goods  were  lost,  see 
The  Vaughan,  14  Wall.  258.  In  a 
modern  English  case  an  indorsement  of 
a  bill  of  lading  "  without  recourse " 
was  held  to  be  valid ;  and  the  ship- 
owners, having  delivered  the  goods 
in  pursuance  of  it,  were  not  permit- 
ted to  sue  the  original  consignees. 
Lewis  y.  M'Kee,  L.  R.  2  Ex.  37.  But 
see  3.  c.  L.  R.  4  Ex.  58.  Whenever, 
indeed,  the  bill  contains  a  condition, 
or  the  indorsement  is  made  upon  a 
condition,  the  possessor  of  the  bill 
must  satisfy  that  condition  in  claim- 
ing the  goods.  Walley  v.  Montgom- 
ery, 3  East,  585.  Of  course,  an  in- 
dorsement and  delivery  is  binding 
only  where  the  party  having  the 
right  to  indorse  does  so  upon  good 
consideration.  1  Pars.  Shipping,  IffS- 
195. 

A  bill  of  lading  and  a  bill  of  ex- 
change covering  the  goods  are  some- 
times enclosed  by  the  consignor  in 
one  letter  to  the  purchaser ;  and 
where  this  is  done,  the  rule,  as  recog- 
nized in  England,  is  that  the  bill  of 
exchange  must  be  accepted  or  the 
bill  of  lading  cannot  be  retained. 
^Vhere  the  bill  of  exchange  is  not 
accepted,  but  the  bill  of  lading  is 
retained,  the  consignee  has  no  right 
to  the  goods.  Shepherd  v.  Harrison, 
L.  R.  5  H.  L.  116.  And  where  the 
consignor    indorses    a   bill    of    lading 

71' 


*'  to  order  or  assigns  "  in  blank,  and 
deposits  as  security  at  a  bank,  and 
upon  satisfaction  of  the  debt  the  bill 
of  lading  is  reindorsed  and  delivered 
back  to  him,  he  is  remitted  to  all  his 
original  rights  as  against  the  ship- 
owners. The  Karnak,  L.  R.  2  Ad. 
&  Ecc.  289. 

For  the  rights  of  parties  where  a 
bill  of  lading  is  attached  to  and  for- 
warded with  a  time  draft,  see  Nat. 
Bank  v.  Merchants'  Bank,  91  U.  S. 
92;  Marine  Bank  v.  Wright,  48  N.  Y. 
1:  Lanfear  v.  Blossom,  1  La.  Ann. 
148.  In  National  Bank  v.  Merchants' 
Bank,  supra,  this  question  is  fully 
discussed;  and  a  conclusion  to  be 
deduced  is,  that  a  bill  of  lading  is 
only  quasi-negotiahle ;  and  that  the 
holder  thereof,  who  has  become  such 
by  indorsement  and  by  discounting 
the  draft  drawn  against  the  consigned 
property,  succeeds  merely  to  the 
rights  of  the  shipper,  and  has  no 
greater  right  to  demand  acceptance 
of  the  accompanying  bill.  And  see 
Emery  v.  Irving  Nat.  Bank,  25  Ohio 
St.  360. 

1.  See  St.  Louis  R.  v.  Knight,  122 
U.  S.  79. 

2.  See  English  act  18  &  19  Vict., 
e.  Ill  (1855),  which  gives  the  con- 
signee or  indorsee  full  right  to  sue. 
And  see  Shaw  v.  Merchants'  Bank, 
101  U.  S.  557. 


§  471 


THE  LAW  OF  PERSONAL  PEOPERTY. 


[PAKT  III. 


lutely  or  by  way  of  pledge,  may  be  acquired  by  a  transfer  of  the 
bill  of  lading.''  Nevertheless,  it  by  no  means  follows,  even  thongh 
a  statute  makes  bills  of  lading  "  negotiable  "  by  indorsement  and 
delivery,  that  all  the  consequences  incident  to  the  possession  of  a 
bill  or  note  payable  to  bearer  or  a  blank  indorsee  become  con- 
ferred.'* Bills  of  lading  are  in  these  days  issued  for  goods  whether 
by  land  or  water  transit ;  but  there  appears  no  essential  distinction 
between  the  two  classes  as  to  the  rights  and  duties  conferred 
thereby.^ 


3.  Commercial  Bank  v.  Pfeiflfer,  22 
Hun,  327.  The  property  described 
in  the  bill  of  lading  may  thus  be- 
come appropriated  even  though  the 
bill  be  transferred  without  formal 
indorsement.  Holmes  v.  Bailey,  9'2 
Penn.   St.   57. 

4.  Thus,  as  to  the  iond  fide  pur- 
chaser of  a  lost  or  stolen  bill  of 
lading,  the  privilege  applicable  to 
negotiable  paper  is  not  presumed  to 
avail  him.  Shaw  v.  Merchants'  Bank, 
101  U.  S.  557.  Cf.  Tiedeman  v.  Knox, 
53  Md.  612;  Sehoul.  Bailm.,  §  190. 
And  the  first  of  triplicate  bills  of 
lading  takes  no  priority,  but  the 
second  or  third  may  be  bond  fide  re- 
garded by  the  carrier,  unless  he  is 
notified  seasonably  to  the  contrary. 
Glyn  V.  East  India  Dock  Co.,  7  App. 
CaS.  591.  There  may  be  a  variance 
between  different  bills  of  lading,  or 
a  misdescription  of  property  in  such 
an  instrument  where  the  receipt  of 
the  carrier  is  subject  to  explanation. 
See  supra,  §  321 ;  Ontario  Bank  v. 
Hanlon,  23  Hun,  283;  Sehoul.  Bailm., 
§  190.  Possession  of  goods  acquired 
under  a  bill  of  lading  is  sufficient  to 
maintain  an  action  against  one  who 
does  not  show  a  better  title.  Adams 
V.  O'Connor,  100  Mass.  515;  Murray 
V.  Warner,  55  N.  H.  546. 


Bills  of  lading  fraudulently  signed 
and  issued,  the  goods  never  having 
been  received,  do  not  by  the  better 
opinion  render  the  carrier  liable  even 
to  a  bond  fide  holder.  Baltimore  R. 
V.  Wilkens,  44  Md.  11;  Pollard  v. 
Vinton,  105  U.  S.  7;  Friedlander  v. 
Tex.  Ry.  Co.,  130  U.  S.  416.  Cf. 
Armour  v.  Michigan  Cent.  R.,  65 
N.  Y.  111. 

As  to  bills  of  lading,  see,  more 
generally,  Sehoul.  Bailm.,  §§  190,  387, 
475-477,  533-537,  and  other  works 
treating  of  the  law  of  carriers.  See, 
also,  §  321,  supra. 

5.  See  supra,  §§  319-322;  Sehoul. 
Bailments,  part  VI. ;  In  re  New  Glen- 
wood  Co.,  150  Iowa,  696,  130  N.  W. 
800. 

Ah  to  indorsee's  lien  on  cargo,  see 
Dewar  v.  Mowinckel,  179  Fed.  355, 
102  C.  C.  A.  539  As  to  bill  of  lading 
with  bill  of  exchange,  see  Daniels' 
Neg.  Instrum.,  §  1234. 

A  carrier's  baggage  check  receipt 
is  not  to  be  considered  a  bill  of  ex- 
change. Blossom  V.  Dodd,  43  N".  Y, 
264.  Nor  is  a  savings-bank  deposit 
book,  as  bank  restrictions  usually 
run.  See  as  to  order  upon  a  third 
person,  Windsor  Co.  v.  Thompson,  86 
Conn.  511.  86  Atl.  1.  And  see  Mor- 
ris V.  Burrows,  180  S.  W.  1108   (Tex. 


718 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS.  §    473 

§  472.     Warehouse  Receipts;    Whether  Negotiable. 

Warehouse  receipts,  in  accordance  with  the  modern  business 
tendencies,  are  now  often  treated  as  quasi-negotiable,  to  much  the 
same  extent  as  bills  of  lading.  But  thej  are  not  negotiable  in  the 
full  sense;  and  even  though  a  statute  should  confer  negotiable 
qualities  upon  this  class  of  instruments,  it  could  not  fairly  render 
the  warehouseman  a  guarantor  of  the  title  of  property  placed  in 
his  custody;  while,  too,  his  receipt  of  goods  might  be  subject  to 
correction.^ 


§  473.  Letters  of  Credit,  Circular  Notes,  Certificates  of  Deposit, 
etc. 
III.  Letters  of  credit  are  not  negotiable,  though  in  some  par- 
ticulars they  resemble  bills  of  exchange.  A,  going  abroad,  takes 
for  convenience  a  letter  from  B,  by  which  B  requests  his  foreign 
banker  to  honor  the  drafts  of  A  to  a  certain  extent,  and  charge 
the  same  to  B's  account ;  and  this  letter  is  called  a  letter  of  credit. 
Had  B  drawn  directly  and  at  once  on  the  foreign  banker  for  the 
whole  amount  in  A's  favor,  the  instrument  would  have  been  a  bill 
of  exchange;  but  being  a  letter  of  credit,  the  doctrine  of  nego- 
tiable instruments  does  not  apply.^  In  these  days  of  foreign 
travel,  while  rates  of  exchange  between  different  countries  vary 
and  fluctuate,  letters  of  credit  are  found  exceedingly  useful  to 
tourists.* 

Civ.   App.    1915)    as   to   cotton    ware-  between  A  and  B;   for  not  only  may 

house  receipt.  B's   liability  be  less,  while  it  cannot 

For    negotiable    qualities    of    stock,  be   more   than    the   limit   he   has   set, 

see  next   chapter.  but    A    may    draw    for    the    amount 

6.  Insurance  Co.  v.  Kiger,  103  U.  S.  named  in  such  sumsi  and  at  such 
352.  Warehouse  receipts  made  pay-  times  as  suit  his  own  convenience, — 
able  to  bearer  are  not  negotiable;  lessening,  if  he  pleases,  his  own  in- 
there  must  be  a  written  indorsement  debtedness  to  A  by  not  drawing  for 
and  delivery.     Erie  Dispatch  v.  Com-  the  full  amount. 

press  Co.,  6  Mo.  App.  172.  8.  A    letter    of    credit    is    liberally 

7.  The  convenience  afforded  by  let-  available  in  favor  of  the  person  who 
ters  of  credit  is  obvious,  and  this  con-  advances  on  the  faith  of  it;  whether 
venience   must   often   be   mutual,   as  as    the    person   solely    addressed,    or 

719 


§  473  THE  LAW  OF  PERSONAL  PROPEETY.       [PART  IH. 

Circular  notes,  too,  as  thej  are  called,  which  refine  a  little  upon 
the  simple  letter  of  credit,  and  may  be  useful  to  travelers  abroad, 
are  generally,  but  not  always,  for  specific  sums;  and  they  are 
purchased  from  a  banking-house,  with  the  design  of  being  used  at 
any  of  the  banker's  agents  or  correspondents  in  various  foreign 
places.  Like  the  common  letter  of  credit,  these  circular  notes 
enable  one  to  dispense  with  the  necessity  of  carrying  large  sums 
upon  his  person.  The  nearer  all  such  letters  and  circulars  ap- 
proximate to  the  bill  of  exchange,  the  more  nearly  do  they  come 
within  the  designation  of  negotiable  instruments;  yet,  as  a  gen- 
eral rule,  though  ti'ansferable  by  indorsement,  they  are  thus  far 
treated  in  the  courts  as  being  governed  by  the  law  of  ordinary 
contracts,  rather  than  that  which  applies  to  bills  and  notes.^ 

But  the  "  certificate  of  deposit,"  as  it  is  generally  termed  in  this 
country, —  or,  in  other  words,  that  certificate  which  a  bank  or 
other  depositary  issues  to  an  individual  upon  his  paying  over  a 
sum  of  money,  by  way  of  irregular  deposit,  or  for  the  purchase  of 
the  certificate, —  is  treated  as  in  effect  the  promissory  note  of  such 
depositary,  and  subject  to  the  usual  rules  of  negotiable  paper. 
Certificates  of  this  description  usually  state  that  the  party  in  ques- 
tion has  deposited  that  sum,  payable  to  himself  or  order  on  demand, 
or  on  return  of  the  certificate  properly  indorsed.^  The  advantage 
of  using  certificates  of  deposit  is  seen  in  the  substitution  of  the 
larger  credit  of  the  bank  for  that  of  the  individual,  who  may  thus 
transfer  the  certificate  to  distant  parties  at  pleasure,  or  carry  it 
on  his  person  until  he  is  ready  to  use  the  money.  Such  transac- 
tions are  to  be  distinguished  from  the  ordinary  deposits  of  a  cus- 
tomer at  his  bank,  with  the  use  of  a  deposit  book;    for  to  sue  the 

on    a    general    letter.      Lawrason    v.  v.  Morrison,  2  Met.  381;  Union  Bank 

Mason,   3   Cr.   492;   Pollock  v.   Helm,  v.  Coster,  3  Comst.  203. 

54  Miss.  1.  1.  Poorman  v.   Mills,  35   Cal.   118; 

9.  See  2  Pars.  Notes  and  Bills,  108,  Payne   v.    Gardiner,    29    N.    Y.    146; 

109;    Birckhead    v.    Brown,     5    Hill,  Hunt  v.  Divine,  37  111.   137;   Vastine 

634;   Orr  v.  Union  Bank  of  Scotland,  v.  Wilding,  45  Mo.  89.     See  Benedum 

1  H.   Ld.   Cas.   513 ;    Lonsdale  v.   La-  v.  First  Bank,  72  W.  Va.  124,  78  S.  E. 

fayett©  Bank,  18  Ohio,  126;  Carnegie  656   (fraudulent  issue). 

720 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS.  §    474 

bank,  in  the  latter  case,  one  must  first  make  a  demand,  either  by 
check  or  otherwise,^  while  here  the  bank  is  immediately  liable  upon 
its  own  note  if  failing  to  honor  it.  Sometimes  a  bank  issues  cer- 
tificates made  payable  on  time,  instead  of  on  demand.  But, 
whether  made  payable  on  time  or  on  demand,  certificates  of  deposit 
are  substantially  promissory  notes  of  the  same  description,  and 
should  be  presented  for  payment,  when  due,  in  a  corresponding 
manner;  though  we  should  say  that  a  certificate  payable  on  de- 
mand ought  not  readily  to  be  presumed  overdue  in  a  holder's 
hands,  more  than  a  bank  check.  The  rule  as  to  indorsement  and 
the  rights  of  indorsee  or  bearer  appears  to  be  essentially  that  of 
promissory  notes.-'  If  the  holder  of  a  certificate  of  deposit  puts 
it  into  his  own  bank,  the  latter  must  honor  his  checks  drawn  against 
the  fund ;  "*  and  by  receiving  and  applying  such  certificate  this 
bank  acquires  the  rights  of  a  bond  fide  holder  against  the  bank 
which  issued  it.^ 

§  474.    Coupon  Bonds  and  Their  Negotiable  Qualities;   English 
Rule. 

IV.  The  manifest  disposition  of  the  present  age  to  multiply 
the  kinds  of  negotiable  instruments  in  circulation  is  well  illus- 
trated in  the  history  of  "  coupon  bonds,"  —  a  kind  of  security 

2.  See  Payne  v.  Gardiner,  and  Hunt  primd  fame  proof  of  title,  as  against 
V.  Divine,  supra.  the   payee  therein   named;    this   on  a 

3.  Poorman  v.  Mills,  35  Cal.  118.  principle  broad  enough  to  include  all 
See  Phelps  v.  Town,  14  Mich.  374.  negotiable  paper  whatever.  Vastine 
And  consistently,  too,  one  who  takes  v.  Wilding,  45  Mo.  89,  criticising 
such  a  certificate  payable  on  demand  statement  in  2  Pars.  Notes  and  Bills, 
unreasonably  late  after  date  takes  it  444. 

subject  to  the  original  equities.    Tripp  4.  Armstrong  v.   Am.    Exch.    Bank, 

V.  Curtenius,  36  Mich.  494.     A  certifi-  133  U.  S.  566. 

cate  of  deposit  in  the  usual  form,  5.  lb.  Goldsmiths  by  way  of  doing 
payable  to  order,  renders  an  indorser  a  banking  business  used  to  issue  re- 
liable as  such.  Pardee  v.  Fish,  60  ceipts  for  deposits  after  this  manner. 
N.  Y.  265.  2  Daniel,  Neg.  Instr.,  §   1698  a. 

The   mere   possession    of    an    unin-  See,  further,  In  re  Marine,  78  Misc. 

dorsed    certificate    of    deposit,    naked  Rep.  707,  140  N.  Y.  S.  231. 
and  unexplained,  is  held  not  to  afford 

46  721 


§  474-  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

which  is  now  constantly  found  in  the  money  market,  being  a  great 
favorite  with  the  investor,  and  eagerly  offered  by  borrowers  who 
wish  to  make  their  debts  attractive ;  though  before  1850  the  name 
was  scarcely  known  in  American  legal  circles.  To  borrow  money 
on  a  personal  bond  conditioned  for  the  repayment  of  the  loan  at 
some  future  date  specified  is  no  new  thing;  and  additional  secur- 
ity in  the  shape  of  a  mortgage  of  real  estate  was  frequently 
furnished  by  the  obligor  in  the  days  of  our  ancestors.  But  how 
could  securities  of  this  sort  pass  about  readily,  at  their  market 
value,  when  assignment  was  attended  with  considerable  formality, 
when  the  assignee  was  compelled  to  sue  in  the  name  of  the  original 
obligee,  holding  subject  to  the  original  equities,  and  when  it  was 
found  an  awkward  matter  for  all  parties  to  adjust  interest  pay- 
ments, pending  the  maturity  of  the  principal  debt?  The  seal 
which  distinguished  a  bond  from  a  note  was  a  legal  obstruction  to 
negotiability.  As  Mr.  Parsons  says,  however,  there  has  been  a 
tendency  on  the  part  of  courts  and  legislators,  perhaps  even  more 
on  that  of  the  mercantile  community,  to  extend  some  of  the 
advantages  of  negotiable  paper  to  other  contracts  and  instruments.^ 
And  in  1811,  when  the  Court  of  King's  Bench  in  England  ex- 
pressed strong  doubts  whether  the  bond  fide  purchaser  for  value  of 
East  India  Company  bonds  could  be  protected  against  a  former 
owner,  from  whom  they  had  been  fraudulently  obtained,  upon  the 
ground  that  they  were  not  assignable  at  law,  Parliament  immedi- 
ately interfered,  and  declared  that  such  bonds  should  be  assignable 
and  transferable  by  delivery  of  the  possession  thereof.^  The 
recognition  of  bonds  in  the  negotiable  form  as  negotiable  instru- 
ments has  since  been  largely,  if  not  altogether,  accomplished  in 
the  English  courts,  as  appears  [1870]  from  important  decisions 
on  the  subject.^ 

6.  See  2  Pars.  Notes  and  Bills,  112.  tion,   instruments   des«ribe(i   on   their 

7.  lb.  See  Glyn  v.  Baker,  13  East,  face  as  "  debenture  bonds,"  and 
510;  51  Geo.  III.,  c.  64.  stamped    as    bonds,    and    expressing 

8.  In  a  decision  rendered  in  1870,  that  the  company  "  bind  themselves 
a  company  had  issued,  as  duly  author-  to  pay  the  bearer  the  principal  sum 
ized  by  its  memorandum  of  asaocia-  of  £20."     The  words,  with  respect  to 

722 


CHAP.  VIII.]  NEGOTIABLE,    ETC,    INSTRUMENTS.  §    475 

§  475.     The  Same  Subject. 

The  so-called  debentures  in  one  of  tbese  cases  bad  interest 
coupons  annexed,  though  the  question  of  the  validity  and  effect  of 
these  coupons  received  no  especial  consideration  ivom  the  court.' 
And  a  case  decided  by  the  Court  of  Queen's  Bench  much  earlier 
turned  upon  the  rights  of  parties  to  promissory  notes  dated  in 
1846,  with  interest  coupons  annexed.^  Indeed,  the  use  of  these 
convenient  interest  coupons,  or  interest  warrants,  seems  to  have 
originated  in  Continental  Europe ;  for  the  public  securities  of 
Prussia,  Denmark,  and  other  countries,  which  became  marketable 
in  England,  bore  this  character  certainly  in  1820,  if  not  earlier.^ 


the  interest,  were  in  similar  form; 
and  the  instruments  were  sold  in 
open  market.  The  company  being  in 
course  of  winding  up,  it  was  admitted 
that  the  company  had  equities  against 
the  parties  to  whom  the  instruments 
were  originally  issued;  and,  on  one 
side,  it  was  claimed  that  these 
equities  ought  to  be  enforced  against 
the  holders,  because  the  bonds  were 
not  negotiable.  But  the  Court  held, 
upon  full  consideration  of  the  case: 
1st,  That  the  instruments  were 
promissory  notes,  or,  if  not  promis- 
sory notes,  at  least  negotiable  instru- 
ments, and  amounting  to  contracts  to 
pay  any  one  who  might  happen  to  be 
the  bearer ;  2d,  That,  consequently, 
holders  for  value  without  notice  of 
the  original  equities  were  entitled  to 
prove  for  the  amount  d\ie,  free  from 
all  such  equities.  Imperial  Land  Co., 
In  re,  L.  R.  11  Eq.  478.  "A  case 
of  the  greatest  possible  importance." 
Per  Malins,  V.  C.  See  former  con- 
flicting cases  cited  in  this  case;  also, 
City  Bank,  Ex  parte,  L.  R.  3  Ch.  758 ; 
Brown  v.  London,  13  C.  B.  N.  s.  828 ; 
Higgs  V.  Assam  Tea  Co.,  L.  R.  4  Ex. 
387.  The  negotiability  of  municipal 
and    corporate    bonds,    in    negotiable 

7 


form,  notwithstanding  the  seal,  is 
affirmed  in  the  latest  English  cases. 
Goodwin  v.  Roberts,  1  App.  Cas.  476; 
L.  R.  10  Ex.  337. 

The  scrip  of  a  foreign  government 
issued  by  it  on  negotiating  a  loan 
(which  scrip  promises  to  give  to  the 
bearer,  after  all  instalments  have  been 
duly  paid,  a  bond  for  the  amount  with 
interest)  is  by  the  custom  of  the  stock 
markets  a  negotiable  instrument  and 
passes  by  mere  delivery  to  a  bona  fide 
holder  for  value,  after  the  usual  rule 
of  negotiable  instruments.  Goodwin 
v.  Robarts,  1  App.  Cas.  476.  When 
the  instalments  mentioned  in  the  scrip 
have  actually  been  paid,  the  scrip  is 
as  much  a  sjmbol  of  money  due,  and 
as  capable  of  passing  by  delivery,  as 
the  bond  itself  would  be.  lb.,  Lord 
Selborne.  See  further,  on  this  point. 
Rumball  v.  Metropolitan  Bank,  2  Q. 
B.  D.  194.  Cf.  Williams  on  Personal 
Property,   17th   ed.   344. 

9.  Imperial  Land  Co.,  In  re,  L.  R. 
11  Eq.  478. 

1.  McLae  v.  Sutherland,  3  E.  &  B. 
1;  1  Smith  Lead.  Cas.  602  et  seq.;  n. 
to   Miller   v.   Race,   1   Burr.   452. 

2.  See  Attorney-General  v.  Bou- 
wens,    4    M.    &    W.    171.      The    word 


23 


§  476  THE  LAW  OF  PEKSONAL  PROPERTY.       [PART  III. 

§  476.  Coupon  Bonds  and  Their  Negotiable  Qualities ;  American 
Rule. 
In  our  modem  every-day  life  we  find  the  coupon  principle 
applied  to  railway  tickets,  and  in  a  variety  of  other  ways ;  and  as 
to  coupon  bonds,  government  issues  them,  counties,  cities,  and 
towns  issue  them,  the  individual  who  mortgages  his  farm  to  a 
distant  capitalist  tenders  them,  and  corporations,  and  especially 
public  service  and  industrial  corporations,  find  them  extremely 
serviceable  in  connection  with  placing  their  loans  on  the  market. 
In  our  growing  States,  where  vast  transportation  enterprises  were 
projected  (1825-1860),  which  called  for  expenditures  beyond  the 
means  of  the  private  citizens  specially  interested  in  them,  it 
became  a  common  thing  for  a  legislature  to  lend  the  credit  of  the 
State  to  the  new  concern,  or  to  authorize  such  counties  and  cities 
as  were  likely  to  be  benefited  to  subscribe  to  the  stock,  and  to  issue 
its  bonds  in  payment.  Upon  bonds  of  this  latter  description 
(which  naturally  enough  were  sometimes  found  a  burden  instead 
of  a  blessing)  suits  frequently  arose ;  and  it  became  in  time  well 
settled,  by  a  series  of  decisions  culminating  in  the  Supreme  Court 
of  the  United  States,  that  bonds  of  municipal  or  other  corpora- 
tions which  have  been  issued  by  lawful  authority,  with  interest 
warrants  or  coupons  annexed  (or,  indeed,  without  them,  so  long- 
as  they  are  of  the  ordinary  kind,  and  are  made  payable  to  bearer), 
are  commercial  securities,  and  so  far  possess  the  usual  qualities  of 
negotiable  paper  that  the  bond  fide  holder  purchasing  before 
maturity  has  a  full  title  irrespective  of  the  equities  unknown  to 
him  which  might  have  availed  against  the  original  payee.  And 
coupons,  too,  if  suitably  expressed  as  payable  to  bearer,  and  separ- 
able from  the  bond,  are,  as  it  is  settled,  to  a  like  extent  negotiable 
instruments,  so  that  the  holder  may  sue  on  them  without  produc- 

"  coupon"    itself    betokens    a    Conti-  Sometimes   foreiofn    debentures    are 

nental    origin;    the    word    covper,    to  found  objectionable  to  our  public  pol- 

cut,    being    suitably    applied,    in    the  icy  as  a  "lottery"  contrivance,  such 

present  connection,   to  the  many   in-  as  once  prevailed  in  the  loans  of  sorr^.o 

terest  certificates  annexed  which  must  of  the  United  States.     See  Horner  v. 

be   severally   presented    for    payment.  U.  S.  147  U.  S.  449. 

724 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTEUMENTS. 


§  477 


ing  or  being  interested  in  the  bonds.-'  "  These  securities  are 
found,"  as  Mr.  Justice  Swayne  observed,'*  "  in  the  channels  of 
commerce  everywhere,  and  their  volume  is  constantly  increasing."  ^ 
Suits  on  a  bond  and  on  its  coupons  cut  from  it  are  different  causes 
of  action.^ 

§  477.     The  Same  Subject. 

So  universal,  indeed,  has  the  use  of  coupon  bonds  become  at  the 
present  day,  that  many  other  interesting  doctrines  concerning  the 
legal  status  of  parties  to  these  securities  must  inevitably  come 
before  the  courts ;  and  in  this  country,  certainly,  questions  of  this 
character  are  sure  to  receive  such  a  liberal  interpretation  as  may 
protect  the  rights  of  parties  who  have  fairly  and  honestly  invested 


3.  The  fact  that  bearer  bonds  are 
negotiable,  without  indorsement  may 
be  proved  by  judicial  knowledge.  See 
Chamberlayne  Evid.,  §  834.  Coupon 
bonds  deemed  negotiable.  Book  3, 
X.  Y.  Rpts.,  Bender  ed.,  note,  p.  480. 
Negotiability  of  coupon.  Book  14, 
X.  Y.  Rpts.,  Bender  ed.,  note,  p.  10. 

4.  Murray  v.  Lardner,  2  Wall.  110 
(1864). 

5.  lb. ;  Thomson  v.  Lee  County,  3 
Wall.  330.  And  see  Mercer  County 
V.  Racket,  1  Wall.  95;  Gelpcke  v. 
Dubuque  1  Wall.  175 ;  Clark  v.  Iowa 
City,  20  Wall.  583;  Vermilye  v. 
Adams  Exp.  Co.,  21  Wall.  138;  Haven 
V.  Grand  Junction  R.,  109  Mass.  88; 
Welch  V.  Sage,  47  N.  Y.  143;  Morris 
Canal  v.  Fisher,  1  Stockt.  667;  Clark 
V.  Janesville,  10  Wis.  136 :  1  Am. 
Lead.  Cas.,  5th  ed..  Hare  &  Wall,  n., 
406,  408 ;  Aurora  v.  West,  22  Ind.  88. 
Also  see  cases  cited  in  note,  infra. 

The  latest  American  authorities 
aiErm  the  rule  of  tlie  text  as  to  cor- 
porate bonds  generally;  e.  g.,  those  of 
railways,  and  the  coupons  annexed. 
Evertson  v.  National  Bank,  66  N.  Y. 


14;  Hotclikiss  v.  National  Bank,  21 
Wall.  138.  The  detached  coupons 
may  circulate  after  the  bonds  them- 
selves have  been  paid.  National 
Bank  v.  Hartford  R.,  8  R.  I.  375.  A 
coupon  once  detached  and  negotiated 
ceases  to  be  a  mere  incident  of  the 
bond.  lb.  Negotiable  coupons  are 
entitled  to  days  of  grace.  Evertson 
V.  National  Bank,  66  N.  Y.  14.  But 
if  interest  coupons  or  warrants  are 
not  negotiable  in  form,  they  are  not 
negotiable  when  separated  from  the 
bond,  although  the  latter  be  negotia- 
ble; hence  the  purchaser  takes  them 
subject  to  all  defects  of  title.  Evert- 
son V.  National  Bank,  66  N.  Y.  14. 

"  Sealed  notes  "  are  in  some  States, 
contrary  to  the  old  rule,  given,  by 
legislative  enactment,  the  usual  con- 
.sequences  of  negotiability.  Laidley 
V.  Bright,  17  W.  Va.  779;  Pate  v. 
Brown,  85  N.  C.  166.  See,  as  to 
the  alteration  of  a  sealed  note,  Neff 
V.  Horner,  63  Penn.  St.  327. 

6.  Presidio  County  v.  Bond  &  Stock 
Co.,  212  U.  S.  58,  29  S.  Ct.  237,  53 
L.  ed.  402. 


725 


§  477  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

in  this  kind  of  property.  But  in  view  of  the  expressions  of  many 
eminent  jurists  touching  the  general  negotiable  characteristics  of 
coupon  bonds,  we  apprehend  that  it  is  somewhat  premature  to  say 
they  are  negotiable  instruments  in  the  same  full  sense  that  bills, 
notes,  and  checks  are.  Securities  of  this  character,  so  far  as  they 
sell  in  the  market,  are  almost  always,  if  not  invariably,  made 
payable  "to  bearer,"  instead  of  ''to  order;"  or  else  are  regis- 
tered. The  law  of  indorsement  pertaining  to  them  is  still  unde- 
veloped; and  indorsement  when  made  upon  them  is  rather  in 
connection  with  the  formalities  of  transfer  than  for  assuming  an 
indorser's  liability.  It  is  true  that  coupons  have  usually  the  form 
of  a  promissory  note ;  and  so  is  the  principal  obligation  some- 
times ;^  but  when  a  surety  obligation  is  added,  it  is  usually 
indorsed  upon  the  instrument  in  the  form  of  a  specific  guaranty. 
Thus  far,  the  current  of  decisions  sets  chiefly  towards  the  deter- 
mination :  first,  of  the  right  which  some  municipal  or  private  cor- 
poration had  to  issue  the  coupon  bond  at  all ;  and,  second,  of  the 
extent  to  which  la  hona  fide  holder  for  value  taking  as  bearer,  and 
not  as  indorsee,  shall  be  protected  against  equities  which  may 
have  existed  between  the  original  parties.^ 

7.  Individual  mortgage  notes  in  Holder  of  severed  coupon  of  a  bond 
many  States  have  coupon  warrants  protected  in  the  mortgage  security, 
for  interest  attached.  See  §  256.  Real  Estate  Co.  v.  Pennsylvania  Co., 
Coupon  bonds  expressed  in  negotia-  237  Penn.  311,  85  Atl.  365. 
ble  words  carry  the  essential  qualities  8.  As  to  the  first  of  these  proposi- 
of  negotiability  like  bills  and  prom-  tions,  the  right  of  a  State  Legislature 
issory  notes;  while,  if  no  negotiable  to  authorize  municipal  corporations 
words  are  expressed,  the  instrument  to  subscribe  to  railroads  extending 
is  not  negotiable.  Daniel  Neg.  Instr.,  beyond  the  limits  of  the  city  or 
§  1500,  and  numerous  State  decisions  county,  and  to  issue  bonds  accord- 
cited;  Thomson  v.  Lee  County,  3  ingly,  is  settled  on  construction,  in  a 
Wall.  327.  So  much  has  been  de-  number  of  instances.  See  Gelpcke 
cided  since  the  first  edition  of  this  v.  Dubuque,  1  Wall.  175;  State  v. 
work  as  an  American  doctrine.  The  Wapello,  13  Iowa,  388 ;  Amey  v. 
English  courts  have  not  so  clearly  Allegheny  City,  24  How.  364.  And 
settled  the  point.  §  475;  Daniel,  the  statute  may  confer  its  authority 
§  1504.  But  rules  of  indorsement,  as  by  implication.  Gelpcke  v.  Dubuque, 
applicable  to  commercial  paper,  have  supra;  Mej-er  v.  Muscatine,  1  Wall, 
not  been  developed.  384.     But     county     bonds     are     in' 

726 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS. 


§  477j 


§  477a.     Negotiable  Bonds  in  General. 

Bonds  of  a  negotiable  form,  representing  money  loans  or  invest- 


valid,  though  in  the  hands  of  an 
innocent  purchaser,  when  issued  in 
one  way  illegally,  when  the  statute 
declared  that  tliey  should  be  issued 
in  another  and  different  way.  Marsh 
V.  Fulton  County,  10  Wall.  676.  And 
when  municipal  bonds  bear  a  refer- 
ence upon  their  face  to  the  authority 
under  which  they  are  issued,  third 
persons  are  bound  to  take  notice  of 
such  authority  and  its  extent.  Au- 
rora V.  West,  22  Ind.  88;  McClure  v. 
Oxford,  94  U.  S.  429.  But  a  new 
statute  may  operate  as  a  ratification 
of  bonds  and  cure  all  defects  and 
irregularities  of  the  issue.  Beloit  v. 
Morgan,  7  Wall.  619;  Campbell  v. 
Kenasha,  5  Wall.  194.  And  see 
Butler  V.  Dubois,  29  111.  105;  John- 
son Co.  V.  January,  94  U.  S.  202; 
County  of  Bates  v.  Winters,  97  U.  S. 
83.  There  are  numerous  cases  of  con- 
struction as  to  the  act  or  charter 
authorizing  the  issue  of  bonds:  as, 
for  instance,  Seybert  v.  Pittsburg, 
1  Wall.  272;  Hopple  v.  Brown,  13 
Ohio  St.  311;  Amey  v.  Allegheny 
City,  24  How.  364;  Mitchell  v. 
Burlington,  4  Wall.  270.  The  ques- 
tion is  sometimes  as  to  the  authority 
of  particular  officials  to  issue  the 
bonds.  See  Curtis  v.  Butler,  24  How. 
435;  Marshall  County  v.  Cook,  38 
111.  44 ;  Berliner  v.  Waterloo,  14 
Wis.  378.  Bonds  of  municipal  cor- 
porations require  statute  authority; 
the  power  to  borrow  money  on  mu- 
nicipal credit  does  not  imply  the 
power  to  issue  such  negotiable  instru- 
ments ;  and  provisions  of  the  statute 
which  authorizes  must  be  strictly 
pursued.       Barnett    v.    Denison,    145 


U.  S.  135;  Young  v.  Clarendon,  132 
U.  S.  340;  Hill  V.  Memphis,  134  U.S. 
198 ;  Brenham  v.  German-American 
Bank,  144  U.  S.  173.  But  express 
power  to  issue  interest-bearing  bonds, 
implies  power  to  attach  coupons. 
Atchison  v.  De  Kay,  148  U.  S.  591. 
If  submission  to  voters  is  a  pre- 
requisite, that  submission  should  be 
made.  See  Foote  v.  Salem,  14  Allen, 
87 ;  also  Warren  Co.  v.  Marcy,  97  U.  S. 
96 ;  American  Life  Ins.  Co.  v.  Bruce, 
105  U.  S.  328 ;  Ottawa  v.  Xat.  Bank, 
105  U.  S.  342;  Lewis  v.  Commission- 
ers, 105  U.  S.  739;  Hannibal  v. 
Fauntleroy,  105  U.  S.  408.  But  the 
bond  fide  holder's  right  is  favored, 
nevertheless,  where  such  bonds  recite 
full  conformity  with  statute  require- 
ments. And  it  seems  always  in- 
equitable that  a  municipal  govern- 
ment should  be  paid  the  money 
bond  fide  lohich  it  has  sought  to  raise, 
and  after  applying  it  as  desired  repu- 
diate its  bonds  and  escape  in  toto  all 
obligation  to  refund  the  money.  The 
autliority  to  issue  "  bonds  "  does  not 
restrict  such  issue  to  the  old  common- 
law  and  unncgotiable  bonds.  Woods 
v.  Lawrence  County,  1  Black,  386. 
Power  of  the  corporation  to  issue 
being  shown,  it  would  appear  that  the 
want  of  a  proper  execution  of  that 
power  cannot  be  set  up  against  a 
bond  fide  holder.  Rogers  v.  Burling- 
ton. 3  Wall.  654;  County  of  Henry  v. 
Nicolay,  95  U.  S.  619.  And  see  Super- 
visors V.  Schenck,  5  Wall.  772.  The 
effect  of  recitals  in  the  bond,  of  offi- 
cial certificate,  of  estoppel  or  ratifica- 
tion, may  be  often  worth  considering 
in  all  such  cases.     Bondholders  may 


727 


§  477a 


THE  LAW  OF  PERSONAL  PEOPEETY.       [PAET  III. 


ments,  have  now  [1917],  aided  by  local  statute,  the  character  of 


be  deemed  holders  for  value  although 
taking  bonds  in  security  or  as  pay- 
ment for  pre-existing  indebtedness. 
McMurray  v.  Moran,  134  U.  S.  150. 
It  seems  to  matter  little  whether 
the  so-called  "  bonds "  issued  by  a 
municipal  corporation  are  under  seal 
or  not.  People  v.  Mead,  24  N.  Y. 
114.  On  the  whole  it  may  be  said 
that  a  substantial  compliance  with 
the  statute,  as  to  amount,  for  in- 
stance, where  the  amount  is  clearly 
limited,  is  necessary.  See  State  v. 
Saline  County  Court,  45  Mo.  242. 
But  immaterial  misstatements  in 
bonds  do  not  affect  their  validity. 
Gould  V.  Sterling,  23  N.  Y.  439.  As 
to  a  proviso  in  charter  that  bonds 
"  shall  not  be  sold  at  less  than  par," 
see  Woods  v.  Lawrence  County,  1 
Black,  386.  And  bonds  being  issued 
to  bond  fide  holders,  which  under  the 
State  decisions  are  valid  at  the  time 
of  issue,  they  cannot  be  invalidated 
by  subsequent  decisions  of  the  State. 
City  V.  Lamson,  9  Wall.  477.  If  de 
facto  officers  execute  the  bonds,  the 
question  of  office  de  jure  cannot  be 
set  up  against  the  bond  fide  holder. 
County  of  Rollo  v.  Douglas,  105  U.  S. 
728.  As  to  stipulations  declaring 
the  bonds  convertible,  see  Denney  v. 
Cleveland  E.  R.  Co.,  28  Ohio  St.  108. 
As  to  stipulations  for  a  default  mak- 
ing the  principal  payable,  see  Mayor 
of  Griffin  v.  City  Bank  of  Macon,  58 
Ga.  584.  Where  bonds  are  regular 
on  their  face  it  is  no  defence  against 
a  bond  fide  holder  without  notice, 
that  the  corporation  issuing  the 
bond.s  was  not  organized  in  due  form ; 
nor  can  irregularity  or  even  fraud  in 
issuing  them  be  set  up.  Macon  Co. 
V.  Shores,  97  U.  S.  272;  Little  Rock 


V.  National  Bank,  98  U.  S.  308; 
County  of  Clay  v.  Society  for  Sav- 
ings, 104  U.  S.  579.  The  absence 
of  a  seal  to  the  bond,  the  bonds 
themselves  being  duly  authorized  and 
otherwise  properly  issued,  does  not 
affect  the  bond  fide  holder's  right  to 
recovery.  Draper  v.  Springfort,  104 
U.  S.  501.  Formal  prerequisites  are 
not  essentials,  as  concerns  such 
holder.  Lewis  v.  Commissioners,  105 
U.  S.  739. 

Detached  coupons  may  be  sued  on 
when  due,  as  an  independent  cause  of 
action.  National  Bank  v.  Hartford 
R.,  8  R.  I.  375;  Evertson  v.  National 
Bank,  66  N.  Y.  14;  Cicero  v.  Clifford, 
53  Ind.  191;  Union  Trust  Co.  v. 
Monticello  Co.,  63  N.  Y.  311;  East 
Lincoln  v.  Davenport,  94  U.  S.  801. 
If  interest  coupons  refer  to  the  bonds 
to  which  they  were  attached,  the  pur- 
chaser is  charged  with  notice  of  what 
the  bonds  contain.  McClure  v.  Ox- 
ford, 94  U.  S.  429;  Silliman  v.  Fred- 
rieksburg  R.  R.  Co.,  27  Gratt.  119. 
An  unpaid  and  overdue  coupon  does 
not  so  dishonor  the  whole  bond  as 
to  deprive  a  buyer  of  the  character  of 
a  purchaser  before  maturity.  Crom- 
well V.  Sac  County,  9^6  U.  S.  51. 
Delivery  of  interest  coupons  implies 
no  guaranty  that  they  will  be  paid. 
Ketchum    v.    Duncan,    96    U.    S.    659. 

Municipal  bonds  as  negotiable  pa- 
per. Book  34,  N.  Y.  Rpts.,  note,  p. 
971.  Negotiability  of,  bonds.  Book 
34,  N.  Y.  Rpts.,  Bender's  ed.,  note, 
pp.  971,  975:  Common  knowledge 
as  to  municipal  bonds.  See  Chem- 
berlayne  Evid.,  §  834. 

Purchaser  held  to  be  affected  with 
notice  of  their  invalidity  where  an 
express  provision  for  an  indorsement 


728 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    IXSTRUMEXTS. 


§  477i 


'negotiable   instruments,    and    are   treated   in   the   courts   accord- 
ingly.9 


was  not  complied  with,  and  there  was 
uncertainty  in  the  amount  and  place 
of  payment.  Parsons  v.  JacksoH,  99 
U.  S.  434.  But  where,  consistently 
with  its  tenor,  the  bond  is  indorsed 
by  an  officer  "  to  bearer,"  a  pur- 
chaser has  the  right  to  sue  as  holder. 
Wilson  Co.  V.  Nashville  Bank,  103 
U.  S.  770.  See  further,  Maas  v.  Kan- 
sas E.,  83  N.  Y.  223.  For  application 
of  the  rule  of  hond  fide  holder  to  a 
bond  whose  indorsement  was  erased 
and  a  new  one  forged,  see  Col  son  v. 
Arnot,  57  N.  Y.  253;  Force  v.  Eliza- 
beth, 28  N.  J.  Eq.  403.  Bonds  may 
be  invalid  as  between  the  original  par- 
ties, and  yet  available  to  the  bond  fide 
holder.  Stewart  v.  Lansing,  104  U.  S. 
515. 

As  to  the  second  proposition  of 
the  text,  see  cases  in  note  supra,  to 
the  effect  that  a  bond  fide  purchaser 
before  maturity  hold.s,  as  in  the  case 
of  bills  and  notes,  free  from  the 
original  equities.  And  see  Moran  v. 
Commissioners,  2  Black,  722  ;  Society 
for  Savings  v.  New  London,  29  Conn. 
174;  People  V.  Mead,  24  N.  Y.  114. 
But  it  appears  that,  if  taken  when 
overdue,  they  are  Subject  to  such 
equities,  following  the  usual  rule. 
See  Texas  v.  White,  7  Wall.  700; 
Arents  v.  Commonwealth,  18  Graft. 
750.  Making  the  bonds  payable  to 
bearer  on  their  face  amounts  to  a 
direction  that  they  shall  be  transfer- 
able by  delivery,  like  bills  and  notes. 
Commonwealth  v.  Commissioners,  37 
Penn.  St.  237.  Purchaser  is  not 
bound  to  see  how  the  monej'  he  pays 
is  applied.  Mills  v.  Gleason,  11  Wis. 
49^5.  Coupons  are  transferable  by 
delivery,  and  the  holder  may  sue  in 


his  own  name.  Thom.>on  v.  Lee 
County,  3  Wall.  330;  Johnson  v. 
Stark,  24  111.  75;  Clark  v.  Janesville, 
10  Wis.  136.  One  who  receives  the 
coupons  after  they  are  stolen,  and 
sells  and  turns  them  into  money,  only 
as  an  agent,  and  without  deriving  any 
benefit  to  himself,  cannot  be  sued  for 
their  conversion.  Spooner  v.  Holmes, 
102  Mass.  503. 

Defendant  having  shov.n  strong 
circumstances  of  fraud  in  the  origin 
of  a  negotiable  security,  the  holder 
must  show  that  he  gave  value  before 
maturity.  Smith  v.  Sac  County,  11 
Wall.  139.  Concerning  the  applica- 
tion of  the  Statute  of  Limitations  to 
suits  on  coupons  detached  from  tlie 
bonds,  see  City  v.  Lamson,  9  Wall. 
477.  And  see  Beaver  v.  Armstrong. 
44  Penn.  St.  63;  Welsh,  v.  St.  Paul 
R.,  25  Minn.  314. 

Since  the  first  edition  of  this  work 
was  issued,  there  have  been  many 
decisions  rendered  on  the  subject  of 
municipal  and  corporate  bonds.  An 
exhaustive  presentation  of  the  State 
decisions  on  the  subject  in  a  work  of 
the  present  compass  would  be  impos- 
sible; but  as  the  Supreme  Court  of 
tlie  United  States  has  passed  upon 
many  of  these  questions  it  has  been 
thought  de-sirable  to  refer  the  reader 
to  tlieir  detailed  examination. 

The  decisions  since  the  second 
edition  of  this  work  seem  to  put  the 
bond  fide  holder  to  considerable  risk 
as  to  municipal  securitie.^.  He  must 
take  the  risk  of  the  olTicial  character 
of  those  executing  them.  131  U.  S. 
162.  He  must  be  without  notice  of 
infirmity  when  he  pays  over.  147 
U.  S.  59.     If  he  buys  bonds  in  liti- 


729 


§  478 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


§  478.     Government  Loans ;   Notes,  Bonds,  etc. 

The  subject  of  coupon  bonds  brings  us  very  closely  to  tbat  of 
government  loans,  State  or  national ;  and  that  of  government  loans 
takes  us  to  the  extreme  limit  of  incorporeal  chattels ;  to  that  point 
where  it  becomes  extremely  difficult  to  distinguish  the  incorporeal 
"  money  right  "  from  the  corporeal  "  money."  Our  loan  laws  are 
for  the  most  part  public  contracts  for  the  temporary  exigencies  of 
the  government,  and  constitute  a  series  of  isolated  financial  expedi- 
ents with  few  permanent  or  general  features.  From  the  very 
nature  of  the  case  they  receive  but  little  attention  in  the  courts ; 


gation  or  where  they  are  offered  at 
an  immense  depreciation  he  takes  the 
risk  of  one  affected  by  notice.  Coler 
V.  Cleburne,  132  U.  S.  107;  147  U.  S. 
59.  Even  a  bond  fide  holder  cannot 
upon  bonds  or  coupons  where  there 
was  no  authority  to  issue  them.  Bren- 
ham  V.  German-American  Bank,  144 
U.  S.  173.  He  is  chargeable  with 
notice  of  the  requirements  of  the  law 
under  which  they  were  issued;  he  is 
bound  to  take  notice  of  constitutional 
limitations  on  the  municipal  indebt- 
edness; and  he  is  bound  by  informa- 
tion open  to  him  in  the  official  rec- 
ords of  the  officers  signing  the  bonds. 
Barnett  v.  Denison,  145  U.  S.  135; 
Chaffee  County  v.  Potter,  142  U.  S. 
355;  Nesbit  v.  Riverside,  144  U.  S. 
610;  Crow  v.  Oxford,  119  U.  S.  215. 
But  as  to  no  notice  of  restriction 
upon  issue  by  a  contract  see  McMur- 
ray  v.  Moran,  134  U.  S.  150.  And 
legislative  and  executive  notice  that 
requirements  are  fulfilled  or  a  certifi- 
cate of  registry  may  avail  him. 
Comanche  Co.  v.  Lewis,  133  U.  S. 
198;  Cairo  v.  Zane,  149  U.  S.  122. 
Wrongful  disposition  of  the  proceeds 
of  borrowed  money  cannot  be  set  up 


against  the  bond  fide  investor.  Bogle 
V.  Gassert,  149  U.  S.  22. 

See,  further,  note  at  close  of  this 
chapter. 

9.  Bond  fide  third  parties  for  value 
are  protected  accordingly.  Interboro 
Co.  V.  Doyle,  165  App.  Div.  646,  151 
N.  Y.  S.  325  (unmatured  bonds 
pledged  by  "bearer").  Gronwold  v. 
Federal  Co.,  212  Fed.  908,  129  C.  C. 
A.  428  (blanks  filled  up).  Other- 
wise where  bonds  non-negotiable  until 
indorsed,  were  stolen  and  the  in- 
dorsement forged.  Chester  Co.  v.  Se- 
curities Co.,  165  App.  Div.  329;  150 
N.  Y.  S.  1010.  Third  parties  must 
notice  recitals  of  bond.  Kohn  v. 
Sacramento  Ry.  Co.,  168  Cal.  1,  141 
Pac.  626. 

Stein  v.  Whitman,  156  App.  Div. 
861,  142  N.  Y.  S.  4  (guaranty  by 
obligee)  ;  Santa  Cruz  v.  Wykes,  202 
Fed.  357,  120  C.  C.  A.  485  (recitals 
in  municipal  bonds)  ;  In  re  Manistee 
Watch  Co.,  197  Fed.  455  (Mich.  D.  C. 
1912). 

As  to  controlling  expression  of  such 
acts,  see  First  Bank  v.  Williams,  164 
Ky.  143,  175  S.  W.  10;  Kavanagh 
v.  Bank  of  America,  239  111.  404,  88 
N.  E.  171. 


730 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    INSTRUMENTS.  §    478 

and  redress,  if  hardship  is  suffered,  must  be  found  in  legislation.^ 
Since  the  adoption  of  our  Constitution,  the  usual  evidences  of  the 
public  debt  have  been  distinguished  as  bonds  and  notes.  But  one 
form  of  obligation  is  doubtless  regarded  as  solemn  and  binding 
upon  the  government  no  less  than  the  other;  though  it  might  be 
thought  that  the  bonds  constitute,  technically  speaking,  a  preferred 
claim.  In  either  case  the  seal  of  the  Treasury  Department  is 
affixed.  The  practical  difference  seems  to  have  generally  been 
that,  whereas  the  treasury  notes  are  issued  for  short  periods, — 
from  one  to  three  years, —  and  then  funded,  cancelled,  or,  if  neces- 
sary, reissued,  the  bonds  are  issued  for  longer  periods,  and  possess, 
in  theory  at  least,  all  the  advantages  of  a  permanent  investment. 

Formerly  treasury  notes  were  in  comparatively  small  sums,  for 
the  most  part,  and  passed  readily  from  hand  to  hand.  Government 
bonds,  on  the  contrary,  were  issued  for  large  amounts,  and  could 
only  be  transferred  by  assignment  on  the  books  of  the  Department. 
The  former  were  better  adapted  for  circulation ;  the  latter  could 
be  held  with  greater  safety.  But  the  "  coupon  "  principle  has  of 
late  years  been  applied  quite  liberally  to  our  loans  both  State  and 
Federal,  as  they  are  likewise  in  England  and  Continental  Europe, 
and  indeed  in  most  civilized  countries  of  the  present  day,  whose 
rulers  appear  as  borrowers  in  the  world's  great  money  market ;  and 
whether  the  loan  take  the  shape  of  bonds  or  promissory  notes, 
interest  coupons  or  warrants  are  usually  annexed.^  Making  allow- 
ance for  the  limited  remedies  which  pertain  to  rights  against  gov- 
ernment, as  compared  with  those  applicable  to  individuals  and 
private  or  municipal  corporations,  it  is  safe  to  assert  that  the 

1.  See  author's  article  on  "  Gov-  nominally  of  bonds  and  the  other  of 
ernment  Loans,"  3  Am.  Law  Rev.  218  notes,  and  both  issued  originally  as 
et  seq.  popular  loans  in  small  denominations 

2.  The  characteristics  of  the  long  —  will  perceive  that  there  is  little 
loans  of  the  United  States  are  now  difference  between  them,  so  far  as 
greatly  changed ;  and  those  who  amount  of  certificate  is  concerned ; 
compare  the  "  five-twenty  "  and  and  still  less  in  respect  to  negotiable 
"seven-thirty"  loans  of  the  civil  convenience.  lb.  The  same  may  be 
war  (1861-1865) — the  one  consisting  said    of    the    Liberty    Loan    of    1917. 

731 


§  479 


THE  LAW  OP  PERSONAL  PROPERTY. 


[part  III. 


holder  of  government  coupon  bonds  or  government  notes  payable 
to  bearer  and  not  yet  due  has  the  same  privileges  as  the  holder  of 
other  commercial  negotiable  securities  of  a  corresponding  char- 
acter. And  it  has  been  held,  moreover,  conformably  to  the  rules 
of  negotiable  securities,  that  government  bonds  payable  to  bearer, 
which  are  purchased  considerably  later  than  the  date  at  which  they 
were  redeemable,  and  at  a  depreciated  value,  are  subject  to  defects 
of  title  in  the  party  to  whom  they  were  first  issued.''  Coupons  of 
a  government  bond  are  negotiable  if  suitably  expressed.'* 

§  479.     Registered  Bonds  Distinguished  from  Coupon  Bonds. 

To  get  rid  of  some  of  the  disadvantages  attending  the  use  of 
coupon  bonds,  or  rather  to  secure  certain  advantages  which  they 
cannot  readily  supply,  inasmuch  as  indorsement  is  undesirable, 
corporations  sometimes  adopt  a  plan  of  "  registering,"  as  it  is 
called,  the  bonds  at  any  holder's  option,  so  that  negotiability  may 
be  created  or  destroyed  by  the  bond  fide  holder  at  pleasure.^     And 


3.  Texas  v.  White,  7  Wall.  700. 
And  see  Gorgier  v.  Mieville,  3  B.  & 
C.  45;  Brandao  v.  Barnett,  12  CI.  & 
Fin.  787.  And  as  to  that  form  of 
public  loan  known  as  the  "  certifi- 
cate of  indebtedness,"  see  Banks  v. 
Mayor,  7  Wall.  16.  See  also,  as  to 
certain  State  bonds,  Hartman  v. 
Greenhow,  102  U.  S.  672.  Treasury 
notes  of  the  United  States  convertible 
into  government  bonds  at  a  definite 
future  time  fellow  the  rules  of  nego- 
tiable paper  as  to  title  taken  before 
or  after  maturity.  Vermilye  v.  Adams 
Express  Co.,  21  Wall.   138. 

4.  Spooner  v.  Holmes,  102  Mass. 
503.  See  Bender's  Federal  Rvenue 
Law,  1917. 

Certain  State  bonds,  though  fraud- 
ulently issued,  were  sold  in  a  foreign 
ma:*ket.  Owners  were  treated  under 
the  circumstances  as  purchasers  for 
value.    Florida  Central  R.  v.  Schutte, 


103  U.  S.  118.  As  to  "  impairing  the 
obligation  of  contracts "  by  a  State 
in  such  connection,  see  Bier  v.  Mc- 
Gehee,  148  U.  S.  137.  And  as  to 
"  tax  receivable "  coupons  under  a 
State  law,  see  McGahey  v.  Virginia, 
135  U.  S.  662.  A  purchaser  of  State 
bonds  with  knowledge  of  thek'  illegal 
issue,  or  of  long  dishonor  by  non- 
payment of  interest,  acquires  no 
title  which  he  can  enforce  as  bond 
fide  holder.  Trask  v.  Jacksonville 
R.,  124  U.  S.  515. 

5.  See  Am.  Lead.  Cas.,  5th  ed.  408, 
409,  where  this  plan  is  fully  set  forth. 
Mr.  Wallace,  in  the  same  connection, 
says  that  while  the  owner  of  coupons 
may  sue  on  them,  detached  from  the 
bond,  such  things  as  coupons,  far 
from  maturity,  "  are  so  seldom  or 
never  dealt  in  when  in  a  form  de- 
tached from  their  proper  bonds,  that 
a  purchaser  of  them  would,  in  case 


732 


CHAP.  VIII.]  NEGOTIABLE,    ETC.,    IXSTBUMENTS. 


§  479 


"  registered  bonds,"  formerly  the  usual  kind  of  long  government 
loans  from  individuals,  are  still  to  be  found ;  these  are  purchased 
by  persons  who  prefer  to  guard  against  loss  of  their  securities,  and 
do  not  mean  to  change  their  investments  frequently;  and  any 
assignment  of  the  instrument  must  be  recorded  on  the  books  of  the 
treasury,  interest  being  drawn  only  by  the  registered  owner  or  his 
attorney  duly  authorized.^  The  registry  system  of  private  cor- 
porations which  issue  bonds  and  borrow  on  a  large  scale  is 
similarly  conducted. 


of  a  loss  or  robbery  from  a  true 
owner,  hardly  be  treated  with  the  fa- 
vor due  to  a  holder  of  ordinary 
negotiable  paper,  or  of  coupon  bonds 
with  the  coupons  annexed."  Am. 
Lead.  Cas.  ib.  408.  But  see  Na- 
tional Bank  v.  Hartford  R..  8  R.  I. 
375 ;  Evertson  v.  National  Bank,  66 
N.  Y.  14.  The  tendency  of  the  latest 
cases  is  to  regard  detached  coupons 
as  usually  negotiable. 

As  to  whether  a  certificate  of  stock 
may  ever  be  considered  a  negotiable 
instrument,  see  next  chapter. 

6.  The  permissive  registry  of  a 
bond  payable  to  bearer  does  not  of 
itself  make  the  bond  non-negotiable. 
Savannah  R.  v.  Lancaster,  62  Ala. 
555.  As  to  government  liability  for 
cancelled  registry  bonds,  see  German 
Bank  v.  United  States,  148  U.  S.  573. 

The  law  of  various  kinds  of  quusi- 
negotiable   chattels    has   much    devel- 


oped since  the  foregoing  chapter  was 
originally  prepared.  As  to  checks, 
the  reader  is  referred  to  the  works  on 
Bills  and  Notes  mentioned  at  the 
close  of  the  preceding  chapter.  Bills 
of  lading  receive  treatment  in  Schoul. 
Bailments,  under  the  head  of  "  Car- 
riers ;  "  also  in  the  latest  editions  of 
Angell,  R,edfield,  and  others,  on  Bail- 
ways  and  other  Carriers.  As  to 
coupon  bonds,  &c.,  Dillon  on  Munici- 
pal Corporations,  and  Jones  on  Rail- 
road Securities  will  be  found  valuable 
for  reference.  And  see  John  W. 
Daniel  on  Negotiable  Instruments 
(edition  1913),  a  work  whose  proper 
scope  best  embraces  all  instruments 
considered  in  this  and  the  preceding 
chapter.  The  latest  text-books  or  lat- 
est editions  should  be  consulted  upon 
all  these  topics.  See,  also,  W.  H.  Har- 
ris on  Municipal  Bonds. 


733 


CHAPTER  IX 

SHAKES    OF    STOCK 

§  480.  Shares  in  Joint-Stock  or  Business  Corporations ;  Division 
of  Present  Chapter;  Capital  is  Largely  Invested  in 
Business  Corporations, 

Shares  in  incorporated  companies  constitute  at  this  day  a  very 
important  species  of  personal  property;  and  in  our  own  country, 
where  joint-stock  corporations  are  rapidly  multiplying,  there  are 
very  few  wealthy  persons  who  do  not  invest  some  of  their  surplus 
riches  in  corporation  stock ;  such  investments  yielding  a  handsome 
profit,  or  else  melting  away  altogether,  according  to  the  good  stand- 
ing of  the  corporation  and  the  nature  and  conduct  of  its  transac- 
tions. For  investing  in  a  company  chartered  and  organized  for 
the  business  of  banking,  insurance,  railway  transportation,  or 
some  sort  of  manufacture,  we  embark  with  others  in  that  particular 
business,  and  go  into  trade  somewhat  as  partners,  though  (subject 
to  the  law  of  corporations)  with  a  more  restricted  liability  and  a 
less  extensive  control  over  the  affairs  of  the  concern. 

Of  the  nature  and  organization  of  business  corporations  we  have 
spoken  in  a  former  chapter:  it  now  remains  to  discourse  of  the 
capital  stock  of  such  corporations.  And  we  shall  find  it  con- 
venient to  consider,  at  the  present  time,  first,  what  is  the  nature  of 
stock;  second,  how  one  becomes  a  stockholder;  third,  what  are 
the  rights  of  a  stockholder ;   and  fourth,  what  are  his  liabilities.^ 

1.  It  is  not  every  corporation  which  tered  and  organized  for  certain  busi- 

offers  shares  in  its  capital   stock  for  ness  purposes,  and  with  the  view  of 

investment;     for     instance,     a     city,  having   the   profits   of   that   business 

though  a  corporation,  is  not  a  "  joint-  divided  among  those  holding  the  cor- 

stock    corporation."       A    "  joint-stock  poration  stock  in  proportion  to  their 

corporation "     should     not     be     con-  respective     shares.      Ang.     &     Ames, 

founded  with   the  strict  "joint-stock  §  556;  Field  Priv.  Corp.,  §  123.     And 

company."       See    supra,    §§    201-204.  sometimes  the  style  "  business  corpo- 

But  by  the  former  term   we  usually  ration  "  vdll  be  found  preferable, 
designate  a  corporation  which  is  char- 

734 


CHAP.  IX.]  SHARES   OF    STOCK.  §    481 

§  481.     Nature  of  Stock  Considered;    Capital  Stock. 

First,  as  to  the  nature  of  stock.  The  word  "  stock  "  is  some- 
times applied  to  the  trading  capital  of  persons  engaged  in  a  part- 
nership business,  and  in  a  sense  similar  to  the  present.  For  as 
each  partner  usually  gives  something  valuable  to  the  common  con- 
cern which  goes  towards  making  up  the  aggregate  capital,  whether 
his  contribution  consist  in  goods  or  monej,  so,  in  a  joint-stock 
corporation,  each  person  who  becomes  a  shareholder  contributes  in 
effect  the  nominal  amount  represented  by  his  shares  towards  the 
capital  of  the  corporation,  which  capital  constitutes  the  fund  for 
employment  in  the  corporate  business.  "  Capital  stock  "  is  the 
term  frequently  used  in  our  present  connection;  and  this  capital 
stock  is  computed  as  so  much  money,  constituting  a  certain  sum 
which  is  divided  into  a  number  of  shares.  The  stock  is  raised  by 
the  mutual  subscription  of  the  members  of  the  corporation  in  the 
first  instance,  though  the  stockholders  or  shareholders  in  a  corpora- 
tion may  be  constantly  changing  afterwards  through  the  transfer 
of  stock  or  otherwise.  And  the  corporation  capital  is  divided  into 
shares,  the  holders  of  which  are  entitled  to  a  corresponding  pro- 
portionate part  of  the  profits  of  the  corporate  business,  and  are 
subject  to  assessment  in  the  same  proportion.^  But  while  the  word 
"  stock  "  is  usually  applied  to  the  capital  of  a  corporation,  it  some- 
times refers  more  especially  to  the  interests  of  individual  share- 
holders therein.-^ 

As  a  corporation  is  limited  in  its  powers  by  the  organic  act  or 
charter  which  gave  it  existence,  we  may  usually  ascertain  the 

2.  See  Ang.  &  Ames  Corp.,  cs.  15,  "  Capital  "  and  "  Capital  Stock " 
16;  Bouv.  Diet.  "Stock;"  and  chap-  distinguished.  In  re  Wells'  Estate, 
ter  on  Corporations,  supra.  By  "  capi-  156  Wis.  294,  144  N.  W.  174 ;  Bryan 
tal  stock"  vcQ  do  not  usually  refer  v.  Aiken,  86  Atl.  674  (Del.  Sup. 
to  the  property  of  the  corporation,  1913).  The  unissued  stock  of  a  cor- 
to  its  "  plant "  so  called,  but  to  the  poration  forms  capital  at  par. 
amount  contributed  by  the  .stockhold-  Bivens  v.  Hull,  58  Col.  338,  148  Pac. 
ers'  as  members.  State  v.  Morristown  694.  And  see  as  to  increasing  the 
Association,  23  N.  J.  L.  195.  capital  stock,  Northern  Trust  Co.  v. 

3.  People     V.     Commissioners     of      Day,  83  Wash.  296,  145  Pac.  182. 
Taxes,  23  N.  Y.  192. 

735 


§    482  THE    LAW    OF    PERS50NAL    PROPERTY.  [PART IIL 

extent  of  the  capital  stock  which  any  joint-stock  corporation  is 
authorized  to  raise  by  examining  such  act  or  charter;  and  the 
same  can  be  said  as  to  the  number  of  shares  into  which  the  capital 
stock  is  divided.  But  if  a  charter,  instead  of  fixing  the  number  of 
shares,  provides  that  there  shall  not  be  less  than  a  certain  number, 
nor  more  than  another  number,  the  company  may  determine  the 
number  within  the  limits  prescribed ;  "*  and  so  correspondingly, 
with  charter  provisions  concerning  the  amount  of  the  capital  stock. 
Shares  usually  represent  money  contributions  in  a  modern  business 
corporation;  but  where  the  charter  authorizes  capital  stock  to  be 
paid  for  in  property,  and  the  shareholders  in  good  faith  contribute 
property,  instead  of  money,  by  way  of  subscription,  third  parties 
have  no  ground  of  complaint.^ 

§  482.     The   Same   Subject;     Shares   are   Incorporeal  Personal 
Property. 

Previous  to  the  nineteenth  century,  corporations  were  rarely 
chartered,  and  questions  concerning  the  nature  of  stock  seldom 
arose  in  the  courts.  When  canal,  turnpike,  and  other  companies, 
whose  profits  arose  out  of  transactions  connected  with  land,  first  be- 
gan to  be  created,  there  was  no  little  disposition  to  treat  their  stock 
as  real  estate ;  but  at  the  present  day  the  universal  preference  is  to 
regard  all  corporation  stock  in  the  hands  of  stockholders  as  personal 
property.  Often  there  are  general  statutes  found  to  this  effect; 
and  it  has  been  not  an  unusual  thing  for  an  act  of  incorporation  to 
use  such  special  expression  as  to  remove  all  doubt  on  the  subject. 
Thus,  in  England,  the  nature  and  incidents  of  shares  in  the  joint- 
stock  companies  incorporated  by  letters-patent  or  act  of  Parliament 
have  generally  been  designated  in  their  respective  charters  or  acts 
of  incorporation,  which  at  the  present  day  always  declare  the 
shares  to  be  personal  estate,  and  so  transmissible.^     The  shares  in 

4.  Somerset  R.  R.   Co.  v.  Gushing,  6.  Wms.    Pers.    Prop.,     17th    Eng. 
45  Me.  524.  ed.    32S;    Drybutter  v.   Bartholomew, 

5.  Fort  Madison  Bank  v.  Alden,  129  2  P.  Wms.  127. 

U.  S.  372. 

736 


(IIAP.  IX.]  SHAKES    OF    STOCK,  §    482 

some  of  the  early  American  corporations  were  by  statute  made 
real  estate,  as  in  the  instance  of  the  Cape  Sable  Company  in  Mary- 
land. But  shares  in  the  modern  railroad  companies  appear  to 
have  always  been  treated  as  personal  property,  even  where  the 
charter  was  silent,  conformably  to  the  later  English  and  American 
rule  that  shares  in  incorporated  companies  holding  land  for  the 
purposes  of  their  business  must  be  considered  personal  property, 
unless  the  organic  act  or  charter  expressly  declares  otherwise.^ 
As  for  manufacturing,  banking,  and  insurance  corporations,  whose 
business  is  primarily  with  personal  property,  there  was  far  less 
reason  why  their  stock  should  ever  be  regarded  as  real  estate.^ 

A  share  of  stock  is  a  chose  in  action  of  a  complicated  character, 
and  title  to  it  cannot  be  properly  determined  in  an  action  to  which 
the  corporation  is  not  a  party.^ 

In  fact,  as  to  every  joint-stock  corporation,  the  shares  in  a  share- 
holder's hands  entitle  him  to  a  proportionate  part  in  a  capital 
which  is  regarded  as  so  much  money;  and  his  right  is  a  money 
right  so  far  as  himself  is  concerned,  even  though  that  capital,  with 
reference  to  the  fictitious  personage  known  as  the  corporation,  be 
invested  in  real  estate,  or  in  goods  and  chattels,  or,  what  is  quite 
commonly  the  case,  in  both  together,  for  the  purposes  of  the  cor- 
porate business.^  For  this  reason  the  lands  of  a  corporation  may 
be  taxed  as  real  estate,  while  its  stock  is  personal  property;  and 
according  to  the  modern  doctrine,  while  a  corporation  may  own 
a  great  deal  of  real  and  a  great  deal  of  personal  property,  the 
interest  of  each  individual  shareholder  is  a  share  of  the  net  produce 
of  both  when  brought  into  one  fund,  by  way  of  capital  assets. 

Shares  in  corporation  stock  being  regarded  therefore  as  personal 
property,  they  are  to  be  classed  with  incorporeal  personal  prop- 

7.  Abb.  Dig.  Corp.  736;  Cape  Sable  9.  Baker  v.  Baker,  Ecclcs  &  Co., 
Company's  Case,  3   Bland  Ch.   606.  242  U.  S.  394,   (Sup.  Ct.). 

8.  Ang.  &  Ames,  §  557;  Boiiv.  Diet.  1.  lb.;  Rex  v.  Hull  Dock  Co.,  1 
"Stock;  "  Edwards  v.  Hall,  6  De  G.  T.  R.  219;  Bradley  v.  Holdsworth,  3 
M.   &   G.    74 ;    Tippets  v.   Walker,    4  M.  &  W.  422. 

Mass.  595.     Contra,  Welles  v.  Cowles, 
S  Conn.  567.    See  §  IQ',  supra. 

47  737 


§  483  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

erty,  or,  as  it  is  sometimes  said,  they  are  of  the  nature  of  choses 
in  action;  for  the  certificate  of  stock  is  merely  corporeal  evidence 
of  the  incorporeal  right,  and  a  muniment  of  title,  as  in  the  case  of 
bills  and  notes ;  while  shares  of  stock  as  a  rule  differ  from  bills 
and  notes  in  being  non-negotiable,  or  rather  assignable  instruments, 
as  will  be  seen  when  we  come  to  consider  the  method  of  their 
transfer.^ 

Stock  has  always  had  a  par  value,  commonly  of  one  hundred 
dollars  a  share,  but  under  some  recent  statutes  it  is  possible  to 
issue  stock  without  any  par  value.  These  statutes  are  sound  in 
theory  and  recognize  that  stock  represents  only  an  aliquot  part  of 
the  assets  of  a  corporation.^ 

§  483.     Dividends  upon  Stock;    Their  Nature. 

To  that  portion  of  the  principal  or  profits  (usually  the  latter) 
which  the  corporation,  by  its  officers,  divides  among  the  stockhold- 
ers on  some  periodical  computation,  we  apply  usually  the  term  of 

2.  See  Rex  v.  Capper,  5  Price,  217;  men's  Co.  v.  Turner,  182  S.  W.  438 
Arnold  v.  Ruggles,  1  R.  I.  165;  Allen  (Tex.  Civ.  App.  1916). 
V.  Pegram,  16  Iowa,  163 ;  Sewall  v.  The  sittis  of  corporate  stock  may 
Boston  Water  Power  Co.,  4  Allen,  be  regarded  sometimes  at  the  domicile 
282 ;  Ang.  &  Ames,  8th  ed.,  §  560 ;  of  the  holder  and  sometimes  at  the 
Mechanics'  Bank  v.  New  York  R.  R.  domicile  of  the  corporation.  Lock- 
Co.,  3  Kern.  599;  Union  Bank  of  wood  v.  U.  S.  Steel  Corporation,  153 
Tennessee  V.  State,  9  Yerg.  490 ;  Field  App.  Div.  655,  138  N.  Y.  S.  725; 
Corp.,  §  133.  Gamble  v.  Dawson,  67  Wash.  72,  120 

See  National   Bank  v.  Newell,  259  Pac.  1060. 

Mo.  637,  167  S.  W.  710   ( certificate  of  The  relation  of  a  corporation  to  its 

stock   a   muniment    of    title)  ;    U.    S.  stockholders  on   conflicting  claimants 

Radiator  Co.  v.  New  York  State,  208  of  stock  is  a  fiduciary  one.     Cooper  v. 

N.  Y.  144,  46  L.  R.  A.  N.  s.  585,  n..  Spring  Valley  Co.,   171  Cal.  158,  153 

101  N.  E.   783 ;    Baker  v.   Davie,   211  Pac.  936 ;  Boyd  v.  New  York  &  H.  R. 

Mass.   429,  97  N.   E.   1094;   Crowther  Co.,  220  Fed.  174   (N.  Y.  D.  C.  1915). 

V.  Bell,  190  111.  App.  48;  Longyear  v.  3.  See   N.    Y.    St.    1912,   the   Stock 

Hardman,   219   Mass.   405,   106  N.   E.  Corporation  Law,  §§  19-23.     See  also 

1012   (personal  relation  constituted)  ;  article  on  the  subject  by  Victor  Mora- 

B«llows  Falls   Co.   v.   Commonwealth,  wetz  in  26  Harvard  Law  Review,  729. 

222  Mass.  51,  109^  N.  E.  891    (nature  Stock  issued  without  par  value  under 

of   certificate    as    proj>erty)  ;    Cattle-  recent  Maine  law  of  19'17. 

738 


CHAP.  IX.]  SHAEES    OF    STOCK.  §    484 

dividend.^  Until  a  dividend  is  regularly  declared,  and  thus  sepa- 
rated from  the  bulk  of  the  capital  stock,  all  profits  and  surplus 
funds  of  the  corporation  continue  by  their  accumulation  part  of  the 
capital  itself.  But  a  dividend  which  has  been  regularly  declared, 
and  is  already  payable,  should  be  deemed  not  only  incorporeal 
personal  property  (or  a  chose  in  action)  but  an  unpaid  debt  due 
from  the  corporation  to  the  individual  stockholder,  until  he  has 
drawn  or  appropriated  it  to  himself.^  The  right  of  the  party  to 
whom  the  dividend  is  payable  is  a  separate  and  independent  right, 
which  may  be  enforced  as  against  the  corporation,  notwithstanding 
his  character  of  stockholder.^ 

§  484.     Stock  as  Distinguished  from  the  Corporate  Property. 

The  nature  of  the  stock  of  a  company,  and  the  rights  and  liabil- 
ities of  the  corporation  concerning  it,  may  depend  greatly  upon 
the  organization  of  the  concern :  whether,  for  instance,  the  charter 
is  a  peculiar  one ;  or  whether,  again,  the  capital  stock  is  that  of 
a  full  corporation,  or  that  only  of  a  joint-stock  company.  The 
rule  is  that,  if  an  unincorporated  company  or  a  firm  purchase 
property,  each  individual  shareholder  has  an  immediate  interest 
in  it ;  but  that  the  moment  a  company  becomes  a  legal  corporation, 
the  corporation,  upon  being  invested  with  the  legal  title,  has  that 
property  in  trust  for  the  individual  members, —  or,  in  oth^r 
words,  for  the  stockholders.'^  And  hence,  no  stockholder  as  an 
individual,  nor  even  a  single  person  who  owns  all  the  capital  stock, 

4.  The  ultimate  object  of  an  ordi-  Co.,  29  N.  J.  L.  (Dutch.)  82,  504; 
nary  business  corporation  is  the  pecu-  Wilkinson  v.  Charlesworth,  11  Jur. 
niary  profit  of  its  individual  mem-  644;  West  Chester  R.  v.  Jackson,  77 
bers.  Morawetz  Priv.  Corp.,  §  344.  Penn.  St.  321;  Morawetz  Priv.  Corp., 
This  does  not  apply  to  a  savings  bank.  §  351. 

Huntington  v.  Savings  Bank,  96  U.  S.  6.  lb. ;   Ang.  &  Ames,  §   561 ;   Tay- 

388.      Dividends,   of   course,   are   per-  lor,  §§  568,  750;  §  510,  post. 

sonal   property.      Tippets   v.    Walker,  7.  Wordsworth's    Joint-Stock    Com- 

4  Mass.  595.  panics,    2&8;    Ang.    &   Ames,    §    559; 

5.  Phelps  v.  Farmers',  &c.,  Bank,  26  Regina  v.  Arnaud,  9  Q.  B.  806 ; 
Conn.   269;    King   v.   Paterson   R.   R.  supra,  §  231. 

739 


§  485  THE  LAW  OF  PERSONAL  PROPERTY.       [ PART  in. 

can  separately  act  for  the  corporation  or  sue  as  legal  owner  of  its 
property.^ 

§  485.     Over-issue  of  Stock;   Partially-paid-in  Capital,  etc. 

A  corporation,  whose  capital  is  limited  by  its  charter,  either  in 
amount  or  the  number  of  shares,  cannot  issue  valid  certificates  in 
excess  of  this  limit.^  Nor  can  the  price  of  shares  fixed  by  charter 
be  disregarded.^  And  it  appears  that  any  bond  fide  holder  of  stock 
certificates  which  are  spurious,  because  a  fraudulent  over-issue, 
can  sue  the  parties  who  made  the  over-issue,  although  his  purchase 
was  from  other  persons ;  ^  and  so  with  other  fraud  in  issuing  the 
certificates.^  As  a  general  rule,  a  corporation  cannot  change  the 
amount  of  its  capital  as  prescribed  in  its  charter ;  and  all  attempts 
to  do  so  are  void.'*  The  stock  thus  created  is  void  and  the  attempt 
to  increase  it  is  ultra  vires;  and  the  holder  of  such  certificates  has 
none  of  the  rights  and  is  subject  to  none  of  the  liabilities  of  a 
holder  of  authorized  stock. ^  And  while  a  stockholder  may  be 
estopped  to  set  up  informalities  in  the  issue  of  stock  which  the 
corporation  had  legal  authority  to  create,^  the  nullity  of  unauthor- 
ized stock  may  be  alleged  by  its  holder.^ 

8.  Button  V.  Hoffman,  61  Wis.  20.  6.  Upton  v.  Tribilcock,  91  U.  S.  45; 
20  N.  W.  667;  England  v.  Dearborn,  Chubb  v.  Upton,  95  U.  S.  665;  Pull- 
141  Mass.  590,  6  N.  E.  837;  Taylor,  man  v.  Upton,  96  U.  S.  328;  Taylor, 
§  187.  §   541.     Majority  rule  in   increase   of 

9.  Bruff  V.  Mali,  36  N.  Y.  200;  stock.  Book  4,  N.  Y.  Rpts.,  Bender 
cases  post;  Railway  Co.  v.  Allerton,  ed.,  note,  p.  91.  May  increase  stock. 
18  Wall.  233.  Book  4,  K  Y.  Rpts.,  Bender  ed.,  note, 

1.  Sturges  V.  Stetson,  1  Biss.  246.  p.  606. 

2.  BruflF  V.  Mali,  36  N.  Y.  200.  He  7.  Such  is  the  declared  view  of  the 
may  recover  from  his  vendor.  Arnold  Supreme  Court  of  the  United  States. 
V.  Ruggles,  1  R.  I.  165.  See  Mr.  Justice  Woods   in   Scovill  v. 

3.  Field  Corp.,  §  126.  Thayer,    105    U.    S.    143;    Delano    v. 

4.  Mackley's  Case,  L.  R.  1  Ch.  D.  Butler,  118  U.  S.  634.  Over-issued 
247 ;  Stace's  Case,  4  Ch.  App.  682,  n. ;  stock  reduces  the  value  of  the  original 
Mechanics'  Bank  v.  N.  Y.  &  N.  H.  R.,  stock,  which  thus  becomes  sometimes 
13  N.  Y.  599;  N".  Y.,  N.  H.  &  H.  R.  v.  known  as  "watered  stock;  "  a  term 
Schuyler,  34  N.  Y.  30;  Railway  Co.  applied  also  to  issues  in  a  purchase 
v.  Allerton,  18  Wall.  233.  largely  in  excess  of  a  true  valuation. 

5.  Scovill  V.  Thayer,  105  U.  S.  143.  Generally  by  an  over-issue  a  fraud  is 

740 


CHAP,  IX.]  SHAKES    OF    STOCK.  §    486 

But  when  a  corporation  is  created  with  a  defined  capital,  which 
has  been  only  partially  paid  in,  the  directors  may  afterwards 
receive  subscriptions  and  issue  certificates  for  the  balance,  entitling 
the  holders  to  all  the  rights  of  the  original  stockholders.  Nor 
have  the  original  stockholders  any  prior  right  of  subscription  to 
these  shares.^  In  fact,  where  there  are  no  legislative  provisions 
to  the  contrary,  it  would  appear  that  the  corporation  has  the  same 
power  to  dispose  of  its  unsubscribed  and  properly  issued  capital 
stock  as  any  ordinary  owner, —  paying  debts  with  it,  or  exchanging 
it  for  labor  or  such  other  property  as  may  be  required  for  the 
corporate  purposes ;  ^  provided  that  all  this  be  done  in  good  faith 
and  upon  sufficient  consideration.^ 

§  486.     Right  of  a  Corporation  to  Deal  in  Its  Own  Stock. 

But  the  extent  to  which  a  corporation,  by  its  managing  officers, 
may  employ  the  corporate  funds  in  buying  up  its  own  stock,  is  a 
matter  of  some  uncertainty.  The  practice  of  speculating  in  this 
manner  certainly  ought  not  to  be  encouraged ;  and  there  are  some 
cases  which  regard  such  a  playing  of  corporate  funds  from  one 
hand  into  the  other  as  a  breach  of  trust.^     But  the  rule  is  not  so 

committed  upon  such  stockholders  as  Stock  certificates  not  spurious  nor 

have     not     assented.      Field     Corp.,  illegally  issued  may  avail  a  bond  fide 

§   144.     If  such  over-issue  is  fraudu-  holder  for  value,   though   the   consid- 

lent  and  ultra  vires,  semhle  the  cor-  eration,    as    between    the    corporation 

poration  is  not  bound  by  the  agents'  and  the  party  to  whom  they  were  is- 

acts,   but   the    agents   themselves   be-  sued,  should  fail.     Savage  v.  Ball,  17 

come  liable  for  over-issued  stock.  N.  J.  Eq.  142.     Cf.  Scovill  v.  Thayer, 

8.  Curry  v.  Scott,  54  Penn.  St.  270.  105  U.  S.  143,  cited  su-pra. 
Compelling  issue  of  stock.     Book  28,  1.  Handley  v.  Stutz,  139  U.  S.  417; 
N.  Y.  Rpts.,  Bender  ed.,  note,  p.  1037.  Fogg  v.  Blair,  139  U.  S.  118.     But  it 

9.  lb. ;  Abb.  Dig.  Corp.  740.  The  cannot  give  away  its  stock,  nor  trans- 
right  to  issue  capital  stock  not  al-  fer  it  upon  any  simulated  payment  or 
ready  taken  is  a  corporate  franchise,  dishonest  device.     lb. 

and  the  property  thus  held  is  in  trust  2.  In  re  London,  &c.,  Railway  Co., 

for  the  benefit  of  the  corporators  and       5  De  Gex  &  S.  402 ;  L.  R.  5  Ch.  444 ; 
should  be  disposed  of  accordingly  and      L.  R.  7  Ch.  161 ;  Williams  v.  Savage 
not    by    way    of    favoritism.      Field      Man.  Co.,  3  Md.  Ch.  418. 
Corp.,  §  124 ;  Ree.se  v.  Bank  of  Mont- 
gomery Co.,  31  Penn.  St.  78. 

741 


§  487  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

strict  in  most  parts  of  this  country  as  in  England ;  and  not  only 
may  a  corporation  lawfully  take  its  own  stock  in  pledge  or  as  pay- 
ment of  some  debt  from  necessity,  but  in  the  absence  of  special 
restrictions  it  is  often  permitted  to  purchase  and  own  such  shares 
to  much  the  same  effect  as  an  individual  stranger,  holding  them 
unextinguished  and  reissuing  them ;  even  by  issuing  new  stock 
on  a  new  subscription,  or  by  dividing  the  shares  pro  rata  among 
the  remaining  shareholders.^  Even  where  a  corporation  may  have 
been  guilty  of  a  breach  of  trust  by  thus  speculating  with  the  cor- 
porate property,  a  stockholder  interested  may  affirm  by  his  own 
action  the  misapplication  of  funds,  so  as  to  be  debarred  of  a 
remedy.'* 

§  487.     Risks  of  Investment  in  Stock;    Whether  Trust  Funds 
May  be  Thus  Invested. 

There  are  two  noteworthy  risks  incurred  by  those  who  invest 
in  stock:  one,  that  of  the  corporate  business  proving  in  practice 
unprofitable;   the  othf^r,  that  of  bad  management  of  the  corporate 

3.  Coleman  v.  Columbia  Oil  Co.,  51  Fed.  721,  142  C.  C.  A.  245  (appro- 
Penn.  St.  74,  and  eases  cited;  Abb.  priation  of  stock  by  an  unlawful 
Dig.  737  ;  City  Bank  V.  Bruce,  17  N.  Y.  assessment);  Wright  Bros.  v.  Mer- 
507;  Robison  v.  Beall,  26  Ga.  17;  Vail  chants'  Co.,  104  Miss.  507,  61  So.  550 
V.  Hamilton,  85  N.  Y.  453;  New  Eng-  (corporation  must  exist  de  jure)  ; 
land  Trust  Co.  v.  Abbott,  162  Mass.  Boyd  v.  New  York  R.  Co.,  220  Fed. 
148;  Taylor,  §§  134-136.  See  siipra,  174  (N.  Y.  D.  C.  1915 )  (operating 
§  483.  A  corporation  having  stock  under  a  lease  of  another  company)  ; 
not  taken  may  issue  certificates  there-  Bridgeport  Co.  v.  Osborne,  222  Mass, 
for,  taking  in  payment  its  own  bonds.  517,  111  N.  E.  364  (stock  in  exchange 
Lohman  v.  N.  Y.  R.,  2  Sandf.  39.  for  patent  rights)  ;    Harrison  v.   Ar- 

4.  Coleman  v.  Columbia  Oil  Co.,  51  mour,  169  Cal.  787,  147  Pac.  1166; 
Penn.  St.  74;  Taylor,  §  541.  A  be-  Schmidt  v.  Marconi  Co.,  86  N.  J.  L. 
quest  to  a  corporation  of  its  own  183,  90  Atl.  1017  (offer  of  increased 
stock  has  been  sustained  as  valid.  capital  stock  to  stockholders)  ;  Vine- 
Rivanna  Nav.  Co,  v.  Dawson,  3  Gratt.  land  Co.  v.  Chandler,  80  N.  J.  Eq. 
19.  437,  85  Atl.  213  (stock  issued  in  pay- 
See  Granite  Brick  Co.  v.  Titus,  226  ment    for    work    performed)  ;    Macon 

Fed.  557,  141  C.  C.  A.  313  (issue  of  Co.  v.  Richter,  143  Ga.  397,  85  S.  E. 
corporate  stock  as  collateral  secur-  112  (unanimous  consent  of  stockhold- 
ity)  ;    Wilson    v.    Colorado    Co.,    227      ers  to  excessive  increase  of  stock). 

742 


CHAP.  IX.]  SHARES    OF    STOCK.  §    487 

concerns.  To  invest  in  this  manner  is  to  put  money  into  trade; 
and  into  a  trade  which,  however  safe  in  itself,  may,  through  the 
want  of  judgment,  skill,  and  fidelity  in  those  having  the  manage- 
ment of  affairs,  prove  disastrous ;  for  a  stock  corporation's  direct- 
ors are  usually  difficult  to  control  and  difficult  to  hold  accountable. 
Hence,  investments  in  stock  are  hardly  to  be  deemed  equally  safe 
with  investments  in  the  securities  of  some  well-established  govern- 
ment or  in  the  notes  of  individuals  secured  by  a  first-class  mort- 
gage of  real  estate ;  for  which  reason  trustees,  by  the  old  English 
rule,  were  not  permitted  to  invest  their  funds  in  any  such  manner; 
and  such  is  the  positive  rule  in  New  York  and  Pennsylvania.^ 

But  a  more  flexible  rule  applies  in  most  parts  of  this  country; 
and  in  Massachusetts  a  trustee  is  justified  in  investing  in  bank 
stocks,  or  in  the  shares  of  manufacturing  and  insurance  corpora- 
tions, or  in  the  notes  of  individuals  secured  by  such  stocks  and 
shares  as  collateral  security."^  With  the  growth  of  capital  seeking 
investment  on  the  one  hand,  and  on  the  other  the  rapid  increase 
of  joint-stock  corporations  organized  for  a  variety  of  purposes,  the 
American  tendency  must  constantly  be  towards  a  flexible  rule. 
We  have  a  number  of  public  funds  offered  in  the  market  at  this 
day  which  are  far  less  secure  than  the  best  species  of  corporation 
stock;  and  both  kinds  of  investments  are  frequently  offered  at 
speculative  rates,  and  sold  in  a  similar  manner.  The  real  safety 
promised  in  any  investment,  in  short,  must  depend  greatly  upon 
the  facts  concerning  the  particular  stock  or  security.^ 

5.  King  V.  Talbot,  40  N.  Y.  76;  do  not  invest  an  undue  fraction  of 
Howe  V.  Dartmouth,  7  Ves.  150;  the  estate  in  any  one  security.  Ap- 
Worrell's  Appeal,  9  Penn.  St.  508;  peal  of  Davis,  183  Mass.  499,  67  N.  E. 
Perry  Trusts,  §§  455,  456.  604. 

6.  Harvard  College  v.  Amory,  9  7.  Such  seems  to  be  the  principle 
Pick.  446;  Lovell  v.  Minot,  20  Pick.  more  latterly  regarded  in  England; 
116.  Trustees  in  Massachusetts  are  for  while  in  that  country  trustees 
held  only  to  a  sound  discretion  and  were  formerly  obliged  almost  invari- 
may  invest  in  stocks  of  a  conserva-  ably  to  invest  in  the  public  funds, 
tive  character.  Green  v.  Crapo,  181  courts  of  chancery  have  been  author- 
Mass.  55,  62  N.  E.  956;  provided  they  ized  by  more  recent  acts  of  Parlia- 
aet  in  good  faith  in  the  matter  and  ment  to  order  investments  in  various 

743 


§488  THE    LAW    OF    PERSONAL    PROPERTY.  [pART  III. 

§  488.     Methods  by  Which  One  Becomes  a  Stockholder;    Sub- 
scription and  Transfer. 

Secondly,  we  inquire  how  one  becomes  a  stockholder.  There 
are  two  methods  open :  one  by  being  an  original  subscriber  to  the 
stock ;  the  other  by  coming  in  afterwards  under  what  is  called  the 
transfer  of  another's  stock.  In  some  kinds  of  corporations,  mem- 
bership is  a  sort  of  exclusive  privilege.  Such  is  peculiarly  the 
case  with  sociefties  incorporated  for  the  promotion  of  some  literary, 
scientific,  benevolent,  or  social  object;  their  charters  and  by-laws 
usually  providing  some  special  mode  for  filling  vacancies  by  elec- 
tion, in  order  that  personal  fitness  may  be  made  a  test  of  member- 
ship. But  as  to  joint-stock  corporations  and  companies  generally 
which  are  organized  for  the  pursuit  of  gain  in  some  line  of  busi- 
ness, membership  in  the  first  instance  is  constituted  by  subscrip- 
tions towards  the  original  capital  stock,  and  afterwards  by  the 
transfer  of  shares,  without  any  election  on  the  part  of  the  corpora- 
tion itself.^  To  be  sure,  transfer  books  are  kept  by  corporations 
of  this  character,  whose  records  determine  to  a  considerable  extent 
who  shall  rightfully  vote  at  the  meetings,  as  in  the  case  of  an 
election  of  directors ;  yet  one  who  is  entitled  to  stock  may  compel 
the  corporation  to  give  him  a  proper  certificate  where  it  is  refused.^ 
And,  in  general,  what  distinguishes  a  joint-stock  or  business  cor- 
poration from  all  others  is  that  the  title  of  one's  admission  into 
the  concern  is  either  by  subscribing  to  the  undertaking  or  taking 
the  place  of  an  original  subscriber.  For  in  such  a  corporation, 
each  stockholder,  whether  by  purchase  or  original  subscription,  has 
the  right,  unless  restrained  by  the  charter  or  articles  of  association, 

other  securities;    so  that,  at  the  pres-  tion,    1    Whart.    461;    Ang.    &    Ames, 

ent   day,    cash    under   the   control    of  8th  ed.,  §  114.     Some  business  corpo- 

chancery    may,    in    that    country,    be  rations  are  so  organized  as  to  restrict 

invested  in  bank  stock  and  East  India  changes  of  membership  by  reserving, 

stock,   as  well  as   upon  mortgage   se-  as  in  case  of  a  member's  death,  the 

curity.     See  Acts  22  &  23  Vict.,  c.  35;  right  of  the  company  to  buy   in  the 

23   &   24  Vict.,   c.   38;    Perry  Trusts,  stock  at  a  valuation. 

§  455,  and  cases  cited.  9.  Ang.  &  Ames,  §§  113,  565;  Agri- 

8.  Overseers  v.  Sears.  22  Pick.  122 ;  cultural  Bank  v.  Burr,  24  Maine,  256. 
In   re   Philadelphia   Savings   Institu- 

744 


CHAP.  IX.]  SHAKES    OF    STOCK.  §    489 

to  sell  and  transfer  his  shares,  and  by  doing  so  to  introduce  others 
into  the  concern  in  his  stead.  ^ 

§  489.     Subscription  for  Shares. 

A  subscription  for  shares  in  the  stock  of  a  joint-stock  corpora- 
tion is  a  contract,  and  follows  the  ordinary  rules  which  relate  to  a 
contract.  There  is  a  consideration  for  every  such  subscription, 
which  the  law  will  infer  from  the  subscription  itself  and  the  rights 
and  privileges  of  membership  thereby  conferred  upon  the  sub- 
scriber; and  this  consideration  is  usually  sufficient  to  enable  the 
corporation  to  sue  for  the  amount  of  the  subscription."  It  is  true 
that  there  may  have  been  terms  and  conditions  set  forth  in  the 
subscription  paper  sufficient  to  negative  the  presumption  of  a 
promise  to  pay  on  the  subscriber's  part;  but  subscription  contracts 
are  not  very  strictly  construed  in  matters  of  form,  an  intent  to 
subscribe  being  capable  of  quite  simple  manifestation;  and  it  is 
only  necessary,  as  a  rule,  that  the  writing  should  indicate  the  sub- 
scriber's intention  to  become  a  stockholder  and  the  number  of 
shares  to  be  taken  by  him ;  for  the  promise  to  pay  for  the  stock  is 
implied  under  these  circumstances,  and  no  express  promise  is 
necessary.^ 

1.  Morgan  v.  Struthers,  131  U.  S.  of  his  agreement.  Small  v.  Herkimer 
246.  Manuf.  Co.,  2  Comst.  330;   Abb.  Dig. 

2.  Ang.  &  Ames,  Stli  ed.,  §§  517-519,  Corp.  788.  A  subscription  to  the  full 
and  cases  cited ;  Wordsworth's  Joint-  amount  named  as  the  capital  stock  of 
Stock  Cos.,  317;  Birmingham  R.  R.  the  corporation  is  not  a  condition 
Co.  V.  White,  1  Q.  B.  282;  Small  v.  precedent  to  the  right  of  recovery 
Herkimer  Manuf.  Co.,  2  Comst.  330 ;  from  any  subscriber.  Abb.  Dig.  Corp. 
Abb.  Dig.  783,  801.  787;   Hoagland  v.  Cincinnati,  &c.,  R. 

3.  lb.;  Kennebec,  &c.,  R.  R.  Co.  v.  R.  Co.,  18  Ind.  452;  Schenectady,  &c., 
Jarvis,  34  Maine,  360.  See  Phillips  Plank  Road  Co.  v.  Thatcher,  1  Kern. 
Limerick  Academy  v.  Davis,  11  Mass.  102.  But  where  a  given  amount  is 
113.  If  subscription  papers  refer  to  required  to  be  subscribed  before  the 
the  charter  of  the  company,  the  sub-  corporation  can  go  into  operation, 
scription  should  be  construed  as  if  all  there  is  no  right  to  recover  subscrip- 
the  statute  provisions  affecting  the  tious  before  that  amount  is  fully  sub- 
subscriber's  liability  or  his  title  to  the  scribed.  Fry  v.  Lexington,  Ac,  R.  R. 
stock  which  he   purdiaseS  were  part  Co.,  2  Met.  (Ky.)  314. 

745 


§  490  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

It  appears  to  be  a  rule  that  if  one  who  subscribes  for  stock  and 
receives  it  has  not  paid  up  his  subscription  in  full,  he  owes  for  the 
balance,  but  is,  notwithstanding,  a  stockholder ;  that  is  to  say,  that 
the  mere  failure  on  his  part  to  settle  what  he  owes  will  not  detract 
from  his  legal  rights  and  liabilities.'*  The  subscription  is  a  good 
consideration  for  a  note  given  in  payment  for  the  stock,  and  for 
a  mortgage  given  to  secure  that  note  likewise ;  and  in  the  United 
States  this  principle  is  quite  liberally  extended.  For  it  is  held 
in  a  number  of  cases  that  a  corporation  may  enter  into  transactions 
of  this  sort,  and  may  even  give  its  stock  in  payment  of  land,  labor, 
or  materials,  where  there  is  no  express  prohibition  to  the  contrary 
affecting  its  charter.^  And  it  is  further  held  that  if  the  subscriber 
to  stock  whose  subscription  was  upon  the  understanding  that  a 
certain  amount  should  be  paid  in  materials  refuses  so  to  pay,  his 
subscription  may  be  demanded  in  money.^  ISTot  uncommonly  we 
find  subscription  papers  drawn  up  so  as  to  make  the  capital  sub- 
scribed for  payable  in  instalments.  This  is  quite  convenient  to  all 
parties  where  the  proposed  business  may  be  conducted  profitably 
on  a  minimum  cash  capital  and  extended  gradually  afterwards; 
as,  for  instance,  where  a  railroad  is  being  built  and  subscriptions 
are  to  be  paid  in  from  time  to  time  as  the  work  progresses.^ 

§  490.     The  Same  Subject. 

The  later  decisions  exhibit  the  frequent  spectacle  of  a  man,  who 
has  been  drawn  into  some  projected  scheme  of  profit,  repenting 
afterwards,  and  seeking  to  disentangle  himself  from  the  conse- 
quences.    He  joins  others  in  going  before  the  legislature  to  pro- 

4.  Curry  V.  Scott,  54  Penn.  St.  270;  6.  Ang.  &  Ames,  ib.;  Hay^'ood  P. 
Sehaeffer  v.  Missouri  Ins.  Co.,  46  Mo.      E.  Co.  v.  Bryan,  6  Jones,  82. 

248.  7.  Ang.  &  Ames,   §   517;   Abb.  Dig. 

5.  See  Carr  v.  Le  Fevre,  27  Penn.  789.  An  engagement  being  made  by  a 
St.  413 ;  Cincinnati  R.  R.  Co.  v.  Clark-  subscriber  to  pay  at  stipulated  peri- 
son,  7  Ind.  595;  Clark  v.  Farrington,  ods,  the  Statute  of  Limitations  will 
11  Wis.  306;  Vermont  Central  R.  R.  begin  to  run  against  each  instalment 
Co.  V.  Clayes,  21  Vt.  30 ;  Ang.  &  as  fast  as  it  becomes  due.  Corning  v. 
Ames,  8th  ed.,  §  517.  McCullough,  1  Comst.  47. 

746 


CHAP.  IX.]  SHAKES    OF    STOCK.  §    490 

cure  an  act  of  incorporation  for  the  proposed  company,  or  else, 
finding  that  an  act  has  already  been-  obtained,  consents  to  become 
a  party  to  the  new  enterprise.  In  either  case,  he  has  signed  a 
subscription  paper;  but  when  it  comes  to  a  demand  of  payment, 
he  is  found  reluctant  to  take  the  stock,  and  ready  to  assign  a  num- 
ber of  reasons  why  he  should  not  be  held  to  his  engagement ;  the 
truth  being  that  he  has  been  disappointed  in  some  way,  and  wants 
to  get  out  of  the  speculation.  Our  further  examination  as  to  the 
validity  of  subscriptions  for  stock  will  lead  us,  then,  to  consider 
how  far  the  binding  force  of  a  subscription  contract  may  be  affected 
by  the  circumstance  that  it  was  upon  conditions  which  have  not 
been  fulfilled,  or  that  it  presupposed  some  state  of  things  which 
was  not  realized,  or  that  the  subscriber  has  been  fraudulently 
imposed  upon,  or  that  the  subscription  was  not  in  fact  his  own, 
but  that  of  some  third  person,  who  had  no  authority  to  bind  him. 

The  general  law  of  contracts  must  be  our  main  guide  in  form- 
ing conclusions  under  any  of  these  circumstances ;  the  rule  being 
still  that  a  subscription  is  a  contract,  and  a  contract  upon  consid- 
eration whose  mutual  sufficiency  is  essential  f    and  further  that 

8.  As  to  conditions  precedent  which  lent  indorsement,  see  Abb.  Dig.  795 ; 
have  failed,  see  Abb.  Dig.  793,  and  Atkin.son  v.  Pocock,  12  Jur.  60;  Ang. 
cases  cited;  Penobscot,  &c.,  R.  R.  Co.  &  Ames,  §  531;  Troy  R.  R.  Co.  v. 
V.  Dunn,  39  Me.  587;  Burlington  R.  R.  Newton,  8  Gray,  596;  Central  PI.  R. 
Co.  V.  Boestler,  15  Iowa,  555.  As  to  Co.  v.  Clemens,  16  Mo.  359;  Pitts- 
alteration  of  circumstances,  see  Mc-  burgh  R.  R.  Co.  v.  Graham,  2  Grant 
Millan  v.  Maysville,  &e.,  R.  R.  Co.,  15  Cas.  259;  Downie  v.  White,  12  Wis. 
B.  Monr.  218;  McCully  v.  Pittsburgh  176;  White  Mt.  R.  v.  Eastman,  34 
R.  R.  Co.,  32  Penn.  St.  25;  Ang.  &  N.  H.  124;  Jennings  v.  Broughton, 
Ames,  §§  536-544;  Union  Locks  Co.  19  E.  L.  &  Eq.  420;  Abb.  Dig.  796; 
V.  Towne,  1  N.  H.  44;  Ticonic  Water  Ang.  &  Ames,  8th  ed.,  §  531;  Conncc- 
Power  Co.  v.  Lang,  63  Me.  480.  See,  ticut,  &c.,  R.  R.  Co.  v.  Bailey,  24  Vt. 
also,  Terre  Haute  R.  R.  Co.  v.  Earp,  465.  As  to  agency,  see  Ang.  &  Ames, 
21  111.  29'1;  City  Hotel  v.  Dickinson,  §  517;  Mississippi  R.  R.  Co.  v.  Harris, 
6  Gray,  586;  Milwaukee  R.  R.  Co.  v.  36  Miss.  17;  Great  Western  Co.  v. 
Field,  12  Wis.  340;  South  Bay  Co.  Loewenthal,  154  111.  261.  A  subscrip- 
V.  Gray,  30  Me.  547;  Cork  R.  R.  Co.  tion  once  fully  received  cannot  be 
V.  Paterson,  IS  C.  B.  414;  Abb.  Dig.  cancelled.  Walker  v.  Mobile  R.  R. 
808,  811;  Poughkeepsie  PI.  R.  Co.  v.  Co.,  34  Miss.  245;  Lowe  v.  R.  R.  Co., 
Griffin,  24  N.  Y.  156.     As  to  fraudu-  1    Head,    65?;    Abb.    Dig.    Corp.    795. 

747 


§  491  THE  LAW  OF  PERSONAL  PEOPERTY.       [pART  III. 

contracts  of  this  character  are  controlled  and  explained  b_y  the 
charter  or  enabling  act  of  incorporation,  together  with  articles 
and  by-laws  made  in  conformity  thereto. 

§  491.     The  Same  Subject. 

As  a  general  rule,  the  corporation  which  seeks  to  enforce  a  sub- 
scription must  show  that  the  terms  of  its  charter  have  been  care- 
fully complied  with  in  the  matter  of  organization;  but  in  some 
cases  compliance  will  be  presumed,  and  in  others  it  may  be  waived.^ 
And  as  concerns  the  subscriber  who  claims  that  the  subscription  in 
his  name  does  not  bind  him,  it  is  one  thing  to  defen-d  against  the 
corporation,  and  another  to  avoid  the  demands  of  persons  who  are 
creditors  of  the  corporation;  while,  furthermore,  any  defence  on 
the  ground  of  conditions  unfulfilled,  or  material  alterations  in  the 
charter,  or  fraudulent  misrepresentation,  may  fail  altogether  where 
the  subscriber  by  his  acts  and  conduct  shows  that  he  w^as  a  party 
to  the  fraud,  or  that  he  meant  to  waive  his  right  to  annul  the  sub- 
scription.^ On  the  other  hand,  one's  agreement  to  take  shares 
ought  not  to  be  divested  by  any  pretended  assignment  or  transfer 
on  his  part  of  his  interest,  to  an  irresponsible  person ;  ^  nor  ought 
he,  as  to  bond  fide  third  persons  in  interest,  to  be  permitted  to  set 
up  any  secret  understanding  with  the  promoters  of  the  scheme 
inconsistent  with  his  apparent  undertaking  as  a  subscriber.^^ 

Not   even   by  the  directors.     Bedford  2a.  White    Mountains    R.    v.    East- 

R.  R.  Co.  V.  Bowser,  48  Penn.  St.  29.  man,  34  N.  H.  134;  Taylor,  §  105. 

As    to    the    contract    of    membership,  See  Harvey  v.  Weitzenkorn,  232  Pa. 

see,  generally,  Morawetz,  c.  iv. ;  Field  447,    81    Atl.    447     (waiver,    cancella- 

Corp.,  §§  77-92;   Taylor  Corp.,  §§  91-  tion,  etc.,  by  mutual  consent)  ;  Clarks- 

112;  143  N.  Y.  537.  burg  v.  Davis,  86  S.  E.  929    (W.  Va. 

9.  Maltby  v.  Northwestern,  &c.,  R.  1916);   Roe  v.  Gradell   Co.,  85  N.  J. 

R.  Co.,  16  Md.  422 ;  Abb.  Dig.  789.  E.     146,     96    Atl.    65     (voidable    for 

1.  See  Ogilvie  v.  Knox  Ins.  Co.,  22  fraud)  ;  National  Bank  v.  Amoss,  144 
How.  380;  Ang.  &  Ames,  §  531;  De-  Ga.  425,  87  S.  E.  406  (mutuality  of 
posit  Ass.  Co.  V.  Ayscough,  6  Ell.  &  subscriptions);  Windsor  Co.  v.  Schenk, 
B.  761.  76   W.   Va.    1,   84    S.   E.   911    (condi- 

2.  See  Taylor,  §  101 ;  Graff  v.  Pitts-  tional  subscription )  ;  Starkweather  v. 
•burgh  R.,  31  Penn.  St.  489;  Williams,  Gleason.  221  Mass.  552,  109  N.  E. 
Ee,  1  Ch.  D.  546.  635;    Odden   v.    Jamison,    129    Minn. 

748 


CHAP.  IX.]  SHAKES    OF    STOCK.  §    492 

Where  a  stockholder  has  never  complied  with  the  law  requiring 
the  payment  of  a  certain  percentage  of  his  subscription  to  the  cor- 
poration, its  trustee  in  bankruptcy  can  enforce  this  liability 
against  him.^ 

§  492.     Promoters;    Preliminary  Subscribers,  etc. 

Persons  often  subscribe  before  the  incorporation  of  a  joint-stock 
corporation;  in  which  case  a  mutuality  is  raised  which  renders 
the  subscriber  liable  to  the  company  after  its  charter  has  been 
obtained  and  the  organization  is  completed."*  And  it  has  been 
held  that  a  subscriber  in  a  proposed  corporate  undertaking  cannot 
withdraw  during  the  progress  of  a  bill  in  the  legislature,  so  as  to 
exonerate  himself  from  liability.^  But  in  this  latter  respect  the 
English  rule  differs  somewhat  from  that  in  this  country;  for 
*'  promoters,"  as  they  are  called,  of  certain  enterprises,  organize 
into  a  preliminary  association,  in  England,  before  their  measure 
has  gone  through  Parliament ;  while  in  most  parts  of  the  United 
States  no  provision  is  made  by  law  for  preliminary  associations, 
and  where  application  to  the  legislature  is  required  at  all,  it  is 
usually  made  by  individuals  who  have  neither  organized  nor  called 
for  general  subscription ;  the  charter  or  act  of  special  incorporation, 
itself  or  some  general  law  prescribing  the  method  of  subscribing 
and  organizing.^     The  promoter  of  a  corporation  is  in  a  fiduciary 

489,  152  N.  W.   871    (timely  enforce-  3.  Jeffery  v.  Selwyn,  220  N.  Y.  77, 

ment  of  condition)  ;  Goodwin  v.  Dick,  115  N.  E.  275. 

220  Mass.  556,  107  N.  E.  925   (fraud-  4.  Ang.   &  Ames,    8th   ed.,    §§    523- 

ulent      inducement)  ;      Dickin.son      v.  525;  Lane  v.  Brainerd,  30  Conn.  577; 

Kline,   96  Neb.   435,   148  N.   W.   141;  Abb.  Dig.  801. 

Holcombe  v.  Trenton  Co.,  82  N.  J.  E.  5.  lb.;  Selma,  &c.,  R.  R.  Co.  v.  Tip- 
364,  91  Atl.  1069  (acceptance  vali-  ton,  5  Ala.  786;  2  Price,  93. 
dates)  ;  Campbell  v.  Raven,  176  Mich.  6.  See  1  Redf.  Railw.  3d  ed.  5  et 
208,  139  Pac.  755;  Johns  v.  Clother,  seq.;  Burke  v.  Lechmere,  L.  R.  6  Q. 
78  Wash.  602,  139  Pac.  755  (mutual  B.  297.  The  binding  force  of  prelim- 
subscription)  ;  Trent  Co.  v.  Wheel-  inary  papers  is  diminished  by  statutes 
Wright,  118  Md.  249,  84  Atl.  543  (il-  in  some  States,  as  in  New  York.  See 
legality)  ;  HobSon  v.  Marsh,  69  Wash.  Lake  Ontario  R.  R.  Co.  v.  Mason,  16 
323,  124  Pac.  912.  N.  Y.  451. 

749 


§    493  THE    LAW    OF    PERSONAL    PROPERTY.  [pART  III. 

relation  to  the  company  so  long  as  he  owns  or  controls  all  its 
outstanding  stock.^ 

§  493.     Subscribers  to  New  Stock;   New  Shareholders,  etc. 

A  subscription  to  an  increase  of  stock  not  authorized  by  the 
charter  is  void.^  But  it  is  no  uncommon  thing  for  a  company  to 
issue  new  stock,  while  keeping  within  the  capital  sum  authorized 
by  the  charter,  and  to  give  existing  stockholders  a  privilege  to 
purchase  in  preference  to  the  public  at  large.  There  are  cases 
which  treat  this  privilege  of  existing  stockholders  as  an  exclusive 
right,  though  its  true  extent  is  to  be  determined  greatly  by  the 
language  of  each  charter  in  question,  or  of  general  statutes  appli- 
cable; and  certainly  an  original  subscriber  is  not  compelled  to 
take  the  new  stock,  but  he  may  waive  or  sell  out  his  right.^  Nor, 
again,  can  the  corporate  power  of  increasing  the  stock  be  so  exer- 
cised as  to  cause  a  discrimination  in  favor  of  any  set  of  old  stock- 
holders ;  but  the  right  of  each  to  subscribe  for  the  new  stock  should 
be  pro  rata  and  in  proportion  to  the  shares  one  already  holds  in 
the  old.i 

A  third  person  may  become  a  shareholder  in  a  corporation 
already  in  existence,  by  an  increase  of  the  number  of  its  shares ; 
in  which  case  the  relation  assumed  is  that  of  adding  a  new  party 
to  the  original  contract.^ 

7.  Old  Dominion  Chopper  Mining  &  1  Man.  &  Gr.  448;  Abb.  Dig.  Corp. 
Smelting  Co.  v.  Bigelow,  203  Mass.  741;  Rutland  R.  R.  Co.  v.  Thrall,  35 
159,  89  N.  E.  193.     See  article  on  the      Vt.  546. 

liability  of  promoters  in  30  Harvard  1.  lb. ;    Taylor,    §    569.      The    same 

Law  Review,  39".     See  Ehrich  on  Pro-  pro  rata  doctrine  applies  in  a  decrease 

meters.  of  capital  stock.     Strong  v.  Brooklyn 

8.  McCord  v.  Ohio  R.  R.  Co.,  13  R.  R.  Co.,  93  N.  Y.  426;  Taylor,  §  570. 
Ind.  220.  And  see  supra,  §  485.  2.  Morawetz,  §  262.  The  new  sub- 
Rights  and  certificates  on  stock  wrong-  scriber  is  not  properly  a  shareholder 
fully  issued.  Book  28,  N.  Y.  Rpts.,  until,  by  issue  of  a  certificate,  or 
Bender  ed.,  note,  p.  338.  otherwise,  the  company  has  recognized 

9.  Gray  v.  Portland  Bank,  3  Mass.  him.  lb.;  Clark  v.  Continental  Ins. 
364;  Ang.  &  Ames,  §§  554,  555;  Co.,  57  Ind.  138;  St.  Paul  R.  v.  Rob- 
Southampton   Dock   Co.    v.    Richards,  bins,  23  Minn.  440. 

750 


CHAP.  IX.]  SHAKES    OF    STOCK.  §    495 

§  494.  The  Contract  of  Membership,  and  Subscription  in  General. 

The  contract  by  which  the  stockholders  of  a  corporation  are 
bound  together  is,  in  fact,  a  purely  statutory  contract;  for  under 
the  common  law  the  right  to  form  a  corporation  is  a  special  priv- 
ilege which  only  legislation  can  confer,  and  otherwise  there  is  a 
simple  voluntary  association.^  Special  charters  and  general  acts 
of  incorporation  usually  express  specifically  how  corporations  shall 
be  formed  and  how  original  subscriptions  shall  be  received.'*  The 
subscribers  do  not  become  stockholders,  strictly  speaking,  until 
the  number  of  shares  required  by  law  have  been  taken ;  ^  neverthe- 
less the  subscription  itself  is  a  contract  upon  consideration,  and 
the  subscription  binds  from  the  time  it  is  made.^  A  subscription 
for  shares  will  be  held  valid  if  made  in  substantial  conformity 
with  the  requirements  of  the  charter  or  act  of  incorporation.^ 

Unpaid  subscriptions  to  the  stock  of  a  corporation  constitute  a 
trust  fund  for  the  benefit  of  creditors ;  ^  and  where  shares  are 
voted  to  a  person  as  a  bonus  and  accepted  by  him,  he  is  properly 
subject  to  the  liabilities  of  a  shareholder  who  has  taken  stock  but 
has  not  paid  for  it.^ 

§  495.     Transfer  of  Stock;   General  Mode  Considered. 

We  are  now  brought  to  the  more  common  method  of  constituting 
a  person  a  shareholder  in  a  joint-stock  corporation;  namely,  by 
means  of  a  transfer  of  its  stock.  Any  original  shareholder  may 
transfer  his  shares  to  another  person,  and  that  person  to  a  third, 

3.  Morawetz  Corp.,  §§  4,  257.  8.  Fogg  v.  Blair,  139^  U.  S.  118. 

4.  Morawetz,  §  258;  Buffalo  R.  v.  9.  Washburn  v.  Green,  133  U.  S.  30. 
Dudley,  14  N.  Y.  337.  See  Eichclborger  v.  Mann,  105  Va. 

5.  New  Hampshire  Central  R.  v.  774,  80  S.  E.  595  (promoter's  agree- 
Johnson,  30  N.  H.  390;  Franklin  Fire  ment)  ;  Tooker  v.  Sugar  Co.,  80  N.  J. 
Ins.   Co.   V.  Hart,   31   Md.   60;   Mora-  Eq.  305,  84  Atl.  10. 

wetz,  §  259.  Where  stock  was  legally  issued,  the 

6.  Lake  Ontario  R.  v.  Mason,  16  corporation's  failure  to  give  certifi- 
N.  Y.  451;  Morawetz,  §  260.  cates  docs  not  impair  a  stockholder's 

7.  Ashtabula  R.  v.  Smith,  15  Ohio  right.  Auld  v.  Caunt,  216  Mass.  381, 
St.   328;   Morawetz,  §   269.     And  see,  103  N.  E.  933. 

at  length,  Morawetz  Corp.,  c.  iv. 

751 


§    495  THE    LAW    OF    PEESONAL    PROPEllTY.  [pART  III. 

and  so  on;  and  each  new  holder  of  the  shares,  who  holds  them 
under  a  perfected  transfer,  takes  by  substitution  the  rights  and 
liabilities  of  the  shareholder  preceding  him,  or  of  the  original  sub- 
scriber. Shares  of  stock  are  transferable  on  the  general  principles 
which  have  been  elsewhere  considered,  being  capable  of  assignment 
like  other  modem  species  of  incorporeal  property,  though  by 
methods  somewhat  peculiar ;  and  one  has  also  to  consider  that  the 
mode  of  transfer  may  be  affected  by  express  provisions  contained 
in  the  charter.^  Formalities  are  often  imposed  by  the  by-laws  of 
a  corporation  in  this  respect,  which,  if  reasonable,  are  usually 
observed ;  since  all  will  admit  that  it  is  a  great  public  convenience 
for  a  corporation  to  have  books  regularly  kept,  which  may  show 
the  names  and  interests  of  its  members  and  stockholders,  and  to 
use  certificates  of  stock  which  can  be  recognized  in  the  market  as 
genuine;  yet  a  corporation  cannot  impose  unreasonable  restraints 
upon  the  right  which  each  stockholder  has  of  disposing  of  his  own 
shares  at  pleasure,  and  any  unusual  and  onerous  restriction  of  this 
character  will  be  deemed  void.^  Formalities  expressly  prescribed, 
however,  by  charter  or  general  enactment,  must  be  respected ;  ^ 
but,  as  we  have  seen,  the  fundamental  right  of  any  stockholder  to 
transfer  his  shares  and  let  in  others  as  members  in  his  place  is  a 
very  liberal  one.'* 

1.  Supra,  §§  72-82 ;  Morawetz,  turb  a  title  acquired  fairly  in  some 
§  320;  1  Redf.  Railw.  3d  ed.  Ill;  other  way,  unless,  indeed,  it  is  evi- 
Ang.  &  Ames,  §  565 ;  Abb.  Dig.  Corp.  dent  that  the  charter  contemplated 
749.  Stockholder's  relation  contrac-  this  as  the  only  mode  of  transfer, 
tual,  transfers  of  stock.  Book  27,  And  if  the  express  provisions  con- 
N.  Y.  Rpts.,  Bender  ed.,  note,  p.  468.  cerning  a  transfer   exist  only  in   the 

2.  lb. ;  Brightwell  v.  Mallory,  10  by-laws  of  the  corporation,  still  less 
Yerg.  196 ;  State  v.  Franklin  Bank,  reason  can  there  be  for  giving  them 
10  Ohio,  91;  Morawetz,  §  321;  Farm-  any  exclusive  force.  See  1  Redf. 
ers'  Bank  v.   Wasson,   48   Iowa,   339;  Railw.   112,  113. 

Stebbins  v.  Phoenix  Ins.  Co.,  3  Paige,  3.  Northrop    v.    Newton    Turnpike 

350.  Co.,    3    Conn.    544 ;    Union    Bank    v. 

Even  where  the  charter  provides  a  Laird,     2     Wheat.     390;      Morawetz, 

mode  of  transfer,  the  disposition  of  §  323. 

the  courts  is  to  regard  the  provision  4.  See  §  488. 
as  merely  directory,  so  as  not  to  dis- 

752 


CHAP.  IX.]  SHAKES    OF    STOCK.  §    497 

§  496.     The  Same  Subject. 

Certificates  of  stock  are  usually  issued  in  the  first  place  by  the 
corporation,  and  have  a  blank  form  of  assignment,  accompanied  by 
a  power  of  attorney,  on  the  back  of  each  certificate;  the  selling 
party  hands  these  certificates  over  to  the  purchaser,  filling  in  and 
signing  this  blank  form ;  and  the  purchaser  presents  the  certificates 
at  the  ofiice  of  the  company,  which  thereupon  furnishes  him  with 
fresh  certificates,  while  the  old  ones  are  cancelled.  But  as  to  the 
essential  part  of  these  formalities  there  is  some  uncertainty,  and 
the  legislature  of  a  State  does  well  when  it  lays  down  some  explicit 
rule  on  the  subject.  For  it  is  a  general  principle  that  stock  may 
be  transferred  by  any  suitable  written  assignment ;  and  it  is  even 
held  that  a  transfer  of  stock  is  sufficient  where  the  certificate  is 
handed  over  indorsed  in  blank,  so  that  the  holder  can  fill  up  the 
back  of  the  certificate  by  writing  an  assignment  and  power  of 
attorney  over  the  signature  indorsed.^ 

But  while  the  strong  tendency  of  modern  times,  and  especially 
in  this  country,  is  towards  sustaining  the  validity  of  transfers  of 
stock  by  means  of  an  instrument  containing  blanks  to  be  filled  up, 
there  are  some  decisions  which  still  favor  the  old  English  rule, 
and  regard  with  abhorrence  the  execution  of  any  instrument  that 
leaves  important  words  to  be  afterwards  supplied.^  In  either  case 
it  seems  fair  enough  for  a  corporation  to  require  something  more 
than  an  indorsement, —  some  evidence,  in  fact,  of  authority  for 
transfer, —  before  permitting  the  transfer  to  stand  completed.^ 

§  497.     Informal  Transfer  of  Stock;    Equitable  Rights  of  Buyer. 

But  one  who  sells  stock  and  receives  consideration  for  it,  giving 

the  assignment  and  power  of  attorney  to  complete  the  transfer, 

cannot  afterwards  in  equity  set  up  any  infonnalities  of  the  instru- 

5.  See  Ang.  &  Ames,  8th  ed.,  §  564,  .231;   Day  v.  Holmes,   103  Mass.  306; 

and  cases  cited;  Kortright  v.  Buffalo  Morawetz,  §  325. 
Commercial     Bank,     20     Wend.     91;  6.  1  Redf.  Railw.  123.  124. 

Abb.  Dig.  Corp.  749 ;  Bridgeport  Bank  7.  See     Bayard    v.    Farmers',     &c., 

V.  New  York,  &c.,  R.  R.  Co.,  30  Conn.  Bank,  52  Penn.  St.  232;  §  498,  post. 

48  763 


§    498  THE    LAW    OF    PERSONAL    PROPERTY.  [pART  UL 

ment  to  defeat  the  purchaser's  title.^  And  though  the  legal  title 
to  stock  cannot  ordinarily  pass  before  a  transfer  is  made  on  the 
corporation  book, —  provisions  to  this  effect  being  now  usual  in 
corporate  charters  or  general  enactments, —  yet  an  equitable,  if 
not  a  legal  transfer  may  meanwhile  have  been  perfected  as  between 
seller  and  buyer;  for  such  provisions  concerning  a  transfer  are 
for  the  security  of  the  corporation  itself  and  boTid  fide  transferees 
and  perhaps  general  creditors.^  Indeed,  a  person  to  whom  shares 
have  been  bond  fide  transferred  will  hold  them  as  against  the  seller 
without  any  certificate ;  and  the  purchaser  of  stock  is  strongly 
protected  in  his  purchase;  the  main  question  being  that  of  his 
right  to  the  shares.^ 

One  who  is  thus  entitled  as  of  right  may  compel  the  corporation 
in  chancery  to  give  the  shares  to  him ;  ^  and  at  any  rate  equity 
will  protect  the  assignee's  interest  as  a  trust  as  against  the  as- 
signor; ^  and  where  the  corporation  wrongfully  refuses  to  permit 
a  transfer,  the  assignee  of  shares  has  been  allowed  to  sue  in 
assumpsit  for  damages.'* 

§  498.     The  Same  Subject. 

How  much  deference  is  to  be  paid  to  the  language  of  the  charter 

8.  Ang.  &  Ames,  §  564.  Gardner,  105  111.  436 ;  Black  v.  Zach- 

9.  Black  V.  Zaeharie,  3  How.  483;       arie,  3  How.  483. 

Ang.  &  Ames,   §§   353,   575;   Duke  v.  4.  lb.;    Commercial   Bank   v.   Kort- 

Cahawba  Nav.   Co.,  10  Ala.  82;  Abb.  wright,  22  Wend.  348.     See  Morawetz, 

Dig.  Corp.  750.  §   338,   where   objections  to   this   suit 

1.  Taylor,  §  511.     So,  too,  one  may  at  law  are  stated. 

be  a  subscriber  and  liable  for  his  sub-  A  seal  is  not  essential  to  the  valid- 

■scription  without  having  a  stock  cer-  ity  of  the  assignment  of  shares  in  a 

tificate.     Hawley  v.  Upton,  102  U.  S.  corporation.      Atkinson    v.    Atkinson, 

314,  316.  8  Allen,  15.     And  the  transfer  having 

2.  Morawetz,  §§  326,  337 ;  Parrott  been  made  on  the  corporation  books 
V.  Byers,  40  Cal.  614.  to  a  bond  fide  holder  for  value,  though 

3.  Ang.  &  Ames,  §  565 ;  Agricul-  the  seller's  certificate  was  not  at  the 
tural  Bank  v.  Burr,  24  Maine,  256 ;  time  surrendered,  it  would  appear 
Bank  of  Attica  v.  Manufacturers'  that  no  subsequent  sale  or  pledge  of 
Bank,  20  N.  Y.  501 ;  Presbyterian  the  seller's  old  certificate  can  impair 
Cong.  V.  Carlisle  Bank,  5  Penn.  St.  this  holder's  title.  See  Abb.  Dig. 
345;   Sargent  v.   Franklin  Ins.  Co.,  8  Corp.  750. 

Pick.    98;    Morawetz,   §    326;    Otis  v. 

754 


CHAP.  IX.]  SHARES    OF   STOCK.  §    498 

or  statutes  relative  to  the  joint-stock  corporation  we  have  already 
suggested ;  and  we  may  now  add  that  the  usual  formalities  attend- 
ing a  transfer  upon  the  corporation  books  leave  little  to  the  discre- 
tion of  its  managers;  for  the  purchaser  simply  makes  known  his 
right  to  a  transfer,  and  the  register  is  made  accordingly.  To 
require  that  the  transfer  be  made  at  the  office  personally,  or  by 
attorney,  and  with  the  assent  of  the  president,  would  be,  without 
some  explicit  authority  to  that  effect  from  the  legislature,  an 
assumption  of  power  on  the  part  of  the  corporation  to  which  no 
purchaser  need  submit.^  And  even  where  the  prescribed  formal- 
ities have  been  disregarded  by  the  corporation  for  a  long  time,  a 
transfer  may  be  sustained  as  against  it  on  the  ground  of  usage.^ 

But  as  concerns  the  extent  of  transfer  which  is  requisite  to 
exempt  the  stock  from  claims  of  the  seller's  creditors,  and  still 
more  of  subsequent  transferees,  the  rule  appears  to  be  more  strin- 
gent. It  is  true  that  in  certain  States  an  assignment  and  delivery 
of  the  certificate  is  considered  effectual,  as  against  a  subsequent 
attachment  by  a  creditor  without  notice,  even  where  the  corporate 
charter  makes  the  stock  transferable  on  the  books.'^  The  generally 
received  doctrine,  however,  in  this  country  is,  in  substance,  that 
where  a  transfer  on  the  books  is  expressly  required,  the  title  of  the 
buyer  is  not  good  as  against  subsequent  attaching  creditors  who 
received  no  notice  of  the  sale,  unless  such  transfer  has  been  made 
on  the  books  before  the  stock  is  attached  f   or,  at  least,  unless  due 

5.  Ang.  &  Ames,  §  567;   Sargent  v.      11  Penn.   St.   120;   Bargate  v.   Short- 
Franklin    Ins.    C!o.,    8    Pick.    90;    Gil-      ridge,  5  H.  L.  Cas.  297. 

bert's   Case,   L.    R.    5    Ch.    559.      But  7.  Broadway  Bank  v.   McElrath,   2 

where  the  directors  are  expressly  in-  Beasl.  24;  Hunterdon  County  Bank  v. 

vested  with  a  discretionary  power  to  Na.ssau  Bank,  17  N.  J.  Eq.  496.    And 

approve    or    disapprove    of    transfers,  see  Black  v.  Zacharie,  3  How.  483. 

they  are   presumed  to  have  exercised  8.  See  Pinkerton  v.  Manchester,  &c., 

the   discretion    fairly    and   not   capri-  R.    R.   Co.,   42   N.   H.   424;    Fisher   v. 

ciously,   and   are   not  bound   to   state  Essex  Bank,  5  Gray,  373;  Pittsburgh, 

reasons     for     disapproval.       Penny's  &c.,  R.  R.  Co.  v.  Clarke,  29  Penn.  St. 

Case,  L.  R.  8  Ch.  446.  146;    Skowhegan   Bank   v.   Cutler.   49 

6.  Chambersburg  Ins.  Co.  v.  Smith,  Maine,  315;   Murphy,  In  re,  51  Wis. 

519. 

755 


§  498  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

diligence  has  been  exercised  in  having  the  formalities  of  transfer 
completed.  The  ground  on  which  the  stock  is  most  fairly  made 
subject  to  attachment  under  such  circumstances  appears  to  be  that 
of  a  presumed  unreasonable  delay  on  the  purchaser's  part  in  per- 
fecting his  equitable  title ;  but  other  cases,  which  deal  with  some 
specific  restriction  or  requirement  contained  in  a  charter  or  statute, 
lay  down  the  rule  more  absolutely.^  There  is  considerable  differ- 
ence of  opinion  as  to  the  point  of  time  from  which  the  transfer  of 
an  equitable  title  should  be  reckoned,  as  between  such  a  purchaser 
for  value  and  attaching  creditors,  so  that  the  present  rule  with 
reference  to  stock  cannot  be  yet  considered  precise  and  positive. 
A  person  becomes  legally  entitled  to  shares  by  having  them  trans- 
ferred on  the  corporation  books  whether  the  certificate  has  yet 
issued  to  him  or  not.^ 

The  precautions  we  have  just  indicated  apply  to  the  case  of  a 
pledge  of  stock ;  ^  and  in  that  connection  it  is  perceived  that  where 
the  pledgee,  or  the  owner  of  a  certificate  of  stock  assigned  in  blank, 
has  confided  its  possession  to  another,  who  disposes  of  it  absolutely 
or  in  security  to  some  other  bond  fide  third  party  without  notice 
of  the  fraud,  such  pledgee  or  true  owner  may  in  many  instances 
be  debarred  from  recovery.-' 

9.  lb.;   Colt  V.  Ives,  31   Conn.  25;  Ins.    Co.    v.    Olmsted,    33    Conn.    476. 

Abb.  Dig.  Corp.  752 ;   1  Redf.  Railw.  See  chapter  5  on  Pledges,  supra;  also 

3d  ed.  152-154.  next  section. 

1.  Hawley  v.  Upton,  102  U.  S.  314;  As  to  pledgee's  rights  in  a  sale  of 
Taylor,  §  587.  stock  pledged,  see  Rosenblatt  v.  Wein- 

2.  See  §§  395,  396.  man,  230  Pa.  536,  79  Atl.  710;  In  re 

3.  See  Mass.  Rev.  Laws,  c.  109,  T.  A.  Mclntyre,  221  Fed.  232,  137 
§  37;  Gray  v.  Coffin,  9  Cush.  192;  Ex  C.  C.  A.  88  (surplus  from  sale).  Attd 
parte  Boulton,  1  De  Gex  &  Jones,  163;  see  Carlisle  v.  Norris,  215  N.  Y.  400, 
Wilson  V.  Little,  2  Comst.  443.  An  109  N.  E.  564  (pledge  redeemed); 
executory  contract  for  the  transfer  of  Hazelden  v.  Earner,  97  S.  C.  178,  81 
stock  as  collateral  security  for  a  debt  S.  E.  424. 

will  not  be  enforced  in  equity  to  the  The  pledgee  acquires  no  better  title 

injury  of  the  other  creditors  of  one      than  his  pledgor.     Chicago  Co.  v.  Na- 
who   has  died    insolvent.      City   Fire      tional  Co.,  173  111.  App.  573. 

756 


CHAP.  IX.] 


SHARES    OF    STOCK. 


§    499 


§  499.  Whether  a  Stock  Certificate  May  be  Deemed  Negotiable. 
This  brings  us  to  the  inquiry  whether  a  stock  certificate  may  be 
deemed  a  negotiable  instrument  in  any  sense  when  indorsed  in 
blank.  On  this  point  there  is  a  discordance  among  the  later  deci- 
sions; and  naturally  so,  for  stock  is  a  creature  of  general  or 
special  statute  and  conforms  to  the  organic  law  of  its  creation.  In 
some  States  a  general  statute  expressly  provides  that  as  against 
attaching  creditors  and  in  some  respects  the  corporation,  every 
sale,  assignment,  or  transfer  must  be  recorded,  and  a  new  certifi- 
cate issued  to  the  transferee ;  and  under  such  rules  a  certificate  of 
stock,  though  indorsed  in  blank,  cannot  be  regarded  as  a  negotiable 
instrument."^  But  there  are  other  States  where,  no  such  legislation 
operating,  or  the  statute  importing  negotiability,  the  transfer  of 
a  certificate  in  blank  is  treated  as  carrying  to  any  bond  fide  trans- 
feree for  value,  whether  by  way  of  sale  or  pledge,  the  rights  of  one 
who  holds  all  the  indicia  of  title.^     Such  a  certificate  may  thereby 


4.  Mass.  Pub.  Sts.  (1882),  c.  105, 
§  24  (since  altered  in  favor  of  nego- 
tiability) ;  Shaw  v.  Spencer,  100 
Mass.  382;  Sewall  v.  Boston  Water 
Power  Co.,  4  Allen,  277;  Mechanics' 
Bank  v.  N.  Y.  &  N.  H.  K.,  3  Kern. 
599.  And  see  Athenaeum  Life  Ass. 
Co.  V.  Pooley,  3  De  G.  &  J.  294; 
Merchants'  Bank  v.  Livingston,  74 
N.  Y.  223. 

5.  See  Pennsylvania  R.  R.'s  Appeal, 
86  Penn.  St.  80;  Cherry  v.  Frost,  7 
Lea,  1;  Morawetz,  §§  328-330,  and 
cases  cited;  McNeil  v.  Tenth  Nat. 
Bank,  46  N.  Y.  324.  It  can  hardly 
be  said  that  tlie  doctrine  of  negotiable 
or  non-negotiable  qualities  might  not 
hereafter,  as  applied  to  stock,  be 
found  modified  in  any  State  or 
country  by  the  provisions  of  some 
new  charter  or  legislative  act;  just 
as  the  question  whether  stock  was 
real  or  personal  property  has  been 
answered  differently  in  times  past  by 


reference  to  the  organic  law  of  such 
bodies.  And  in  the  case  of  Bank  v. 
Lanier,  11  Wall.  377,  it  was  said  that 
stock  certificates  declaring  the  stock- 
holder entitled  to  so  many  shares  of 
stock,  which  can  be  transferred  on  the 
books  of  the  corporation,  in  ]>erson  or 
by  attorney,  when  the  certificates  are 
surrendered,  but  not  otherwise, 
though  "  neither  in  form  or  character 
negotiable  paper,"  yet  "  approximate 
to  it  as  nearlj'  as  practicable." 

It  has  been  held  that  where  certifi- 
cates indorsed  in  blank  were  stolen 
from  the  rightful  owner  and  after- 
Avards  came  into  the  hands  of  a  bond 
fide  purchaser  without  notice,  the 
latter  obtained  a  valid  title  to  the 
shares.  Winter  v.  Belmont  Mining 
Co.,  53  Cal.  48.  But  see  Spragne  v. 
Cochew  Mfg.  Co.,  10  Blatchf.  173; 
Hannahs  v.  N.  Y.  Typewriting  Co.. 
158  App.  Div.  620,  143  N.  Y.  S.  939; 
Long  V.  Symonds,  216  Mass.  595,  104 


757 


§  500 


THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 


pass  from  hand  to  hand,  and  the  last  holder  is  entitled  to  fill  up 
the  assignment  with  his  own  name  and  have  the  transfer  com- 
pleted on  the  books  of  the  company.^  Whether  stock  is  negotiable 
in  a  sense  or  not,  the  maxim  has  sometimes  been  invoked  in  favor 
of  its  bond  fide  holder  as  against  the  owner  -assigning  the  certificate 
in  blank  and  confiding  it  to  an  agent  who  proves  dishonest,  that  of 
two  innocent  parties  he  must  suffer  who  enabled  the  fraud  to  be 
committed.'' 

§  500.     Transfer  of  Stock  in  Special  Instances. 

Where  a  new  title  is  acquired  to  stock  under  some  trust,  or 
through  the  death  or  bankruptcy,  or  in  some  cases  the  marriage, 
of  the  shareholder,  the  formalities  requisite  will  depend  somewhat 


N.  E.  476.  The  latest  cases  favor 
largely  the  bond  fide  holder  for  value 
without  notice  of  infirmity,  as  to  equi- 
ties in  all  other  respects.  Union 
Trust  Co.  V.  Oliver,  214  N.  Y.  517; 
Carlisle  v.  Norris,  215  N.  Y.  400,  109 
N.  E.  564  ("fly  power")  ;  Parkhurst 
V.  Almy,  222  Mass.  17,  109  N.  E.  733 ; 
French  v.  Harding,  235  Pa.  79',  83  Atl. 
586;  Bankers'  Trust  Co.  v.  McCIoy, 
109  Ark.  160,  159  S.  W.  205,  47  L.  K. 
A.  N.  s.  333.  Local  statute  may  af- 
fect the  local  rule.  Though  shares  of 
stock  are  not  fully  "negotiable  paper," 
the  transferee  for  value  takes  by  the 
usual  assignment  in  blank  with  a 
"  fly  power,"  free  from  antecedent 
equities  undisclosed  to  him.  Austin 
V.  Hayden,  171  Mich.  38,  137  N.  W. 
317. 

Until,  however,  a  transfer  of  shares 
has  been  executed  on  the  books,  the 
seller  remains  the  nominal  owner,  and 
should  be  treated  as  a  trustee  for  the 
buyer;  the  latter  taking  the  shares 
with  such  liabilities,  and  by  implica- 
tion undertaking  to  indemnify  the 
seller    in    such    respects.      Morawetz, 


§§  330,  602;  Johnson  v.  Underbill,  52 
K  Y.  203;  Brigham  v.  Mead,  10  Al- 
len, 245 ;  James  v.  May,  L.  R.  6  H.  L. 
328. 

A  corporation  which  has  issued  a 
negotiable  certificate  of  shares  should 
not  permit  a  transfer  to  be  executed 
upon  the  books  until  the  old  certifi- 
cate is  surrendered.  If  it  does  so,  it 
may  be  held  liable  to  a  bond  fide  pur- 
chaser of  the  old  certificate.  Mora- 
wetz, §  331;  Bank  v.  Lanier,  11  Wall. 
369.  But  upon  suitable  indemnity  to 
the  company,  equity  will  grant  relief 
where  a  certificate  is  lost  or  de- 
stroyed, as  in  other  analogous  in- 
stances of  negotiable  instruments. 
Galveston  City  Co.  v.  Sibley,  56  Tex. 
269.  And  see  Houston  Ry.  v.  Van 
Alstyne,  56  Tex.  439. 

6.  Leitch  v.  Wells,  48  N.  Y.  586; 
First  Nat.  Bank  v.  Gifl'ord,  47  Iowa, 
575;  Morawetz,  §  328;  Webster  v. 
Upton,  91  U.  S.  65. 

7.  But  see  Mr.  Justice  Brewer  in 
Hammond  v.  Hastings,  134  U.  S.  401, 
403. 


758 


CHAP.  IX.]  SHARES  OF  STOCK.  §  500 

upon  local  laws  which  regulate  the  subject.  Administrators  can 
execute  a  transfer,  their  letters  being  sufficient  evidence  of  author- 
ity for  that  purpose;  and  so  can  executors  generally,  and  the 
assignees  of  a  bankrupt.^  But  as  to  trusts,  there  is  a  disposition 
sometimes  manifested  in  the  courts  to  protect  the  corporation  which 
deals  solely  with  the  registered  owner  of  its  shares;  and  at  all 
events  the  corporation  may  take  proper  precautions  by  requiring 
the  trustee  who  seeks  to  deal  with  the  shares  to  produce  evidence 
of  his  authority.^  A  corporation  is  not  bound  to  see  to  the  appli- 
cation of  proceeds  of  its  stock ;  and  so  long  as  the  executor  or' other 
person  making  a  transfer  has  authority  to  do  so,  and  the  corporate 
officers  have  no  reasonable  ground  for  believing  that  a  misapplica- 
tion of  money  is  intended,  there  is  no  ground  of  complaint  against 
the  latter.^  But  a  corporation  has  been  held  bound  to  inquire 
whether  the  trustee  who  transfers  had  any  authority  to  make  such 
transfer.^ 

As  regards  marriage,  stock  standing  in  the  wife's  name  does  not 
belong  to  the  husband,  nor  is  he  liable  with  respect  to  it,  until  he 
has  transferred  it  to  his  own  name.^  And  a  married  woman  has 
in  these  days  the  legal  capacity  recognized  to  receive  a  transfer  of 
stock,  whether  the  consideration  proceeded  wholly  from  her  hus- 
band or  from  some  third  party.'*  But  a  transfer  to  an  infant  is 
held  to  leave  the  transferrer  liable ;  on  the  ground  that  the  person 
succeeding  to  shareholding  membership  must  be  one  who  can 
assume  the  shareholder's  full  legal  liability.^ 

8.  Bayard   v.   Farmers',   &c.,   Bank,  3.  Schoul.  Hus.  &  Wife,  §  154;  Ar- 

52  Penn.  St.  232.  nold   v.    Ru^rglcs,   1    R.   I.    165;    Slay- 

9.  lb.  maker    v.    Bank,    10    Penn.    St.    373; 

1.  Albert  v.  Savings  Bank,  2  Md.  Brown  v.  Bokee,  53  Md.  155.  And 
159;     1     Redf.    Railw.     3d    ed.     151;       see  L.  R.  7  Ch.  D.  48. 

Hutchins  v.  State  Bank,  12  Met.  421.  4.  Keyser  v.  Hitz,  133  U.  S.  138. 

2.  Loring  v.  Salisbury  Mills,  125  5.  Zulueta,  Re,  L.  R.  5  Ch.  444; 
Mass.  151;  Bayard  v.  Farmers',  &c..  Reciprocity  Bank,  Re,  22  N.  Y.  9; 
Bank,  52  Penn.  St.  232;  Taney's  Dec.  Taylor,  §  747. 

310 ;    Stewart  v.   Fireman's   Ins.   Co., 

53  Md.  564. 

759 


§  501  THE  LAW  OF  PERSONAL  PKOPERTY.       [PART  III. 

§  501.     Lien  of  Corporation  on  Stock  for  Unpaid  Dues. 

Among  the  restrictions  upon  the  transfer  of  its  stock  which  a 
corporation  may  sometimes  impose,  that  of  practically  securing 
a  lien  for  its  unpaid  dues  deserves  a  passing  notice.  That  no  lien 
upon  stock  in  favor  of  the  corporation  which  issues  it  exists  at  the 
common  law,  is  generally  admitted ;  ^  yet  such  an  advantage  is 
often  given  by  general  statutes  or  the  special  act  of  incorporation. 
The  policy  of  the  English  "  Companies  Clauses  Consolidation 
Act,"  and  of  many  of  our  American  statutes,  is  to  require  the 
payment  of  dues:  to  the  corporation  before  any  valid  transfer  of 
stock  can  be  allowed.''  Local  banks  were  formerly  peculiarly 
favored  in  this  respect  among  corporations  in  our  own  country ; 
though  the  same  can  hardly  be  affirmed  of  our  existing  national 
banks.^  If  a  former  owner  be  indebted  to  the  corporation,  and 
the  charter  requires  all  such  indebtedness  to  be  liquidated  before 
a  transfer  of  the  stock,  the  corporation's  lien  for  this  indebtedness 
holds  good  against  the  debtor's  assignee.  The  effect  of  restrictions 
of  this  sort  is  rather  to  give  the  purchaser  the  property  right  of 
the  seller,  subject  to  the  same  incumbrances,  than  to  incapacitate 
the  seller  from  disposing  of  his  stock.  And  the  lien  usually  covers 
all  assessments  due  and  payable  upon  the  stock  at  the  date  of  the 
new  transfer ;  and  it  may  apply  to  the  owner's  liability  to  pay  for 
the  amount  of  stock  subscribed,  although  the  instalments  were  not 
collected  before  the  time  of  transfer.^  While,  moreover,  a  cor- 
poration cannot  resort  to  unlawful  contrivances,  or  abuse  its  char- 
tered  privilege  in  order  to  secure  a  lien,  we  generally  find  that  this 
lien,  when  once  conferred  by  law,  receives  a  liberal  construction 

6.  Morawetz,  §  332,  and  cases  cited;  8.  See  Bank  v.  Lanier,  11  Wall. 
Farmers'  Bank  v.  Wasson,  48  Iowa,  369;  chapter  on  Liens,  supra;  Ang. 
340;    Sargent  v.  Franklin  Ins.  Co.,  8      &  Ames,  §§  355,  569,  8th  ed. 

Pick.  90;  Neale  v.  Janney,  2  Cranch,  9.  Pittsburgh,    &c.,    K.    K.    Co.    v. 

C.  C.  188 ;  Vansands  v.  Middlesex  Co.  Clarke,    29'    Penn.    St.    146 ;    Ang.    ft 

Bank,  26  Conn.  144.  Ames,    §    355,    575,   and    cases   cited; 

7.  See  Ang.  &  Ames,  §§  355,  570;  Ex  parte  Mayhew.  5  De  G.  M.  &  G. 
1  Redf.  Railw.  111-115;  Abb.  Dig.  837;  Reese  v.  Bank  of  Commerce,  14 
Corp.  757;  Morawetz,  §§  333,  334.  Md.  271;  1  Redf.  Railw.  3d  ed.  114. 

760 


CHAP.  IX.] 


SHAKES    OF    STOCK. 


)02 


in  the  courts  and  is  held  valid  and  enforceable  against  all  the 
world,  while,  like  other  liens,  it  may  be  lost  by  waiver.' 

§  502.  Transfers  Made  under  a  Forged  Power;  Careless 
Transfers. 

If  a  corporation  allows  a  transfer  of  shares  to  be  executed  on 
its  books  without  the  consent  of  the  owner,  the  latter  will  neverthe- 
less remain  a  stockholder ;  and  such  owner  is  entitled  to  have  his 
shares  replaced  on  the  books  unless  concluded  by  his  own  fraud  or 
culpable  negligence  in  the  transaction.  For,  in  general,  the  con- 
tract of  a  stockholder  in  a  corporation  cannot  be  rescinded  without 
his  own  express  or  implied  assent.^ 

So,  too,  in  registering  transfers  the  corporation  must  exercise 
due  care,  as  otherwise  it  will  be  liable  to  the  shareholder  injured ;  ^ 
and  it  must  observe,  besides,  its  own  regulations.'*     But  rights  of 


1.  See  Morawetz,  §  336;  Higgs  v. 
Assam  Tea  Co.,  L.  E,.  4  Ex.  387;  Hill 
V.  Pine  River  Bank,  45  N.  H.  300; 
Hammond  v.  Hastings,  134  U.  S.  401. 
A  statute  forbidding  a  stockholder  to 
transfer  his  stock  on  the  books  of  a 
bank  so  long  as  he  is  indebted  thereto 
does  not  prevent  the  bank  from  waiv- 
ing its  privilege  through  its  proper 
officer,  Cecil  Bank  v.  Watsontown 
Bank,  105  U.  S.  217.  So  may  a  cor- 
poration be  estopped,  as  against  cer- 
tain third  partieSj  to  assert  its  lien. 
Moore  v.  Bank  of  Commerce,  52  Mo. 
377.  But  mere  ignorance  of  the  lien 
by  a  third  partj'  does  not  have  this 
effect.  Hammond  v.  Hastings,  134  U. 
S.  401. 

By  virtue  of  a  by-law  (though  qu. 
whether  the  charter  or  a  statute  must 
not,  by  implication  or  expressly,  con- 
fer authority  to  make  it)  transfers  of 
shares  may  be  prohibited  while  one  is 


indebted  to  the  company.  Morawetz, 
§  332 ;  Mechanics^  Bank  v.  Merchants' 
Bank,  45  Mo.  513;  Brent  v.  Bank  of 
Washington,  10  Pet.  616.  But  no 
feuch  lien  can  be  claimed  as  against 
the  hond  fide  purchaser  of  a  certifi- 
cate who  had  no  notice  of  such  by- 
law. Driscoll  V.  West  Bradley  Co., 
59  N.  Y.  109.  Dividends  declared  by 
the  company  may  be  retained  as  a 
set-off.  Hagar  v.  Union  Nat.  Bank, 
63  Me.  509 ;  Sargent  v.  Franklin  Ins. 
Co.,  8  Pick.  90.  See  further,  137  N". 
W.  270   (Mich.)  ;  194  Fed.  947. 

2.  Morawetz  Corp.,  §  339;  Dewing 
T.  Perdicaries,  96  U.  S.  193;  Taylor, 
§  594;  Telegraph  Co.  v.  Davenport, 
97  U.  S.  369;  Pratt  v.  Taunton  Cop- 
per Co.,  123  Mass.  110;  Hambleton  v. 
Central  Ohio  R.,  44  Md.  551. 

3.  Taylor,  §  592;  Pennsylvania  R.'s 
Appeal,  86  Penn.  St.  80. 

4.  Taylor,  §  594. 


761 


§  503 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  IIL 


others  which  did  not  come  seasonably  to  its  notice  cannot  constitute 
ground  of  liability.^ 

§  503.     Contracts  for  Stock;    Stock  Speculations. 

So  great  are  the  temptations  to  fraud  where  persons  speculate 
largely  in  fluctuating  stocks,  that  important  questions  are  con- 
stantly arising  at  the  present  day,  with  reference  to  the  validity 
of  stock  contracts.  Speculations  in  stock  are  conducted  according 
to  peculiar  usages  which  those  outside  of  financial  circles  cannot 
readily  comprehend ;  and  considering  the  great  fortunes  which 
are  so  often  at  stake,  the  favorite  modes  of  doing  such  business  are 
rather  loose;  so  that  we  find  contracting  parties  pretty  much  at 
the  mercy  of  their  brokers.^  A  contract  for  the  sale  of  stock 
should  have  a  good  consideration  to  support  it;    and  the  usual 


5.  Taylor,   §   595. 

See  as  to  the  registry  of  transferred 
stock,  Husband  v.  Linehan,  168  Ky. 
314,  181  S.  W.  1089;  Davis  Co.  v. 
Wihitmore,  92  Ohio  St.  44,  110  N.  E. 
518;  La  Belle  Iron  Works  v.  Quarter 
Savings  Bank,  74  W.  Va.  569,  82  S.  E. 
614;  Fourth  Nat.  Bank  v.  Manchester 
Co.,  77  N.  H.  481,  93  Atl.  661;  Rich- 
ards V.  Robin,  86  Misc.  528,  148  N.  Y. 
S.  822 ;  Bankers'  Trust  Co.  v.  McCloy, 
log  Ark.  160,  159  S.  W.  205,  47  L.  R. 
A.  N.  s.  333   {bond  fide  bidder). 

As  to  corporate  provisions  restrict- 
ing the  transfer  of  stock,  see  Board- 
man  v.  Lorentzen,  159  Wis.  517,  149 
N.  W.  754  (directors'  right  to  pur- 
chase). Equity  will  cancel  a  fraud- 
ulent transfer.  Harper  v.  Virginian 
Ry.,  76  W.  Va.  788,  84  S.  E.  919. 

For  remedy  of  transferee  where 
registration  is  refused,  see  Spangen- 
berg  V.  Western  Co.,  166  Cal.  284,  135 
Pac.  1127 ;  Farrell  v.  Passaic  Water 
Co.,  82  N.  J.  E.  97,  88  Atl.  627; 
Davidson  v.  Almeda  Co.,  66  Ore.  412, 
134  Pac.  783. 


6.  One  inquiry  pertinent  to  such 
contracts  is  connected  with  the  Stat- 
ute of  Frauds.  It  was  for  some  time 
a  matter  of  doubt  in  England  whether 
shares  in  an  incorporated  company 
were  "  goods,  wares,  or  merchandise  " 
within  the  Statute  of  Frauds,  so  as 
to  require  an  agreement  for  their 
transfer  to  be  in  writing,  where  the 
value  exceeded  a  certain  sum,  and  the 
buyer  neither  accepted  nor  received 
any  part,  nor  gave  something  in  ear- 
nest to  bind  the  bargain,  or  in  part 
payment.  But  it  would  now  appear 
that  such  shares  are  not  within  the 
statute,  and  that  no  written  memo- 
randum is  necessary.  Wms.  Pers. 
Prop.  5th  Eng.  ed.  186,  209;  Humble 
V.  Mitchell,  11  Ad.  &  E.  205;  Duncuft 
V.  Albrecht,  12  Sim.  189.  In  Massa- 
chusetts the  law  is  decided  otherwise ; 
and  such  agreements  must  be  in  writ- 
ing, on  the  ground  that  the  contract 
is  one  for  the  sale  of  goods,  wares,  or 
merchandise.  Tisdale  v.  Harris,  20 
Pick.  9;  Baldwin  v.  Williams,  3  Met. 
365.    See  post,  vol.  ii.,  pt.  vi. 


762 


CHAP.  IX.]  SHARES    OF   STOCK.  §    504 

rules  apply  as  in  other  contracts.^  And  where  such  a  contract  is 
tainted  with  fraud,  courts  will  set  it  aside,  notwithstanding  the 
parties  used  words  which  might  be  thought  susceptible  of  two 
meanings.^ 

§  504.     The  Same  Subject. 

In  these  days  we  often  hear  of  persons  who  attempt  to  make 
what  is  called  "  a  comer"  in  stock;  which  is,  as  we  understand 
it,  to  buy  in  secretly,  by  a  combination  of  funds,  the  stock  of  some 
company,  and  force  its  sudden  rise  in  the  market  by  reason  of  the 
scarcity  thus  occasioned;  the  object  being  to  profit  by  selling  out 
again  before  the  stock  falls,  as  it  soon  must,  once  more  to  its 
natural  level.  Such  agreements  are  declared  to  be  illegal,  like 
betting  contracts.^ 

The  buyer  who  is  interested  in  the  rise  of  stocks  has  long  been 
known  among  financiers  as  a  bull;  the  corresponding  seller  inter- 
ested in  depressing  stock  is  a  hear;  either  party,  if  unable  to  pay 
his  difference,  becomes  a  lame  duck;  and  the  stock  business  is 
often  conducted  on  the  basis  of  a  mere  nominal  sale  and  transfer 
at  some  future  day,  the  difference  between  the  then  ruling  rates 
and  those  agreed  upon  being  made  up  by  the  losing  party.     It  is 

7.  See  Abb.  Dig.  Corp.  763;  Ang.  plies  with  the  agreement  sufficiently 
&  Ames,  §  563.  by    having   the    requisite    number    on 

8.  Thus  an  agreement  to  tran-sfer  hand  to  transfer  when  the  time  comes, 
stock  is  not  satisfied  by  a  transfer  of  Frost  v.  Clarkson,  7  Cow.  25;  Hare 
half-paid  stock  to  that  nominal  amount  v.  Waring,  3  M.  &  W.  362  ;  1  Redf . 
when  the  certificate  was  taken  on   a  Railw.  127. 

supposition,  fraudulently  induced,  that  9.  Accordingly,  where  one  had  au- 
it  represented  full-paid  stock.  John-  thoriz;<'d  another  to  use  a  fund  in  the 
son  V.  Hathorn,  2  Keyes,  477.  And  hands  of  the  latter,  and  belonging  to 
see  Gore  v.  Mason,  18  Me.  84.  If  one  the  former,  for  these  purposes,  it  was 
agrees  to  sell  to  another  a  number  ot  held  that  he  could  not  recover  by 
shares  at  a  future  day,  having  that  suit  what  had  been  actually  thus 
number  at  the  time  of  making  the  expended,  but  only  the  balance  re- 
agreement,  he  is  free  to  sell  them  be-  maining.  as  for  money  had  and  re- 
fore  the  day  to  a  third  person;  for  ceived.  Sampson  v.  Shaw,  101  Mass. 
unless  the  contract  was  for  the  sale  145. 
of   those   particular   shares,    he    com- 

763 


§  505  THE  LAW  OF  PERSONAL  PKOPERTY.       [PAET  III. 

easily  perceived  that  under  these  circumstances  the  managing  offi- 
cers of  a  company,  if  sufficiently  unprincipled,  have  special  oppor- 
tunities for  making  money  in  stock  speculations  from  their  intimate 
knowledge  of  its  condition ;  and  such  is  too  frequently  found  to 
be  the  result,  as  defrauded  stockholders  can  testify.  The  gambling 
feature  of  stock  speculations,  as  manifested  in  the  case  of  those 
who  figTire  upon  a  natural  rise  or  fall  of  stocks  or  securities  accord- 
ing to  the  fluctuations  of  trade  and  public  confidence,  was  early 
noticed  by  the  legislators ;  and  attempts  have  been  made,  both  in 
England  and  parts  of  this  country,  to  suppress  the  so-called 
"infamous  practice  of  s.tock-jobbing"  by  the  strong  arm  of  the 
law;    but  such  legislative  efforts  usually  prove  abortive.^ 

§  505.     The  Same  Subject;    Sales  Through  Brokers. 

Those  who  purchase  and  sell  stocks  'act  usually  through  the 
medium  of  others.  Stockbrokers  are  the  usual  agents  in  such 
transactions;  and  English  writers  speak  of  the  professional 
"stock-jobber  "  as  one  who  supplies  the  public,  through  the  medium 
of  the  brokers,  with  money  or  stock  to  the  exact  amount  they 
require,  taking  a  commission  for  his  ser\dces.^  But  this  business 
appears  not  to  be  quite  so  minutely  subdivided  in  the  financial 
centres  of  the  United  States.  The  Stock  Exchange  in  England, 
and  the  Brokers'  Board  with  us,  establish  rules  and  sanction  cer- 

1.  The  most  famous  of  these  acts  increase  in  price,  and  should  it  fall 
(since  repealed)  is  Sir  John  Bar-  the  buyer  should  pay  the  seller  the 
nard's  Statute,  ^rhioh  was  passed  in  difference  occasioned  by  the  increase, 
the  reign  of  George  II. ;  Stat.  7  Geo.  See  Wms.  Pers.  Prop.  5th  Eng.  ed. 
II.,  c.  8.  This  act  was  directed  espe-  185.  A  similar  statute  formerly  ex- 
cially  against  the  practice  of  fictitious  isted  in  Kew  York,  which  is  also  re- 
sales of  stock  for  a  future  time,  pealed.  See  Thompson  v.  Alger,  12 
where  the  seller  had  not  the  stock  he  Met.  428;  Washburn  v.  Franklin,  28 
sold,  neither  intended  to  procure  it,  Barb.  27.  The  great  difficulty  found 
and  the  buyer  had  no  intention  to  with  such  legislation  is  that  it  inter- 
purchase  the  amount  he  contracted  feres  too  much  with  the  operations  of 
for;  while  the  real  and  only  object  legitimate  traffic  to  work  well  in 
of  the  parties  was,  that  if  the  stock  practice. 

should  rise  the  seller  should  pay  the  2.  Wms.  Pers.   Prop.    5th   Eng.   ed. 

buyer  the  difference  occasioned  by  the  186. 

764 


CHAP.  IX.] 


SHARES    OF   STOCK. 


§  50- 


tain  usages  which  may  materially  affect  the  mutual  contracts  of 
the  general  public ;  for  wherever  a  rule  or  usage  so  established  is 
not  unreasonable  in  itself  it  binds  those  dealing  there,  both  mem- 
bers and  others  who  appear  through  members  in  stock  transaction.^ 
Yet  as  rules  among  brokers  are  not  always  found  to  be  reasonable, 
so  far  as  their  own  customers  are  concerned,  there  are  same  recent 
instances  in  which  sharp  practice,  under  the  name  of  brokers' 
usage,  fails  of  protection  in  the  courts.'*  Brokers,  after  all,  are 
but  agents;   and  unless  special  agreement  varies  the  rule,  it  is 


3.  Duncan  v.  Hill,  L.  R.  6  Ex.  255; 
Grissell  v.  Brlstowe,  L.  R.  3  C.  P. 
112. 

4.  Thus,  it  is  decided  in  Massachu- 
setts that  the  order  of  a  customer  to 
buy  stock  deliverable  to  him  at  any 
time  within  a  certain  period,  at  his 
own  option,  does  not  authorize  his 
broker  to  purchase  the  stock  for  him- 
self at  an  intermediate  period,  and 
then  delievr  it  to  the  customer  when 
called  for,  at  an  advanced  price  and 
interest  besides  the  usual  commis- 
sion ;  and  this  notwithstanding  a 
usage  among  brokers  to  that  effect. 
Day  V.  Holmes,  103  Mass.  306.  And 
in  New  York  it  is  held  by  a  majority 
of  the  Court  of  Appeals  that  where 
stockbrokers,  at  a  customer's  request, 
and  on  his  behalf,  though  in  their 
own  names  and  with  their  own  funds, 
purchase  certain  stocks, —  he  deposit- 
ing with  them^  a  "  margin  "  which  is 
to  be  "  kept  good  "  and  they  '"  carry- 
ing "  the  stock  for  him, —  the  stock 
is  the  customer's  property,  pledged 
in  a  manner  to  them  as  security  for 
their  advances;  and  that  they  have 
no  right  to  sell  the  stock  without 
notice  whenever  by  its  fall  the  "  mar- 
gin "  is  exhausted.  Markhara  v. 
Jaudon,  41  N.  Y.  235.     But  see  fur- 


ther, as  to  "  margin "  transactions, 
Schoul.  Bailm.,  §  233.  In  general  the 
broker  of  a  buyer  has  no  right  to 
profit  as  the  secret  broker  of  the 
seller,  or  as  himself  the  undisclosed 
seller.  Kimber  v.  Barber,  L.  R.  8  Ch. 
56.  In  other  words,  while  reasonable 
usages  and  rules  of  the  Brokers'  Board 
may  control  a  stock  contract,  the 
parties  being  ordinarily  presumed  to 
have  acted  with  reference  thereto,  the 
agent  must  not  absorb  the  functions 
of  his  principal,  nor  speculate  for  his 
private  benefit  with  property  which 
belongs  to  a  customer. 

There  are  numerous  other  recent 
cases  affecting  the  rights  of  stock- 
brokers, which  we  need  not  particu- 
larly notice,  further  than  to  remark 
that  the  liability  for  purchasing  spu- 
rious shares,  which  are  issued  fraudu- 
lently by  a  corporation,  does  not  ap- 
pear to  rest  upon  a  broker  who  has 
bought  in  good  faitli  what  purported 
to  be  genuine  on  their  face,  but  rather 
upon  the  seller  of  the  shares  who  is 
represented  in  the  transaction.  See 
Brown  v.  Phelps,  103  Mass.  313; 
Maxted  v.  Paine,  L.  R.  6  Ex.  132; 
Durant  v.  Burt.  98  Ma&^.  161 ;  Addis. 
Cont.  5th  ed.  191;  Cruse  v.  Paine, 
L.  R.  4  Ch.  441. 


765 


§  507  THE  LAW  OF  PERSONAL  PKOPEETY.       [PART  111. 

the  principal's  judgment  that  should  control  in  the  purchase  and 
sale  of  stocks.^ 

§  506.     False   Representations   by   Directors   Inducing    Sale   of 
Stock. 

Where  the  directors  of  a  company  have  made  false  representa- 
tions concerning  the  state  of  the  corporate  affairs  for  the  purpose 
of  influencing  the  sale  of  shares  at  an  undue  price ;  and,  in  general, 
wherever  there  are  fraudulent  practices  on  the  part  of  managing 
agents  or  managing  stockholders,  and  sales  have  been  wrongly 
induced  in  consequence,  equity  will  afford  relief.^  And  among 
the  most  palpable  frauds  of  this  kind  is  that  of  declaring  dividends 
where  there  are  no  profits  to  be  divided  up,  and  their  payment  is 
actually  made  out  of  the  capital  stock.  But,  to  constitute  a  fraud 
in  such  cases,  the  parties  must  ordinarily  stand  upon  an  unequal 
footing;  for  where  both  those  who  misrepresent  and  those  who 
suffer  by  the  misrepresentation  are  under  the  same  delusion  as  to 
the  value  of  the  shares,  interference  on  the  ground  of  fraud  would 
be  hardly  admissible.^ 

§  507.     Transfer  of  Stock  on  Execution  Sale,  etc. 

Shares  of  stock  cannot  by  the  common  law  be  transferred  by 
sale  on  execution ;  certainly  not  where  the  incorporeal  right  which 
they  evidence  is  an  incident  to  personal  property  instead  of  real 
©state.  Nor,  for  similar  reasons,  can  one's  stock  be  subjected  to 
the  process  of  garnishment  or  trustee  process.  But  the  rule  is 
very  generally  changed,  to  a  considerable  extent,  by  legislation; 
and  in  most  of  our  leading  States  there  are  statute  regulations 
oonceming  the  attachment  and  sale  of  stock  on  execution,  which 
should  be  carefully  followed.^ 

5.  Galigher  v.  Jones,  129  U.  S.  193.  8.  Howe  v.  Starkweather,  17  Mass. 

6.  1  Redf.  Railw.  3d  ed.  138-143;  240;  Bingham  v.  Rushing,  5  Ala.  403 ; 
Stainbank  v.  Fernley,  9  Sim.  559  ;  Ang.  &  Ames,  §§  588,  589 ;  Wms.  Pers. 
Burns  v.  Pennell,  2  H.  Ld.  Cas.  497.  Prop.  17th  Eng.  ed.  107. 

7.  lb.;   2  Kent  Com.  469;   1  Story 
Eq.  Jur.,  §  142. 

766 


CHAP.  IX.] 


SHARES    OF    STOCK. 


§    508 


§  508.     Preference  Shares  or  Preferred  Stock;  Scrip,  "  Rights," 
etc. 

Preference  shares,  or  shares  in  preferred  stock,  confer  special 
privileges  or  benefits  upon  the  holder,  creating  a  perpetual  charge 
upon  the  income  of  the  company,  unless  expressed  after  a  more 
limited  tenor.  The  rights  of  a  preferred  member  are,  in  import- 
ant aspects,  those  of  a  creditor ;  but  every  issue  of  preferred  stock 
depends  upon  its  own  express  provisions  and  the  terms  of  legisla- 
tive sanction.^  Preferred  stock. is  properly  created  in  any  case  by 
authority  of  law  and  in  pursuance  of  the  terms  of  the  corporate 
charter;  and  while  the  claim  to  issue  it  is  sometimes  deduced 
as  an  incident  to  the  power  of  borrowing  money,  the  general  doc- 
trine appears  to  be  that  express  authority  should  have  been  con- 
ferred. Preferred  stock  takes  priority  over  the  common  stock, 
and  is  first  entitled  to  dividends-  from  the  profits,  which  may  or 
may  not  be  made  cumulative.' 

"  Scrip  "  is  a  kind  of  certificate  sometimes  issued  in  England 


9.  Morawetz  Corp.,  §§  352,  353; 
Henry  v.  Great  Northern  R.,  4  K. 
&  J.  1,  21;  L.  R.  5  Eq.  SI?;  In  re 
Bangor  Slab  Co.,  L.  R.  20  Eq.  59; 
Bates  V.  Androscoggin  R.,  49  Me.  491 ; 
St.  John  V.  Erie  R.,  22  Wall.  136. 

1.  Field  Corp.,  §  121;  Ex  parte 
Worth,  4  Drew,  529;  Morawetz, 
§§  230,  353 ;  Kent  v.  Quicksilver  Min- 
ing Co.,  78  N.  Y.  159,  and  cases  cited 
post,  §  510;  Field  v.  Lamson  Co.,  162 
Mass.  388.  Whether  a  corporation 
may,  on  the  first  issue  of  its  stock, 
divide  into  classes,  issuing  part  as 
preferred  stock  without  express  au- 
thority of  law,  is  undecided.  See 
Taylor,  §  571;  Kent  v.  Quicksilver 
Co.,  78  N.  Y.  159. 

As  a  rule  the  riglits  of  preferred 
stockholders  depend  upon  the  particu- 
lar corporate  contract  or  undertaking. 
Equitable  See.  of  U.  S.  v.  Union  Pac. 


Ry.  Co.,  212  N.  Y.  360,  106  N.  E.  92, 
L.  R.  A.  1915  D.  1052,  n.,  affirming 
162  App.  Div.  81,  147  N.  Y.  S.  382 
(common  stockholders  take  extra 
dividend.s  exclusively)  ;  Warren  v. 
Queen  &  Co.,  240  Pa.  152,  87  Atl.  595 
(no  dividend  where  no  profits)  ;  Lee 
V.  Fisk,  222  Mass.  418,  109  N.  E.  833 
(contract  of  company  binding)  ;  Spear 
V.  Rockland  Co.,  113  Me.  285,  93  Atl. 
754;  Boston  Trust  Co.  v.  Adams,  219 
Mass.  175,  106  N.  E.  590  (preferred 
stockholder  not  strictly  a  "  cred- 
itor"); Shaffer  v.  McCulloch,  192 
Fed.  801,  113  C.  C.  A.  535;  Niies  v. 
Ludlow  Valve  Co.,  196  Fed.  994; 
Niles  v.  Ludlow  Valve  Co.,  202  Fed. 
141,  120  C.  C.  A.  319;  American 
Foundries  v.  Lazear,  204  Fed.  204, 
124  C.  C.  A.  231  ;  Stirling  v.  H.  F. 
Watson  Co.,  241  Pa.  105,  88  Atl.  297 
(redemption  of  preferred  stock). 


767 


§  509  THE  LAW  OF  PERSONAL  PEOPEKTT.      [PAET  III. 

by  the  projectors  of  companies,  entitling  the  holder  to  become  a 
member  and  stockholder  of  a  future  company.^  In  this  country, 
"  rights,"  too,  are  issued  under  certain  lesser  circumstances,  as  in 
declaring  a  stock  dividend  or  in  enlarging  the  amount  of  stock; 
so  as  to  entitle  the  holder  to  new  shares  of  stock ;  and  these  rights 
are  sold  by  a  stockholder  in  lieu  of  the  stock  itself,  as  scrip  might 
be.^ 

§  509.     Rights  of  a  Stockholder;  Membership,  Voting,  etc. 

Thirdly,  as  to  the  rights  of  a  stockholder.  It  should  be  remem- 
bered that  all  holders  of  stock  in  a  corporation  stand  in  a  twofold 
relation:  they  are  parties  investing  in  the  stock  of  a  fictitious 
being;  and,  again,  they  are  component  parts  or  members  of  that 
fictitious  being.  They  control  and  enjoy  the  property  in  stock 
with  its  income ;  but,  besides,  they  ultimately  control  the  business 
in  which  they  invest,  and,  if  chosen  on  the  board  of  directors, 
aid  in  its  immediate  management.  Consistently  with  the  number 
of  shares  represented,  stockholders  have  equal  rights  as  well  as 
equal  liabilities.'*  These  rights  the  courts  will  enforce.  The 
stockholder  cannot,  however,  bring  suit  for  injury  to  his  interests 
himself,  but  suit  must  be  brought  in  the  name  of  the  corporation, 
unless  the  stockholder  shows  that  the  injury  was  caused  by  those 
in  control  of  the  corporation  and  that  he  has  exhausted  all  other 
means  of  forcing  them  to  act.^ 

An  important  right,  then,   as  incidental  to  holding  stock,   is 

2.  See  Field,  §  122,  and  cases  cited;  5.  Smith  v.  Hurd,  12  Met.  (Mass.) 
Penobscot  R.  V.  Dummer,  40  Me.  172 ;  371;  Bartlett  v.  New  York,  New 
Buffalo  R.  R.  V.  Dudley,  14  N.  Y.  Haven  and  Hartford  R.  Co.,  221  Mass. 
336 ;  Eastern  Co.  v.  Vaughan,  14  N.  530.  See  General  Rubber  Co.  v.  Bene- 
Y.  546;  Watkins  v.  Eamea,  9  Cush.  diet,  149  N.  Y.  Supp.  880,  164  N.  Y. 
537;  Midland  G.  W.  R.  v.  Gordon,  16  App.  Div.  332,  where  action  by  the 
M.  &  W.  804.  stockholder  was  allowed  on  his  show- 

3.  Bankers'  Trust  Co.  v.  Dietz  Co.,  ing  that  the  wrongdoer  was  simulta- 
155  App.  Div.  594;  Schmidt  v.  Mar-  neouSly  violating  a  duty  he  owed  per- 
coni  Co.,  86  N.  J.  L.  183,  90  Atl.  1017.  sonally  to  the  stockholder. 

4.  Morawetz,     §§     374-380;     supra, 
§  222. 

768 


CHAP.  IX.]  SHAEES    OF   STOCK.  §    509 

that  of  voting  at  the  corporate  meetings  on  matters  of  business 
there  presented,  and  particularly  in  the  election  of  directors  or 
other  managing  officers.^  The  transfer-book  generally  determines 
the  right  of  voting  at  this  day  accordingly.  The  old  common-law 
rule,  applicable  still  to  public  corporations,  is  that  voting  must  be 
in  person.  But  the  laws  which  relate  to  joint-stock  corporations 
usually  confer  the  right  to  vote  by  proxy;  though  it  would  seem 
that,  independently  of  legislative  sanction,  voting  by  proxy  is 
not  allowable  where  an  election  depends  upon  the  exercise  of 
judgment,^ 

A  trustee  who  holds  stock  in  that  character  for  the  benefit  of 
others  may  vote;  and  so  may  executors  and  administrators  by 
right  of  representation.^  But  a  trustee  who  has  no  substantial 
interest,  and  merely  holds  shares  in  trust  for  the  benefit  of  the 
corporation,  has  no  right  to  vote  upon  such  shares.^  An  equitable 
assigTiment  does  not  effect  a  change  of  membership ;  and  hence 
a  seller  of  shares  may  vote  upon  them  until  a  transfer  has  been 
duly  recorded.^  A  pledgor  of  stock  retains,  moreover,  the  right 
to  vote  on  his  shares  before  the  security  is  enforced  and  title 
becomes  absolute  in  the  pledgee.^     If  stock  owned  by  a  partnership 

6.  Right  to  vote  stock  pledged  or  Matter  of  North  Ferry  Co.,  63  Barb, 
transferred.  Book  17,  N.  Y.  Rpts.,  556;  Wilson  v.  Central  Bridge?  Co., 
Bender  ed.,  note,  p.  962.  9  R.  I.  590. 

7.  Ang.  &  Ames,  §§  113,  129,  130;  9.  Ang.  &  Ames,  §  131;  American 
Overseers  of  the  Poor  v.  Sears,  22  Railway  Frog  Co.  v.  Haven,  101 
Pick.  122;  2  Kent  Com.  295,  n. ;  Mor-  Mass.  398;  Brewster  v.  Hartley,  37 
awetz,  §  360;  Taylor  v.  Griswold,  14  Cal.  16;  Vail  v.  Hamilton,  20  Hun, 
N.  J.  L.  222.  Whether  a  by-law  alone  355.  In  general  a  corporation  can- 
can confer  the  right  to  vote  by  proxy,  not  hold  its  own  shares  in  such  a 
see  Morawetz,  §  360.  At  common  law  sense  as  to  be  able  to  vote  upon  them, 
it  seems  that  each  shareholder  is  en-  lb.;  Morawetz.  §  361. 

titled  to  but  one  vote;    but  the  stat-  1.  Morawetz.  §  360;  O'Xeil  v.  Nat. 

utes   relating  to   joint-stock  corpora-  Bank,  46  N.  Y.  332. 

tions  usually  allow  every  shareholder  2.  Ang.  &  Ames.  §  132;  Merchant^' 

a  vote  upon  each  share  held  by  him.  Bank   v.   Cook.   4   Pick.   405;    Hoppin 

Taylor  v.  Griswold.  supra  ;  Morawetz.  v.  Buffum,  9  R.  I.  513 ;  McDaniels  v. 

§  360;  Taylor,  §§   579,  580.  Flower  Co.,  22  Vt.  274;   McHenry  v. 

8.  In  re  Barker,  6  Wend.  509;  Jewett.  26  Hun,  453;  Schoul.  Bail- 
Bailey   v.    Hollister,    26    N.    Y.    112;  ments,  §  216. 

49  769 


§  509a        THE  LAW  OF  PEESONAL  PROPERTY.       [PART  III. 

stands  in  the  name  of  one  member,  and  he  dies,  the  surviving 
member,  and  not  the  administrator  of  the  deceased,  has  the  right 
to  vote  thereon.^  Bnt  a  corporation  cannot  vote  upon  the  shares 
which  it  owns  of  its  own  stock.'* 

All  stockholders  have  in  general  a  right  to  examine  the  books 
of  the  corporation  at  reasonable  times;  but  although  the  statute 
expressly  gives  the  stockholder  a  right  to  inspect  the  books  at  any 
time,  still  the  court  will  not  enforce  this  right  where  it  appears 
that  the  purpose  of  the  stockholder  in  demanding  it  is  inimical 
to  the  corporation.^ 

§  509a.     Voting  Trusts. 

The  desire  of  groups  of  stockholders  to  control  the  policy  of 
corporations,  especially  when  they  are  undergoing  business  trou- 
bles, has  led  to  the  formation  of  voting  trusts,  by  placing  such 
stock  in  the  hands  of  a  trustee  under  an  agreement  giving  him 
the  right  to  vote  the  stock  for  a  certain  period.  This  results  in 
the  creation  of  a  real  trust  of  the  stock,  but  one  subject  to  the 
objection  that  it  really  is  contrary  to  the  whole  theory  of  corpo- 
rate organization.  As  a  result  the  courts  have  usually  viewed 
these  trusts  with  suspicion.  In  some  jurisdictions  they  are  abso- 
lutely void  as  being  contrary  to  public  policy ;  ^  as  an  irrevocable 
proxy  involving  a  restrain  on  alienation ;  '^  or  as  separating  the  vot- 
ing power  from  the  beneficial  interest.^     Some  courts  have,  how- 

3.  Allen  v.  Hill,  16  Cal.  113.  5.  People  v.   American  Press  Asso- 

4.  This  is  a  rule  of  public  policy;       elation,  133  N.  Y.  Supp.  216. 

and  the  device  of  putting  the  shares  6.  Luthy     v.     Ream,      (111.),      110 

in  some  person's  name  as  trustee  does  N.    E.    373;    Harvey   v.    Linville    Im- 

not    remove    the    disability.      Taylor,  provement  Co.,  118  N.  C.  693,  24  S.  E. 

§    136;    American    Ry.    Frog.    Co.    v.  489;  Bridges  v.  First  National  Bank, 

Haven,  101  Mass.  398;   Vail  v.  Ham-  152  N.  C.   293,   67   S.  E.   770;   White 

ilton,  85  N.  Y.  453;  note  supra.  v.  Thomas  Inflatable  Tire  Co.,   52  N". 

See  further,  Hyams  v.  Calumet  Co.,  J.  Eq.  178,  28  Atl.  75. 

221  Fed.  529,  137  C.  C.  A.  239  (minor-  7.  See  Warren  v.  Pim,  66  N.  J.  Eq. 

ity    stockholders    aided    by    proxies)  ;  353,  59  Atl.  773. 

Newburyport  Bank  v.  Brookline,  220  8.  Harvey  v.  Linville  Improvement 

Mass.   300,   107   N.   E.   997    (right  to  Co.,  118  N.  C.  693,  24  S.  E.  489. 
inspect  the  books) . 

770 


CHAP.  IX.]  SHARES    OF   STOCK.  §    510 

ever,  upheld  them  whenever  they  appear  to  be  formed  with  a 
proper  purpose  for  the  protection  of  the  stockholders,^  especially 
in  case  of  reorganization;  and  in  some  States  they  have  even 
received  legislative  sanction.' 

§  510.     Stockholder's  Right  to  Dividends. 

Viewing  the  shareholder  as  an  investing  party,  we  find  that, 
besides  the  right  to  dispose  of  his  share  by  transfer,  which  has  been 
recently  discussed,  and  which  includes  the  usual  rights  of  gift, 
sale,  and  bailment,  he  has  the  right  of  drawing  a  proportional 
share  of  the  profits,  which  are  periodically  declared  under  the  name 
of  dividend ;  and  in  case  the  company  is  wound  up,  and  the  capital 
stock  becomes  divided  among  the  members  of  the  corporation,  he 
is  also  entitled  to  that  proportion  which  his  stock  bears  to  the 
whole  number  of  shares.  Dividends  must  be  made  impartially 
and  equally,  preferring  no  class  unfairly  above  another ;  otherwise, 
equity  may  interfere  and  order  a  readjustment.^  To  this  rule 
there  is,  however,  an  exception  made  in  the  case  of  preferred  stock ; 
for  there  is  a  special  agreement  raised  with  such  holders,  by  which 
they  receive  rather  a  periodical  payment,  or  what  might  be  called 
a  preferred  dividend,  than  a  dividend  as  ordinarily  understood.^ 

9.  Greene  v.  Nash,   85  Me.   148,  26  St.   John   v.   Erie   R*.,    22    Wall.    136; 

Atl.  1114;   Boyer  v.  Nesbitt,  227  Pa.  Thompson  v.   Erie  R.,  45  N.   Y.   468. 

St.  398,  76  Atl.  103 ;  Thompson-Star-  See   supra,   §    508..    Payments   of*  in- 

rett  Co.  V.  Ellis  Granite  Co.,  86  Vt.  terest  on  preferred  stock  can  only  be 

282,  84  Atl.  1017.  made  out  of  profits  hond  fide  earned. 

1.  Md.  St.  1908,  c.  240;  N.  Y.  Con.s.  lb.     And  .see  Taylor,  §  565.     But  the 

Laws,  1909,  c.  28,  §  25.     Agreements  directors   have   not  the  broad   discre- 

to  restrain  voting  of  stock.     Book  30,  tion    to   declare    or   withliold    a    divi- 

N.  Y.  Rpts.,  Bender  ed.,  note,  p.  622.  dend  as  in  the  ca.se  of  ordinary  stock; 

a.  Brightwell  v.  Mallory,  10  Yerg.  and  courts  of  equity  will  here  insist 

196;   Ang.  &  Ames,  §   557;   Ryder  v.  upon  payment  according  to  the  terms 

Alton,   &c.,    R.    R.    Co.,    13    111.    516;  of  the  contract,  if  the  current  earn- 

Morawetz,  §§  374,  405.  ings  permit  of  it.     Field  Corp..  §  121, 

3.  Bate.S'  v.  Androscoggin  R.  R.  Co.,  and  cases  cited;  St.  John  v.  Erie  Co., 

49  Maine,  491;  Taft  v.  Hartford.  &c.,  22  Wall.  136.     Dividends  on  preferred 

R.  R.  Co.,  8  R.  I.  310;   Pittsburg  R.  stock   are   naturally   cumulative,   and 

V.  Allegheny  Co.,   63   Penn.   St.   126;  take  full  precedence  of  ordinary  divi- 

771 


§  510  TILE    LAW  OF  PERSONAL  PROPERTY.       [PAET  III. 

But  a  preferred  stockholder  should  be  allowed  to  participate  in 
a  stock  dividend  which  represents  accumulated  earnings  above 
the  preferred  dividend,  just  as  he  would  be  entitled  to  share  in  a 
cash  distribution  as  he  has  a  right  to  insist  that  his  proportionate 
share  in  the  control  of  the  company  be  preserved.'*  To  pay  divi- 
dends out  of  capital,  and  indeed  from  anything  except  actual 
profits  and  earnings,  should  be  authorized  specially  by  law;  and 
in  fact,  when  dividends  are  declared  simply  as  such,  but  paid  out 
of  the  capital,  the  corporation  may  be  pronounced  a  fraud  upon 
the  community.^  The  net  earnings  should  be  considered,  by  de- 
ducting expenses  from  gross  receipts ;  and  the  payment  of  interest 
periodically  accruing  upon  bonded  debt  should  be  paid  from  these 
net  earnings  before  a  dividend  can  be  properly  declared.^ 

Tlie  duty  which  rests  upon  a  corporation  of  declaring  dividends, 
where  profits  are  in  hand,  is  indefinite  and  discretionary,  though 
it  doubtless  exists ;  and  the  right  to  compel  that  duty  belongs  rather 
to  the  community  of  members,  or,  if  government  be  thereby  de- 
frauded of  the  opportunity  to  tax,  to  the  public  especially,  than  to 
any  particular  member  of  the  corporation.  !N^ot  even  a  preferred 
shareholder  can  claim  a  dividend  simply  because  profits  exist.^ 
Profits  might  be  bond  fide  applied  at  discretion  in  payment  of 
floating  or  funded  debts,  or  to  develop  the  corporate  business; 
but  if  a  dividend  or  distribution  of  profits  be  wrongly  withheld, 
any  aggrieved  stockholder  may,  as  a  last  resort,  seek  relief  in 
equity.^     When,  however,  a  dividend  is  once  declared,  it  becomes 

dends.  But  they  may  be  issued  as  5.  Painesville  R.  R.  Co.  v.  King,  17 
definitely  upon  a  non-cumulative  or  Ohio  St.  534.  As  to  the  rule  applica- 
qualified  basis.  See  Bailey  v.  Rail-  ble  to  the  holder  of  "  preferred  and 
road  Co.,  17  Wall.  96;  Hazeltine  v.  guaranteed  stock,"  see  Taft  v.  Hart- 
Railroad  Co.,  79  Me.  411;  New  York,  ford,  &c.,  R.  R.  Co.,  8  R.  I.  310. 
&c.,  R.  R.  V.  NickaLs,  119'  U.  S.  296.  6.  Mobile     R.     v.     Tennessee,     153 

4.  Jones  v.  Concord  &  Montreal  R.  U.  S.  486. 

Co.,  67  N.  H.  119,  38  Atl.  120;  Gor-  7.  New  York,  &c.,  R.  R.  v.  Nickals, 

don  V.  Richmond  &  R.  Co.,  78  Va.  501.  119  U.  S.  296;  Field  v.  Lamson  Co., 

See,  however,  Niles  v.  Ludlow  Valve  27  L.  R.  A.  136,  n.,  162  Mass.  388. 

Mfg.  Co.,  202  Fed.  141,  20  C.  C.  A.  8.  Morawetz,  §  348 ;  Pratt  v.  Pratt, 

319.  33    Conn.    446;    Smith    v.    Prattville 

772 


CHAP.  IX.]  SHARES    OF    STOCK.  §    510 

a  debt  due  from  the  corporation  to  the  individual  stockholder ;  and, 
as  it  is  said,  the  right  to  the  profits  becomes  individualized,  while 
the  duty  to  distribute  in  certain  proportions  becomes  attached  as 
a  right  to  each  member  distributivelj.^  Accordingly,  where  a 
dividend  is  declared,  and  the  money  is  deposited  in  a  bank,  and 
the  bank  fails,  it  is  held  that  the  corporation  must  pay  to  the 
stockholders  notwithstanding.^  For  the  dividend  is  strictly  de- 
mandable  by  each  stockholder  at  the  office  of  the  company;  and 
where  it  is  paid  through  some  bank,  the  bank  is  merely  an  agent 
of  the  company.  Dividends  are  declared  by  some  formal  act  of 
the  corporation  or  its  directors. 

One  who  purchases  stock  has  the  right,  upon  completion  of  his 
transfer,  to  all  dividends  subsequently  declared  by  the  corporation ; 
and  it  makes  no  difference,  so  far  as  his  rights  are  concerned,  that 
the  surplus  fund  from  which  a  dividend  is  declared  was  earned  in 
great  part  before  he  became  a  stockholder.^ 

A  genuine  stockholder  may  proceed  in  equity  to  restrain  the 
payment  of  dividends  to  the  holders  of  spurious  stock,  and  the 
directors  of  the  corporation  may  be  enjoined  from  misapplying 
the  funds  for  any  such  wrongful  purpose.''  To  enforce  the  pay* 
ment  of  one's  own  rightful  dividend,  a  suit  in  assumpsit  is  prop- 
erly brought  against  the  corporation;  but  a  demand  should  first 
be  made."^  Peculiar  considerations  apply,  however,  to  the  holder 
of  guaranteed  and  preferred  stock  in  this  respect ;  ^  and  the  right 

Man.    Co.,    29    Ala.    503 ;    Taylor,    §§  of  shares,  stock  dividends,  &c.,  sujyra, 

562,  563.  §§  143,  483. 

9.  Jackson  v.  Newark  P.  R.  Co.,  31  3.  Abb.  Difr.  Corp.  302 ;   Morawetz, 

N.  J.  Law,  277;  Abb.  Dig.  301;  King  §    351;    2    Edw.    Ch.    657;    Beers    v. 

V.  Paterson   R.   R.   Co., '5   Dutch.   82,  Bridgeport  Spring  Co..  42  Conn.  17. 
504.     And  see  Le  Roy  v.  Globe  Ins.  4.  Abb.  Dig.  303 :  King  v.  Paterson 

Co.,  2  Edw.   657;  Morawetz,  §  351.  R.   R.   Co.,   5   Dutch.   504;    Morawetz, 

1.  lb.  §  351 ;  Hagar  v.  Union,  Nat.  Bank,  63 

2.  March  v.  Eastern  R.  R.  Co.,  43  Me.  509. 

N.    H.    515;    Goodwin    v.    Hardy,    57  5.  See    VVilliston    v.    Michigan.    *c. 

Maine,    143.     See   as   to   the   bequest      R.  R.  Co.,  13  Allen  400:  supra,  §483. 

773 


§  511 


THE  LAW  OF  PERSONAL,  PROPERTY. 


[part  III. 


of  such  shareholder  to  compel  the  declaration  of  a  dividend  where 
funds  which  are  applicable  exist  is'  strongly  asserted.^ 

§  511.     Liabilities  of  a  Stockholder;  How  Far  Liable  for  Corpo- 
rate Debts. 

Fourthly,  concerning  a  stockholder's  liabilities.  These  are  to 
be  veiwed  both*  with  relation  to  the  public  and  to  the  corporation 
itself.  As  concerns  the  public,  a  stockholder  may  be  regarded  as 
personally  responsible  to  a  greater  or  less  degree  for  debts  incurred 
by  or  on  behalf  of  the  corporation,  though  perhaps  only  remotely 
so.  How  fer,  then,  is  he  responsible  ?  At  the  common  law  there 
is  a  distinction  taken  between  the  personal  liability  of  members 
of  private  corporations,  and  that  of  members  of  such  public  cor- 
porations as  towns  and  counties;  for,  as  to  the  former  class,  no 
individual  liability  attaches  tx>  the  members,  though  the  corpora- 
tion may  be  sued  directly ;  while  as  to  the  latt-er,  though  the  power 


6.  Boardman  v.  Lake  Shore  R.,  84 
N.  Y.  157;  N.  Y.,  &c.  R.  R.  v.  Nick- 
als,  119  U.  S.  296;  Taylor,  §  563. 

See  Hyams  v.  Old  Dominion  Co., 
91  Atl.  1069  (mem.  dec),  affirming 
same  case,  82  N".  J.  Eq.  507,  89  Atl. 
37;  Godley  v.  Crandall,  212  N.  Y.  121, 
105  N.  E.  818,  L.  R.  A.  1915  D. 
632,  n.  (stockholder's  action  where 
a  dividend  declared  is  withh-eld)  ; 
Goetz's  Estate,  236  Pa.  630,  85  Atl. 
65. 

While  a  shareholder  cannot  sue  the 
corporation  as  a  mere  claimant  of  its 
accumulated  earnings,  and  directors 
have  a  clear  'bona  fide  discretion  in 
declaring  dividends,  the  equity  courts 
will  interfere  in  a  clear  case  to  com- 
pel a  declaration.  Spear  v.  Rockland 
Co.,  113  Me.  385,  79  Atl.  533.  But 
this  is  done  reluctantly  if  at  all. 
Smith  V.  Southern  Foundry  Co.,  166 
Ky.   208,  179'  S.   W.   205. 

See,  further,  National  Bank  of  Com- 


merce V.  Equitable  Co.,  227  Fed.  526, 
142  C.  C.  A.  158  (right  of  pledgee  to 
dividends). 

As  a  rule  dividends  should  only  be 
paid  out  of  profits  or  surplus  net 
•earnings.  Northern  Bank  &  Trust  Co. 
v.  Day,  83  Wash.  296,  145  Pac.  182. 
And  see  Grafton  Co.  v.  State,  77  N.  H. 
539,  94  Atl.  193  (private  and  not 
public  considerations)  ;  Union  Trust 
Co.  V.  Taintor,  85  Conn.  452,  83  Atl. 
697  (capital  not  to  be  impaired)  ; 
O'Shields  v.  Union  Foundry,  93  S.  C. 
39'3,  76  N.  E.  1098  (corporation  not 
free  from  debt)  ;  Godley  v.  Crandall 
Co.,  153  App.  Div.  697,  139  N.  Y.  236 
(stockholders  of  the  eame  class  to  be 
treated  alike) . 

"  Stock  dividends "  considered  in 
Union  Trust  Co.  v.  Taintor,  85  Conn. 
452.  83  Atl.  697 ;  Gray  v.  Hemenway, 
212  Mass.  239,  98  N.  E.  789;  Balan- 
tine  V.  Young,  79'  N.  J.  E.  70,  81 
Atl.  119. 


774 


CHAP.  IX.]  SIIAEES    OF    STOCK.  §    511 

to  sue  is  first  conferred  bj  statute,  each  inhabitant  is  liable  to 
satisfy  the  judgment.''  So  far  as  a  joint-stock  corporation  is 
concerned,  which  is  only  a  species  of  private  corporation,  there  is 
at  law  no  immediate  personal  liability  of  the  members  at  law  for 
corporate  debts;  and  as  statutes  usually  read,  liability  in  any 
case  is  limited  by  the  actual  investment;  and  herein  consists  a 
great  advantage  which  these  corporations  enjoy  over  partnerships, 
since,  as  we  have  seen,  every  member  of  a  firm  is  responsible  for 
all  the  debts.^ 

Coming,  however,  more  directly  to  the  individual  liability  of 
shareholders  in  a  joint-stock  corporation,  we  observe  that  in  daily 
practice  the  subject  is  found  to  depend  almost  entirely  upon  the 
construction  of  charters  and  of  special  or  general  statutes ;  nor 
does  it  appear  that  a  uniformity  of  construction  is  applied  to  stat- 
utes of  this  description.  We  have  said  that  by  common  law  the 
shareholders  or  members  of  such  corporations  are  not  individually 
liable  for  the  corporate  debts ;  and  since  positive  law  fastens  the 
obligation,  if  any,  and  defines  its  limits,  so  is  it  fair  that  pro- 
visions imposing  the  obligation  should  be  construed  strictly. 
Where  neither  a  charter  nor  any  act  of  the  legislature  creates  this 
individual  liability,  a  mere  by-law  of  the  corporation  is  not  enough 

7.  See  2  Kent  Com.  221;  Ang.  &  business,  complicated  questions  may 
Ames,  §  629.  arise  as  to  the  transfer  of  individual 

8.  lb.;  Abb.  Dig.  Corp.  376-412;  liabilities,  by  reason  of  the  act  of  in- 
Merchants'  Bank  v.  Cook,  4  Pick.  corporation.  Tlie  general  principles 
414,  supra,  §§  215,  247.  Of  course,  of  the  law  of  partnership  (which  ap- 
by  a  joint-stock  corporation  we  mean  ply  to  such  cases)  have  been  marked 
one  that  is  regularly  incorporated  out  already;  and  we  need  only  say 
under  a  charter  or  act  of  the  legisla-  here  that,  while  an  act  of  incorpora- 
ture;  for  a  joint-stock  company,  so  tion  might  operate  as  a  dissolution 
called,  is  much  the  same  as  a  partner-  of  the  previou.s  company,  yet  the 
ship,  so  far  as  the  personal  liability  members  remain  liable  still  as  part- 
of  its  members  is  concerned.  See  ners  to  those  who  had  no  notice  of 
supra,  §§  201-205.  the     dissolution,    where    they    go    on 

Where  partners,  or  the  associates  using  the  old  name  of  the  company 
in  an  unincorporated  joint-stock  com-  as  before.  See  Ang.  4  Amos,  8th 
pany,  procure  an  act  of  incorpora-  (ni.,  §  522  and  n.:  Coddard  v.  Pratt, 
tion,   and   go   on   with    their   former      16   Pick.    412;    Whitwell   v.   Warner, 

775 


§  512  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

to  give  it  a  legal  existence.^  The  common-law  rule  of  individual 
exemption  from  liability  has  been  frequently  asserted,  and  in 
extreme  cases;  as,  for  instance,  where  the  members  manifested  a 
mistaken  impression,  in  the  corporate  dealings,  that  they  were 
personally  responsible.^  A  stockholder  is  not  answerable  for  judg- 
ments obtained  against  the  corporation;  nor  can  the  treasurer  be 
made  to  respond  in  his  personal  capacity  for  liabilities  which  are 
properly  presentable  to  him  as  a  corporate  officer.^  I^ot  even  does 
a  decree  of  dissolution  per  se  make  the  stockholders  personally 
liable  for  the  debts  of  the  concern.^  Judgments  enforced  directly 
against  the  corporation  might,  however,  exhaust  the  corporate 
property,  leaving  the  corporate  stock  worthless. 

§  512.     The  Same  Subject;  Rule  of  Equity. 

Now  how  far  is  a  stockholder  personally  liable  in  equity  for  the 
corporate  debts  ?  It  was  ruled  by  Judge  Story,  in  a  leading  case, 
that  the  capital  stock  of  a  bank  is  a  trust  fund  for  the  payment 
of  its  notes ;  and  that  if,  before  the  expiration  of  its  charter,  the 
capital  stock  be  divided  among  the  stockholders  without  making 
adequate  provision  for  the  outstanding  notes,  it  may  be  followed 
in  equity  into  the  hands  of  the  stockholders.  In  such  case  the 
decree  against  the  stockholders  before  the  court  should  be  for  their 
contributory  share  of  the  debt,  in  the  proportion  which  their  stock 
bore  to  the  whole.'*     This  doctrine  has  since  been  applied  in  a 

20  Vt.  425.     And  see  swpra,  §§  192,  not  relieve  stockholder  from  liability 

1&3.  to   creditors.      Book    5,   N.    Y.    Rpts., 

9.  Ang.  &  Ames,  §§  SffS  et  seq.;  Bender  ed.,  note,  p.  213.  Liability 
Trustees  of  Free  Schools  v.  Flint,  13  of  stockholders  in  foreign  corpora- 
Met.  539.  tions.     Book  30,  N.  Y.  Rpts.,  Bender 

1.  Vincent  v.  Chapman,  10  Gill  &  ed.,    note,    p.    437.      \Miat   are    labor 

J.   279.     Liability   of  stockholders  to  debts  for  which  stockholders  are  lia- 

creditors.     Book    30,    N".    Y.     Rpts.,  ble.     Book  5,  N.  Y.  Rpts.,  Bender  ed.. 

Bender  ed.,  note,  p.  23.     Liability  of  note,  p.  747. 

stockholders  for  rent.     Book  4,  N.  Y.  2.  French  r.  Fuller,  23  Pick.   108; 

Rpts.,  Bender  ed.,  note.  p.  313.     How  Whitman  v.  Cox,  26  Me.  335. 

debt  established  against  stockholders.  3.  Tarbell  v.  Page,  24  111.  46. 

Book  5,  N.  Y.  Rpts.,  Bender  ed.,  4.  Wood  v.  Dummer,  3  Mas.  308. 
note,  p.  35.     Misconduct  of  company 

776 


CJIAP.  IX.]  SHARES    OF    STOCK.  §    513 

number  of  instances;  courts  of  equity  assuming  jurisdiction  in 
the  premises,  and  dealing  with  the  capital  stock  as  a  trust  fund 
for  the  like  purposes.^  The  liability  of  subscribers  to  assessment, 
their  unpaid  subscriptions  to  the  capital  stock,  the  surplus  funds 
of  the  corporation  undistributed  as  dividends, —  all  of  these  equity 
has  laid  hold  of,  to  enforce  pajment  of  the  debts  of  an  insolvent 
corporation.  Here  the  suit  should  be  that  of  one  or  more  creditors 
on  behalf  of  all  and  not  for  any  exclusive  or  partial  benefit ;  but 
in  general  a  bill  may  be  brought  against  the  stockholders  after 
the  creditors  have  exhausted  all  legal  means  against  a  corporation 
which  fails  to  assess  and  satisfy.^  And  the  rule  of  individual 
liability  has  thus  been  enforced  in  equity  to  an  extent  unknown 
in  courts  of  law,  where  general  principles  offer  the  only  rule  of 
guidance. 

§  513.     The  Same  Subject;  Modern  Legislative  Policy. 

But  in  these  later  times  legislative  policy  largely  discounte- 
nances the  common  law  in  this  respect,  and  lends  a  strong  support 
to  the  doctrines  of  equity.  Thus,  in  many  States,  the  stockholders 
of  joint-stock  corporations  are  now  made  personally  liable  to  a 
considerable  extent  for  the  corporate  debts;  or,  at  any  rate,  the 
liability  of  each  shareholder  extends  in  specific  terms  to  the  inter- 
est which  he  holds  in  the  concern.''  Statutes  like  these  come  up 
frequently  for  construction  in  the  courts;  and  sometimes  it  is 
found  that  the  legislative  provisions  are  aimed  at  some  particular 
kinds  of  joint-stock  corporations,  such  as  those  organized  for  manu- 
facturing or  mechanical  purposes.  The  fairer  r\ile  seems  to  be 
to  limit  the  personal  liability  of  stockholders  to  the  nominal  value 

5.  See  Ang.  &  Ames,  8th  ed.,  §§  600-  7.  See  Anp.  &  Ames.  8th  ixi.,  §§  605- 
605  and  n. ;  Cooper  v.  Frederick,  9  609  and  n.;  CreaSe  v.  Babcock.  10 
Ala.  742;  Dudley  v.  Price.  10  B.  Met.  547 ;  Hitchins  v.  Kilkenny  R.  R. 
Monr.  84;  Bigelow  v.  Cong.  Society,  Co.,  15  C.  B.  459;  Rosevelt  v.  Brow-n. 
11  Vt.  283;  Ward  v.  Griswoldville  1  Kern.  148;  Garrison  v.  Howe,  17 
Manuf.  Co.,  16  Conn.  593.  N.  Y.  458. 

6.  Handley  v.  Stutz,  137  U.  S.  366 ; 
131  U.  S.  319. 

777 


§  513  THE  LAW  OF  PERSONAL  PEOPEKTY.       [PA~.T  III. 

of  their  sihares,  except  in  cases  of  fraud,  or,  when  the  statute  is 
explicit  otherwise,  in  matters  of  public  policy.  Where,  as  is 
sometimes  the  case,  stockholders  are  subjected,  each  in  his  private 
estate,  to  the  debts  of  the  corporation,  the  equity  rule  is  transcended 
by  the  legislature, —  since  that  only  treats  the  capital  stock  as  a 
trust  fund, —  and  the  anomaly  is  introduced  of  a  corporation  com- 
posed of  persons  who  might  as  well  have  prosecuted  their  enter- 
prise without  being  incorporated  at  all.^  Under  these  circum- 
stances, the  stockholder  derives  little  substantial  comfort  from  the 
legal  provisions  sometimes  inserted,  which  require  creditors  to 
first  obtain  judgment  against  the  corporations.^ 

But  officers  and  trustees  of  corporations  are  sometimes  made 
by  statute  personally  liable  to  the  corporate  creditors  for  neglect 
in  performing  their  duties;  and  the  legislative  policy  may  wisely 
discriminate  between  the  officers  and  shareholders  of  a  corporation, 
making  the  latter  only  liable  by  way  of  sureties;  while  holding 
the  former,  who  manage  the  business  and  ought  to  know  the 
condition  of  affairs,  responsible  in  the  first  instance.^  On  the 
other  hand,  the  managers  of  the  business  corporation,  or  some 
outside  committee  which  controls  the  creditors  of  an  insolvent  con- 
cern, will  sometimes  force  a  reorganization  of  the  corporation,  on 
a  basis  which  scales  down  the  stock  or  otherwise  compels  a  virtual 
assessment  upon  the  shareholders.^ 

Statutes,  again,  sometimes  provide  for  the  division  of  the  capi- 
stal  stock  into  "general  stock"  and  "special  stock;"  holders  of 
the  special  stock  being  made  liable  for  the  corporate  debts  only  to 
the  extent  of  their  stock,  while  holders  of  the  general  stock  are 
jointly  and  severally  liable  for  the  corporate  debts ;  and  this  ar- 
rangement is  similar  to  that  of  a  limited  partnership  with  general 

8.  See  Longley  v.  Little,  26  Me.  H^arrison  v.  Armour,  169  Cal.  78r, 
162;    Abb.    Dig.    Corp.    400;    Moss   v.       147  Pac.  166    (valuation). 

Oakley,  2  Hill,  269;  Eaton  v.  Aspin-  1-  Cambridge  Waterworks  v.   Som- 

wall    19  N.  Y.  119.  erville  Dyeing,  &c.  Co.,  4  Allen,  239; 

9.  See    Corning    v.    McCuUough,    1  Waters  v.  Quimby,  3  Dutch.  198. 
Comst.    47;    Ang.    &    Ames,    §    612;  2.  See  §  416. 

778 


CHAP.  IX.] 


SHARES  OF  STOCK, 


§  514 


and  special  partners.^  And  once  more  our  general  statutes  relat- 
ing to  corporations  provide  not  unfrequentlj  that  the  joint  and 
several  liability  of  stockholders  shall  extend  only  to  specified 
instances.'^ 

§  514.     The  Same  Subject. 

It  is  hardly  necessary  to  add  that  all  these  statutes  which  extend 
the  common-law  responsibilities  of  shareholders  ought  to  receive 
a  strict  construction.  Indeed,  a  legislature  which  has  reserved 
no  power  to  alter  a  corporate  charter  cannot  retrospectively  in- 
crease the  individual  liability  of  the  corporate  shareholders  after- 
wards; for  this  would  be  in  violation  of  constitutional  law.^  Yet, 
on  the  other  hand,  if  a  statute  makes  the  stock  of  shareholders 
liable  for  the  corporate  debts,  its  subsequent  repeal  would  be 
unconstitutional  as  respects  existing  creditors.*^ 


3.  See  N.   Y.   Act  of   1855,   c.   290. 

4.  In  Massachusetts  a  general  stat- 
ute provides  that  president  and  di- 
rectors shall  be  jointly  and  severally 
liable  only  for  consequences  of  con- 
senting to  a  dividend  which  renders 
the  corporation  insolvimt,  or  of  loan- 
ing to  a  stockholder,  or  of  signing 
false  statements  of  the  condition  of 
the  corporation.  St.  1903,  c.  437, 
§§  34,  35.  Stockholders  are  liable 
only  (under  certain  qualifications) 
for  debts  contracted  before  the  orig- 
inal capital  is  fully  paid  in ;  for 
debts  due  to  operatives;  for  such 
amounts  as  may  be  requisite  to  re- 
deem special  stock,  or  for  the  pay- 
ment of  debts  existing  at  the  time 
the  capital  is  reduced,  to  the  extent 
of  the  sums  vpithdrawn  and  paid  to 
stockholders.  Stockliolders  and  of- 
ficers are  not  liable  until  judgment 
is  recovered  against  tlie  corporation 
and  returned  unsatisfied.  The  statute 
expression  is  quite  cautious  on  most 

779 


of  these  points.  St  1903,  c.  437,  §§ 
33,  36.  Statutes  of  this  character, 
with  variations  of  expression,  are  to 
be  found  in  most,  if  not  all,  of  the 
United   States. 

See  Holcombe  v.  Trenton  Co.,  82 
N.  J.   Eq.  364,  91  Atl.  1069. 

5.  Ang.  &  Ames,  §  767;  Sherman 
v.  Smith,  1  Black,  587. 

6.  Hawthorne  v.  Calef,  2  Wall.  10. 

See,  further,  on  this  subject  of  in- 
dividual statutory  liability,  Mora- 
wetz,  §§  600-628,  and  cases  cited; 
Hawthorne  v.  Calef,  2  Wall.  10;  Pol- 
lard v.  Bailey,  20  Wall.  520;  Terry 
v.  Little,  101  U.  S.  216.  That  one  is 
not  liable  as  a  "stockholder,"  within 
the  meaning  of  such  acts,  who  has  sold 
his  shares,  though  still  registered  on 
the  books,  see  Cutting  v.  Damerel, 
88  N.  Y.  410;  Waki^ficld  v.  Fargo. 
90  N.  Y.  213.  But  one  cannot  transfer 
his  shares  to  some  irresponsible  yxT- 
son,  when  a  corporation  is  in  failing 
circumstances,  so  as  to  avoid  further 


§  516         THE  LAW  OF  PEESONAL  PROPERTY.      [PART  III. 

§  515.     Liability  of  Stockholders  for  Torts  of  a  Corporation. 

The  personal  liability  of  shareholders  for  debts  of  the  corpora- 
tion  is  one  thing,  and  for  claims  or  demands  growing  out  of  a 
tort  quite  another.  Yet,  on  the  usual  principles,  where  persons 
obtain  undue  advantage  by  fraud  and  deceit  in  a  certain  business, 
and  thereby  mislead  bond  fide  creditors,  they  are  personally 
liable,  even  though  the  business  was  carried  on  in  the  name  of  a 
corporation.^ 

§  516.     Liability  of  Stockholders  for  Calls,  Assessments,  etc. 

It  remains  to  speak  of  that  other  liability  of  stockholders  which 
has  reference  to  the  corporation  itself,  and  is  known  as  the  liability 
for  assessments,  or  calls.  Railway,  mining,  and*  other  companies 
are  frequently  organized  and  put  into  operation  without  sufficient 
funds  to  complete  the  projected  work.  If  the  demand  of  the 
corporation  upon  the  subscriber  was  split  up  so  that  his  subscrip- 
tion became  payable  in  instalments,  he  may  be  called  to  pay  each 
instalment  as  fast  as  it  becomes  due ;  and  the  term  "  assessment  " 
in  this  country,  or  "  call "  in  England,  is  sometimes  applied 
accordingly.  But  these  terms  are  substantially  equivalent;  and, 
more  correctly  speaking,  there  is  an  "  assessment "  or  ''  call  " 
where  the  corporation,  instead  of  iss-uing  new  shares  or  getting 
further  instalments  from  subscribers,  relieves  itself  of  pecuniary 
embarrassment  by  levying  a  sort  of  tax  upon  the  shares  outstand- 
ing. The  power  of  a  corporation  to  assess  shares  in  this  way  must 
depend  upon  the  nature  of  the  subscribers'   engagement,  or  be 

liability  to  creditors  on  his  own  part,  who  in  good  faith  trust  the  corpora- 
Taylor,  §  749  ;  Bowden  v.  Johnson,  tion  on  the  faith  of  such  subscriptions 
107  U.  S.  251;  Richmond  v.  Irons,  and  the  security  of  a  capital,  stand 
121  U.  S.  27.  in  the  position  of  innocent  purchasers 
7.  Medill  v.  Collier,  16  Ohio  St.  for  value  to  the  extent  of  their 
599;  Abb.  Dig.  378;  Whitwell  v.  equitable  lien.  Oakes  v.  Turquand, 
Warner,  20  Vt.  425.  Fraud  in  a  con-  L.  E.  2  H.  L.  325;  3  C.  P.  D.  307; 
tract  —  e.  g.,  for  a  subscription  to  Morawetz,  §  595.  And  see  Mr.  Jus- 
shares  —  renders  the  contract  void-  tice  Miller  in  Upton  v.  Tribilcock, 
able  at  the  instance  of  the  defrauded  91  U.  S.  55. 
pajty.    But  it  is  settled  that  creditors 

780 


CHAP.  IX.]  SHARES    OF    STOCK.  §    516 

derived  from  the  charter  or  statute ;  for  at  common  law  a  corpo- 
ration, as  incident  to  its  corporate  existence,  has  no  legal  right  to 
assess  for  its  own  use  a  sum  of  money  upon  the  members,  or  the 
corporate  stock,  and  compel  the  payment  thereof  by  an  action  at 
law.  The  power  of  taxation  must  be  derived  either  from  the 
shareholders'  express  promise,  or  from  the  legislature,  the  fountain 
of  authority  in  matters  relative  to  corporations.^ 

The  extent  of  a  stockholder's  liability  (aside  from  statute)  to 
pay  future  assessments  depends,  then,  upon  the  extent  of  the 
engagement,  on  his  part,  which  is  sometimes  to  pay  assessments 
upon  all  the  shares  he  may  at  any  time  own,  and  sometimes  to  pay 
upon  those  only  for  which  he  originally  subscribed;  in  fact,  the 
contract  may  take  a  variety  of  shapes,  according  to  the  mutual 
intent  of  the  parties  concerned.^  Where  the  legislature  has  inter- 
vened in  the  matter,  the  provision  is  sometimes  that  all  assess- 
ments shali  be  determined  by  the  directors,  or  sometimes  that  the 
corporation  alone,  and  not  the  directors,  shall  exclusively  exercise 
the  power;  and  where  the  statute  declares  that  no  assessment 
beyond  a  fixed  sima  shall  be  laid,  any  further  assessment  would  be 
void.^  All  of  the  legal  formalities  should  be  carefully  followed, 
even  to  the  notice  of  meeting  for  voting  an  assessment.  When 
stock  is  subscribed  to  be  paid  upon  call  of  the  company,  or  an 
assessment  is  proper,  and  the  company  refuses  or  neglects  to  do 
its  own  duty  in  the  matter,  a  court  of  equity  may  itself  make  the 
requisition  when  the  interests  of  the  creditors  require  it.^  But 
any  such  call  or  assessment  should  be  compelled  in  the  name  of 
the  corporation  or  person  legally  entitled  to  make  it.^ 

8.  See  Abb.  Dig.  Corp.  25-40;  Aug.  2.  Hawkins  v.  Glenn.  131  U.  S.  319; 
&  Ames,  §  544;  Morawetz,  §  281.  Richardson   v.   Green,    133   U.   S.   30; 

9.  lb.;  Franklin  Glass  Co.  v.  Alex-  Glenn  v.  Lijrfjett,  135  U.  S.  533. 
ander,  2  N.  H.  380;  Seymour  v.  Stur-  3.  Glenn    v.    Marbury,    145    U.    S. 
gess,  26  N.  Y.  134;  Palmer  v.  Ridge  499.      The    liability    of    stockholders 
Mining  Co.,  34  Penn.  St.  288.  here  is  several  and  not  joint.     Hart- 

1.  Winsor,  ex  parte,  3  Story,  411;       nett  v.  St.  Louis  Co.,  51  Monr.  395, 
Lewey's   Island  R.   R.   Co.  v.  Bolton.      153  Pac.  43T 
48  Me.  451. 

781 


§  517  THE  LAW  OF  PEESONAL  PROPEETY.      [PART  III. 

§  517.     The  Same  Subject. 

Whether  a  corporation  may  sue  a  subscriber  in  the  first  instance, 
upon  his  agreement  to  take  shares,  is  a  point  on  which  the  authori- 
ties are  somewhat  at  variance.  Forfeiture  and  sale  of  the  delin- 
quent person's  shares  is  a  common  remedy  given  as  a  penalty  for 
any  failure,  on  a  stockholder's  part,  to  pay  his  legal  assessments. 
These  and  similar  provisions  seem  sometimes  to  be  regarded  as 
affording  a  merely  cumulative  remedy ;  but  the  better  rule  appears 
to  be,  that  where  one  has  .made  an  express  promise  to  pay  the 
assessments,  he  may  be  sued  directly  upon  this  promise,  before 
any  sale  of  his  shares  is  made;  and  that  where  his  promise  was 
only  to  take  a  specified  number  of  shares,  and  he  did  not  expressly 
agree  to  pay  assessments,  his  shares  must  be  sold  before  any 
action  will  lie  against  him."^  Where  an  original  subscriber  makes 
himself  liable  for  calls  for  instalments  on  his  shares,  his  liabilities 
are  frequently  transmitted  to  the  purchaser  from  him,  so  far  as 
concerns  calls  subsequent  to  the  purchase;  provided  always  that 
such  transfer  is  made  in  good  faith  on  his  part ;  ^  and  this  is  in 
conformity  with  the  usual  rule  as  to  a  stockholder's  rights  and 
liabilities.^ 

Questions  frequently  arise  as  to  the  liability  of  a  stockholder 
where  he  sells  his  stock  and  the  transfer  is  not  properly  noted  on 
the  corporation  books.  The  general  rule  seems  to  be  that  if  the 
failure  to  register  is  not  the  fault  of  the  stockholder,  but  is  due  to 
negligence  of  the  corporate  officer,  the  stockholder  is  not  liable  still 
to  an  assessment  after  a  transfer  in  good  faith ;  but  if  the  failure 
to  record  is  the  result  of  his  own  carelessness  he  remains  liable  as 
a  stockholder.^ 

Independently  of  statute,  equity  has  sometimes  interfered  where 
there  were  strong  reasons  for  so  doing ;  as,  for  instance,  to  relieve 

4.  See  N.  H.  Central  R.  R.  Co.  v.  6.  Merrimac  Mining  Co.  v.  Levy,  54 
Johnson,    10    Fost.    390;    Abb.    Dig.      Penn.  St.  227. 

Corp.  39,  and  cases  cited.  7.  Bank  of  Midland  v.  Harris,  114 

5.  See  §  514,  note.  Ark.  344,  170  S.  W.   67.     See  Earle 

V.  Carson,  188  U.  S.  42. 

782 


CHAP.  IX.]  SHAKES    OF    STOCK.  §    517a 

against  a  demand  for  a  call  or  assessment  which  is  fraudulently 
levied  by  the  corporation;  or  to  compel  the  payment  of  unpaid 
calls  or  assessments,  for  the  benefit  of  creditors,  where  the  direct- 
ors have  failed  to  perform-  their  duty  with  diligence.^ 

§  517a.     Rights  of  Stockholders  on  Dissolution. 

The  winding  up  of  a  corporation  may  last  for  a  considerable 
time  after  it  :bas  ceased  to  do  business-.^  And  the  rights  of  the 
stockholders  in  regard  to  the  assets  of  an  expiring  corporation  are, 
in  absence  of  an  agreement  to  the  contrary,  to  have  the  property 
converted  into  cash  and  its  value  ascertained  by  a  sale ;  and  this 
even  though  a  sale  is  not  necessary  for  the  payment  of  debts.' 
In  fact  the  properties  of  a  corporation  constitute  a  trust  fund ; 
first  for  the  payment  of  debts,  and  next  for  distribution  among 
the  stockholders  according  to  their  respective  interests ;  and  if 
the  directors  dispose  of  the  assets  to  the  prejudice  of  these  parties 
in  interest,  in  reckless  or  fraudulent  disregard  of  the  trust  com- 
mitted to  them,  equity  will  hold  them  to  account  and  follow  the 
diverted  funds.^ 


8.  See  Thorpe  v.  Hughes,  3   My.  &  tees  v.  Akers,  157  Ky.  649,  163  S.  W. 

C.  742;  Ward  v.  Griswoldville  Manuf.  1117. 

Co.,  16  Conn.  593;  also  1  Redf.  Railw.,  9.  See  §§  242-24-4. 

3d  ed.  212,  214.     And  see  Oglesby  v.  1.  Mason  v.  Pewabic  Min.  Co..  133 

Attrill,  105  U.  S.  60^;   §  516.  U.  S.  50. 

Subscribers  to  .stock,  who  have  ex-  2.  Fogg  v.  Blair,  139  U.  S.  118; 
pended  money  and  incurred  liability  Chicago  R.  R.  Co.  v.  Chicago  Bank, 
as  trustees  on  behalf  of  an  associa-  134  U.  S.  276-.  See  In  re  Osborne, 
tion,  both  before  and  after  its  incor-  153  App.  Div.  312,  138-  N.  Y.  518. 
poration,  cannot  compel  the  other  The  subject  of  stock  is  considered 
subscribers  to  contribute,  indepen-  at  more  or  less  lengtli  in  general  works 
dently  of  some  agreement  to  that  cf-  on  corporations.  The  reader  is  re- 
fect. Shibley  v.  Angle,  37  N.  Y.  626.  ferred  to  the  general  treatises  of 
See  as  to  enforcing  the  liability  of  Angelt  &  Ames.  Morawetz,  Henry  0. 
stockholders  in  a  foreign  corporation,  Taylor,  and  G.  W.  Field,  accordingly; 
Erickson  v.  Nesmith,  15  Gray,  221;  also  to  Mr.  .S.  D.  Thompson'.*  ex- 
9.  c.  4  Allen,  233;  s.  c.  46  N.  H.  371.  tensive  treatise  on  Cbrporations    (six 

See  Wilson  v.  Colorado  Mining  Co.,  volumes),  which  is  in  course  of  publi- 

227     Fed.     721,     142     C.     C.     A.     245  cation      (1895).       All     of     these     are 

(pledgor    assessed)  ;    Guthrie's    Trus-  American    works,    with    references    to 

783 


CHAPTER    X 

PATENTS    AND   COPYRIGHTS 

§  518.     General  Policy  of  Patent  and  Copyright  Laws. 

The  wise  policy  of  promoting  the  progress  of  science  and  useful 
arts  "  by  securing,  for  limited:  times,  to  authors  and  inventors, 
the  exclusive  right  to  their  respective  writings  and  discoveries," 
was  favored  in  this  country  .at  the  time  when  the  Constitution  of 
the  United  States  was  framed;  and  to  Congress  was  granted  by 
that  instrument  the  power  of  regulating  and  enforcing  such  a 
policy.  The  power  thus  conferred  has  since  been  exercised  by 
Congress  to  the  exclusion  of  the  State  legislatures.  Accordingly 
we  have  for  inventors  patent  rights,  and  for  authors  a  system  of 
copyrights, —  pe'cuniary  interests  often  of  great  value,  which  are 
in  the  nature  of  incorporeal  rights,  and  constitute  each  a  species 
of  personal  property.^ 

Letters-patent  evince  the  title  of  the  inventor,  and  t'hese  are 
issued  from  the  Patent  Office  under  the  Commissioner's  seal ;  but 
an  author's  title  is  less  formally  exliibited,  while  his  right  is  a 
corresponding  one  in  the  main.  In  either  case,  the  party,  who 
seeks  that  exclusive  enjoyment  of  the  writing  or  discovery  which 
alone  makes  it  valuable  property  as  against  the  world,  complies 
with  certain  legal  requirements,  and  in  return  is  allowed  for  a 
certain  number  of  years  the  sole  right  to  this  product  of  his  brain 

both  English  and  American  decisions,  terson  v.  Kentucky,  97  U.  S.  501.  A 
See  final  note  to  §  247  ante.  State  tax  or  license  law  may  apply 
1.  Where  tangible  property  comes  to  the  tangible  property  in  which  the 
into  existence  by  virtue  of  an  inven-  invention  or  discovery  is  embodied, 
tion  or  discovery  for  which  letters-  Webber  v.  Virginia,  103  U.  S.  344. 
patent  issue,  its  use  is,  to  the  same  The  government  of  the  United 
extent  as  that  of  other  species  of  States,  or  of  a  State,  ought  to  corn- 
property,  subject  within  the  several  pensate  the  owner  of  a  patent,  if 
States  to  the  exercise  of  their  powers  using  the  patent.  James  v.  Camp- 
over  domestic  affairs,  whether  of  in-  bell,  104  U.  S.  356. 
ternal  commerce  or  of  police.     Pat- 

784 


CHAP.  X.]  PATENTS    AND   COPYRIGHTS.  §    519 

which  otherwise  would  have  belonged  to  the  public.  For  neither 
an  inventor  nor  an  author,  here  or  abroad,  has  any  exclusive  right 
of  property  in  his  invention  or  writing,  after  publishing  it,  except 
under  and  by  virtue  of  the  statutes,  foreign  or  dome-stice,  securing 
it  to  him,  and  in  accordance  with  the  regulations,  and  restrictions 
of  those  statutes.^ 

§  519.     Patents  First  to  be  Considered;  Subjects  Patentable. 

1.  Taking  up  first  in  order  the  subject  of  patents,  which  has 
grown  in  this  country  to  be  of  immense  importance, —  affording 
abundant  business,  both  for  solicitors  of  latters-p'atent  before  the 
Patent  Office  and  counsel  in  cases  of  conflicting  rights  before  the 
courts, —  let  us  see  what  subjects  may  be  patented  under  our  laws. 
The  act  of  1870  declares  that  "  any  person  who  has  invented  or 
discovered  any  new  and  useful  art,  machine,  manufacture,  or  com- 
position of  matter,  or  any  new  and  useful  improvement  thereof, 
not  known  or  used  by  others  in  this*  country,  and  not  patented  or 
described  in  any  printed-  publication  in  this  or  any  foreign  coun- 
try, before  his  invention  or  discovery  thereof,  and  not  in  public 
use  or  on  sale  for  more  than  two  years  prior  to  his  application, 
unless  the  same  is  proved  to  have  been  abandoned,  may,  upon  pay- 
ment of  the  fees  required  by  the  law,  and  other  due  proceedings 
had,  obtain  a  patent  therefor."  ^ 

2.  See  Dable  Co.  v.  Flint,  137  U.  S.  of  that  of  Great  Britain.  The  Eng- 
41.  li.sh  patent  law  is  somewhat  different 

3.  Act  July  8,  1870,  §  24.  See  also  from  ours,  though  in-  some  respects 
U.  S.  Rev.  Stat.  (1878),  §§  4883-4936.  givinjr  rise  to  a  corresponding  ex- 
The  code  expre.ssion  of  1878  is  given  position  of  legal  principles.  The 
in  the  text  above.  Language  to  much  foundation  of  the  modern  English 
the  same  effect  is  to  be  found  in  patent  law  appears  in  a  negative  pro- 
former  acts  of  Congress  on  this  sub-  vision  in  the  Statute  of  Monopolies, 
ject;  but  in  this  act  of  1870  the  pat-  pas.sed  during  the  reign  of  James  I. 
ent,  copyright,  and  trademark  laws  (21  Jac.  I.,  c.  3)  curtailing  the  power 
of  the  United  States  are  revised,  of  the  crown  to  grant  monopolies, 
consolidated,  and  amended,  and  some  but  excepting  letters-patent  and 
verbal   changes  have  been  introduced.  grants  of  privilege  of  the  "  .sole  work- 

The     patent     law     of     the     Uni4;ed       ing  or  making  of  any  manner  of  now 
States  is  the  offspring,  in  a  measure,      manufactures,"  &«.     There  are  vari- 
50  785 


§  520  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

What,  then,  is  the  legal  significance  of  these  terms, — ''  art," 
"  machine,"  "  manufacture,"  land  "  composition  of  matter  ?  " 
This  phraseology  appears  in  the  former  patent  acts,  and  the  terms 
have  alreaj  received  judicial  construction*.  "Art "  is  a  word  of 
rather  broad  signification,  and  may  be  said  to  include  an 
invention  or  discovery  where  the  particular  apparatus  or  materials 
employed  are  not  essential,  but  rather  the  use  of  apparatus  or 
materials  in  new  processes,  method,  or  relations."^  The  word 
"  machine  "  is  more  limited  in  its  application ;  and  a  function  or 
mode  of  operation  embodied  in  mechanism  designed  to  accomplish 
a  particular  effect,  as  distinguished  from  a  mere  function  or 
abstract  mode  of  operation,  is  a  machine  under  the  patent  laws.^ 
A  "  manufacture "  is  literally  anything  made  by  the  hand  of 
man,  and  in  this  sense  the  English  law  applies  it ;  but  the  courts 
in  this  country  appear  to  regard  a  manufacture  as  something 
apart  from  machinery, —  fabrics  or  substances,  in  fact,  made  by 
man's  industry  or  art,  not  being  machinery.^  A  "  composition  oi 
nlatter "  includes  medicines,  compositions  used  in  the  arts,  and 
other  combinations  of  substances  intended  to  be  sold  separately.^ 

§  520.     Novelty    and    Utility    Essential    to    the    Invention    or 
Discovery. 
But,  according  to  the  statute,  the  person  who  seeks  a  patent 

ous  later  statutes  on  the  subject,  of  4.  See   Curt.   Pat.,  3d  ed.,   §§   9-19, 

no  vital    consequence,   cited    in   Fish-  and   cases   cited;    McClurg  v.   Kings- 

er's  Harr.  Dig.  "  Patent."    The  crown  land,  1  How.  204 ;  Corning  v.  Burden, 

has  always  exercised   a  control   over  15  How.  252. 

the  trade  of  the  country,  and,  though  5.  Curt.  Pat.,  §§   20-24;   Blanchard 

restrained    by    common    law    and    the  v.  Sprague,  3  Sumn.  535;  Boulton  v. 

Statute   of   Monopolies,   might   grant  Bull,   2   H.   Bl.   463;    Seym'our  v.   Os- 

within    reasonable    limits    the    exclu-  borne,    11    Wall.    516.      A    mere    ab- 

sive  right  to  trade  with  a  new  inven-  stract  principle  or  idea  is  not  patent- 

tion  for  a  reasonable  period.    Caldwell  able,   for   the  machine   is   a   concrete 

V.  Vanvlissengen,  9  Hare,  428.  thing.     Burr  v.  Duryee,  1  Wall.  531; 

The    British    courts,    unlike    ours.  Case  v.  Bro«Ti,  2  Wall.  320. 

construe  an  introducer  as  well  as  an  6.  Curt.   Pat.,   §§   25-27. 

originator  to  be  an  inventor.   Simonds  7.  lb.,  §§  28,  29. 
Summary  of  Patents,  c.  1. 

786 


CHAP.  X.]  PATENTS    AND   COPYBIGHTS.  §    520 

must  have  invented  or  discovered  a  new  and  useful  art,  machine, 
&c.,  or  else  a  new  and  useful  improvement  thereof.  Two  points, 
then,  are  essential  to  a  sufficiency  of  invention, —  novelty  and 
utility;  and  this  holds  true  whether  in  relation  to  the  original 
thing  itself  or  to  any  improvement  on  the  original  thing. 

The  requirement  of  novelty  is  satisfied  if  the  subject-matter 
of  the  thing  for  which  a  patent  is  asked  be  substantially  different 
from  what  has  gone  before;  and  in  determining  this  question  the 
rule  has  been  to  consider  the  character  of  the  result  reached,  and 
not  the  apparent  amount  of  skill,  ingenuity,  or  thought  exercised. 
A  combination  of  materials  may  be  substantially  new,  although 
each  ingredient  has  often  been  used  for  other  purposes ;  and,  as 
Judge  Story  has  observed,  though  a  combination  may  be  appar- 
ently very  simple,  "  the  simplicity  of  an  invention,  so  far  from 
being  an  objection  to  it,  may  constitute  its  great  excellence  and 
value."  ^  Still,  however,  to  distinguish  the  patentable  from  the 
unpatentable  in  respect  to  novelty  is  often  a  matter  of  extreme 
difficulty.  To  apply  an  old  contrivance  to  a  new  use,  or  make 
double  application  of  some  old  mode,  or  to  combine  old  elements 
of  various  earlier  devices  for  the  old  functions,  is  unpatentable ; 
as  where  one  uses  an  apparatus  by  which  the  back  of  a  rocking- 
chair  can  be  placed  at  any  desired  angle,  the  same  apparatus  hav- 
ing long  been  applied  to  other  things  than  chairs  for  a  like  pur- 
pose: or  where  the  sole  change  in  making  door-knobs  consists  in 
substituting  porcelain  for  wood  or  iron ;  ^  or  in  using  iron  alone 
where  wood  and  iron  were  formerly  united.'  But  to  produce  a 
new  and  beneficial  result,  as  in  the  process  of  printing  notes  by 
steel  plates  where  copper  plates  were  formerly  used,  is  held  to  give, 
a  claim  to  a  patent.^     A  new  process  of  manufacture,  iu   truth 

8.  Story,  J.,  in  Ryan  v.  Goodwin,  the  means  of  accomplishmont,  and  tlie 
3  Sumn.  514,  518.  form  of  the  thinir  and  mode  of  opera- 

9.  See  Hotchkiss  v.  Greenwood,  11  lion.  See  also.  Howe  Co.  v.  National 
How.  248;  Bean  v.  Smallwood,  2,  Co.,  134  U.  S.  388;  St.  Germaine  v. 
Story,  408;  Curt.  Pat.,  §§  49-54.  Brunswick,   135  U.  S.  227;   Grant  v. 

1.  Hicks  V.  Kelsey,   18   Wall.    670.      Walter,  148  U.  S.  547. 
Here  the  purpose  was  the  same,  also  2.  Kneass    v.    Schuylkill    Bank,    4 

787 


520 


THE  LAW  OF  PEKSOXAL  PROPERTY. 


[part  III. 


producing  a  different  article  in  combinations  and  decidedly  dif- 
ferent and  advantageous  results,  is  thus  to  be  distinguished  from 
that  which  is  unpatentable.^  And  the  Supreme  Court  of  the 
United  States  has  ruled  that  changes  in  the  construction  and  opera- 
tion of  an  old  machine,  so  as  to  adapt  it  to  .a  new  -and  \'aluable 
use  which  the  old  had  not,  are  patentable.'^  Mere  reduction  of 
cost  or  the  use  of  superior  materials  would  not  appear  to  satisfy 
the  requirement  of  novelty ;  and  yet  such  considerations  have  some- 
times carried  considerable  weight  where  ii  new  result  was  produced 
from  old  materials.  It  is  the  invention  of  what  is  new,  and  not 
the  arrival  at  comparative  superiority  or  greater  excellence  in 
that  which  was  already  known,  which  the  law  protects  by  patent 
as  exclusive  property.^     ISTor  is  it  enough  that  a  thing  is  new,  in 


Wash.  9*.  See,  also,  on  novelty,  Curt. 
Pat.,  §§  41-81,  and  cases  cited;  Booth 
V.  Kennard,  38  E.  L.  &.  Eq.  457;  Le 
Roy  V.  Tatham,  14  How.  156;  s.  c. 
22  How.  132 ;  Keystone  Co.  v.  Adams, 
151   U.    S.    139. 

3.  Mr.  Justice  Bradley  in  Hicks  v. 
Kelsey,  supra;  Krementz  v.  S.  Cottle 
Co.,  148  U.  S.  556.  A  new  article 
in  commerce  is  not  necessarily  pat- 
entable :  the  changed  article  must  be 
more  or  less  efficacious  or  possess  new 
properties  by  a  combination  with  other 
ingredients.  See  Glue  Company  v. 
Upton,  97  U.'  S.  3. 

4.  Seymour  v.  Osborne,  11  Wall. 
516.  See  Tucker  v.  Spalding,  13 
Wall.  453;  Potts  v.  Creagher,  155 
U.  S.  597. 

5.  Mr.  Justice  Swayne,  in  Smith  v. 
Nichols,  21  Wall.  112,  observes:  "A 
new  idea  may  be  ingrafted  upon  an 
old  invention,  be  distinct  from  the 
conception  which  preceded  it,  and  be 
an  improvement.  In  such  case  it  is 
patentable.  .  .  .  But  a  mere  car- 
rying forward,  or  new  or  more  ex- 
tended   application    of    the    original 


thought,  a  change  only  in  form,  pro- 
portions, or  degree,  the  substitution 
of  equivalents,  doing  substantially 
the  same  thing  in  the  same  way  by 
substantially  the  samfe  means  with 
better  results,  is  not  such-  invention 
as  will  sustain  a  .patent."  Here  a 
well-known  textile  fabric  was  pro- 
duced with  higher  finish  and  greater 
beauty  of  surface,  the  result  appar- 
ently of  greater  tightness  in  weaving. 
Rubber-tip  pencil  held  not  a  new  in- 
vention. Rubber-Tip  Pencil  Co.  v. 
Howard,  20  Wall.  498;  Reckendorfer 
V.  Faber,  92  U.  S.  347;  Belden  Co.  v. 
Corn  Planter  Co.,  152  U.  S.  100. 
The  bringing  together  several  old  de- 
vices (as  in  a  stove)  without  produc- 
ing more  than  an  aggregate  of  old 
results,  is  not  patentable.  Hailes  v. 
Van  Wormer,  20  Wall.  354.  Where 
a  patent  is  for  an  entire  process  made 
up  of  several  constituent  steps  or 
stages,  the  patentee  not  pretending 
to  be  inventor  of  those  constituents, 
his  claim  does  not  secure  the  exclu- 
sive use  of  the  constituents  singly, 
but  their  use  when  arranged  in  the 


788 


CHAP.  X.]  PATENTS    AND    COPYEIGllTS.  §    520 

the  sense  that  in  the  shape  or  form  in  which  it  has  been  produced 
it  has  not  been  known;  bnt  (besides  being  useful)  the  thing  must 
have  been  invented  or  discovered."^ 

As  to  the  second  requirement,  of  utility,  this  does  not  go  so 
far  as  to  render  a  prelimiuarj  investigation  necessary  into  proba- 
ble profits  or  the  extent  of  probable  employment  of  the  patented 
article;  but  the  question  is,  whether  the  thing  may  be  applied  to 
some  use  beneficial  to  society,  as  distingTiished  from  an  invention 
which  is  injurious  to  the  morals,  the  health,  or  the  good  order  of 
society.  Provided  the  invention  be  not  absolutely  frivolous  or 
insignificant,  it  is.  almost  invariably  "  useful"  within  the  meaning 
of  our  patent  acts,  save  so  far  as  it  has  some  tendency  positively 
mischievous  and  injurious.^  While  the  extent  to  which  a  patented 
device  has  gone  into  use  affords  an  unsafe  criterion  of  patenta- 
bility, especially  where  its  popularity  was  due  to  no  patentable 
feature,  this  extent  of  general  use  and  the  displacement  of  other 
devices  is  entitled  to  weight  in  a  doubtful-  case,  as  tending  to  show 
utility,  and  even  perhaps  novelty,  sufficient  to  uphold  a  patent.* 
So,  under  like  qualification,  may  the  invention  of  what  does  more 
work  and  at  less  expense  than  devices  before  it  furnish  an  import- 
ant circumstance  for  judicial  consideration.^ 

process.     Mowry  v.  Whitney,  14  Wall.  719;    Smith   v.   Whitman   Saddle   Co.. 

620.  148     U.     S.     674;     Keystone     Co.     v. 

6.  Burt   V.   Every,   133   U.   S.   349;  Adams,  151  U.  S.  139.  14  S.  Ct.  295; 

Hill  V.  Wooster,   132  U.  S.  693.     On  Hudson    Iron   Work.s  v.   Medart,    158 

the   whole,   the    tendency   of  the    Su-  V.  S.  68. 

preme  Court  decisions  (18«4)  appears  7.  See    Story.    J.,    in     Bedford     v. 

to  be  to  restrict  the  right  of  claiming  Hunt,  1  Mas.  302;  Curt.  Pat.,  §§  105. 

a  patent  as  for  novelty  of  invention;  106;   Bright.  Fed.  Dig.  "  Tati-nt?."  2. 

and  doubts  are  cast  upon  the  validity  and     cases     cittni ;     Abb.     Nat.     Dig. 

of   many   patents   which   have   issued  "  Patent'^,"   3.      And   see  Seymour  v. 

from  the  Patent  Office  in  years  past.  Osborne,  11  Wall.  516. 

But    (1895)    the    latest   cases    incline  8.  Keystone     Co.     v.     Adams.     151 

to  turn  the  scale  in  favor  of  uphold-  U.  S.  13<T:  McClain  v.  Ortmayer,  141 

ing    an    invetnion    where    the    article  U.  S.  419,  12  S.  Ct.  76:  Duer  v.  Cor- 

has  gone  into  general   use,  displacing  bin  Co.,  149  U.  S.  216.  13  S.  Ct.  850. 

other   analogous   devices.      Krementz  9.  International     Co.     v.     Gaylord. 

V.  Cottle  Co.,  148  U.  S.  556,  12  S.  Ct.  140  U.   S.    55 :    National  Hat   Co.   v. 

789 


§  521 


THE  LAW  OF  PERSONAL  PKOPEETY. 


[part  IIL 


§  521.     No  Public  Use  for  Two  Years  Prior  to  the  Claim. 

But,  again,  the  supposed  invention,  according  to  the  act  of 
1870,  must  not  have  been  known  or  used  by  others  in  this  country 
and  not  patented  or  described  in  this  or  any  foreign  country 
before  the  alleged  discovery  or  invention,  and  not  in  public  use 
or  on  sale  for  more  than  two  years  prior  to  the  application.^ 
That  which  infringes  a  patent  if  later  in  date,  anticipates  it  if 
earlier;  and  to  show  that  the  invention  claimed  was  patented  or 
described  in  some  printed  publication  earlier  is  a  sufficient  defence 
against  an  infringement  suit.^  Absolute  novelty,  if  estimated 
with  reference  to  all  ages  and  all  countries,  would  be  rarely  attain- 
able ;  for  the  further  we  explore  into  the  customs  of  other  nations 
of  ancient  or  modern  times,  the  more  we  find  that  what  seems  new 
to  us  was  old  to  them,  and  that  many  of  our  so-called  discoveries 
consist  merely  in  the  revival  of  some  lost  art. 


Hedden,  148.  U.  S.  482,  13  S.  Ct.  680. 
As  to  novelty  and  utility,  see 
among  latest  cases  (1917)  Pittsburgh 
Co.  V.  Beler  Co.,  228  Fed.  674,  143 
C.  C.  A.  196  (concrete  as  well  as  ab- 
stract conception)  ;  Salt's  Co.  v. 
Tingue  Co.,  227  Fed.  115  (Conn.  D. 
C.  1915)  ;  Tate  v.  Baltimore  &  0. 
Ry.,  229  Fed.  141,  143  C.  C.  A.  41)  ; 
New  York  Scaffolding  Co.  v.  Whitney, 
224  Fed.  452,  140  C.  C.  A.  138  (sim- 
plicity) ;  Columbia  Metal  Co.  v. 
Halper,  220  Fed.  912,  136  C.  C.  A. 
478;  General  Electric  Co.  v.  Hoskins 
Co.,  224  Fed.  464,  140  C.  C.  A.  150; 
Otis  Co.  V.  Interborough  Co.,  222  Fed. 
501,  138  C.  C.  A.  97  (new  combina- 
tion) ;  Standard  Co.  v.  Iron  Co.,  222 
Fed.  671,  138  C.  C.  A.  219;  McCaskey 
Co.  V.  Mantz,  224  Fed.  495,  140  C. 
C.  A.  203  (patent  for  improvements)  ; 
Schiebel   Co.   v.   Clark,   217   Fed.   760, 

133  C.  C.  A.  490;  Murray  v.  Poca- 
tello,  214  Fed.  100,  130  C.  C.  A.  576 

(economy  in   saving  not  sufficient)  ; 


International  Co.  v.  Sievert,  213  Fed. 
225,  129  C.  C.  A.  509  (new  combina- 
tion) :  Milwaukee  Co.  v.  Avery,  209' 
Fed.  616,  126  C.  C.  A.  572;  Archer 
V.  Imperial  Co.,  207  Fed.  81,  124 
C.  C.  A.  638  (change  of  material); 
Toledo  Co.  V.  Computing  Co.,  208 
Fed.  410,  125  C.  C.  A.  622;  Charles 
Boldt  Co.  V.  Nivision  Weiskoff  Co., 
194  Fed.  871*,  114  C.  C.  A.  617; 
Meygatt  v.  M.  Sthauffer  Flaum  Co., 
191  Fed.  836  (N.  Y.  C.  C.  A.  1911)  ; 
T.  B.  Wood.s  Co.  V.  Valley  Iron  Works, 
191  Fed.  1961  (Pa.  C.  C.  1911)  ;  Cof- 
field  Co.  V.  A.  D.  Howe  Co.,  19*0  Fed. 
42   (W.  Va.  C.  C.  1911). 

A  transfer  ticket  held  patentable 
as  a  "  manufacture."  Cincinnati 
Traction   Co.  v.   Pope,   210   Fed.   443. 

1.  Supra,  §  519.  See  Curt.  Pat., 
§§  85-88;  Gayler  v.  Wilder,  10  How. 
477. 

2.  Miller  v.  Eagle  Man.  Co..  151 
U.  S.  186;  Clark  Co.  v.  Willimantic 
Co.,  140  U-  S.  481,  11  S.  Ct.  846. 


790 


CHAP.  X.]  PATENTS    AND    COPYEIGHTS.  §    523 

§  522.     Patent  of  a  Foreign  Invention. 

Under  certain  conditions,  a  foreign  invention  may  be  patented 
in  this  country;  and  no  patent  shall  be  declared  invalid  under 
our  statutes  because  of  unj  prior  patent  obtained  abroad,  pro- 
vided the  same  shall  not  h-ave  been  introduced  into  public  use  in 
the  United  States  for  more  than  two  years  prior  to  the  applica- 
tion; though  there  are  certain  requirements,  besides,  as  to  the 
expiration  of  the  term  of  the  patent  thus  applied  for.^  A  foreign 
patent  or  publication  describing  an  invention,  unless  published 
anterior  to  the  making  of  the  discovery  or  invention  secured  by 
letters-patent  issued  by  the  United  States,  is  no  defence.'* 

§  523.     Abandonment  or  Public  Dedication  of  One's  Invention. 

It  is  thus  manifest  that  a  public  use  or  sale  in  this  country  for 
more  than  two  years  before  the  patent  is  applied  for  may  prove 
fatal  to  the  inventor's-  claim,  whether  a  prior  patent  is  obtained 
abroad  or  not.  This  is  because  the  law  infers  a  legal  abandon- 
ment of  the  invention  or  discovery  after  such  a  lapse  of  time. 
There  may  be  an  abandonment  before  application  for  letters-pat- 
ent, or  an  abandonment  after  the  letters-patent  have  been  granted ; 
and  in  either  case  the  public  enjoy  the  benefits  of  the  discovery, 
just  as  though  there  were  no  patent  laws  in  existence.  An  in- 
ventor may,  and  frequently  does,  allow  the  use  of  his  invention 
by  individuals  for  any  period  not  exceeding  two  years  before  ho 
puts  in  his  application,  and  still  retain  the  right  to  a  valid  patent ; 
but  he  must  be  careful  not  to  exceed  this  period.  Nor,  under 
any  circumstances,  should  he  do  such  acts  as  virtually  amo^mt  to 
a  general  abandonment  and  free  dedication  of  the  invention  to  the 
public;  for  such  acts  of  themselves,  if  proved,  deprive  him  of  hia 
exclusive  right  to  the  invention,  though  the  two  years  have  not 
expired.^ 

Abandonment  after  an  invention  rests  on   tho  general   (Miuity 

3.  See  Act  July  8,  1870,  §  25.  United  States,  222   Fed.   911,  138  C. 

4.  See   Elizabeth   v.   Pavement   Co.,      C.  A.  391. 

97  U.  S.  126;  Pennsylvania  R.  Co.  v.  5.  See  Curt.  Pat.,  §§  102,  103,  381- 

791 


§  523  THE  LAW  OF  PERSONAL  PROPEETY.      [PAKT  III. 

principlie  that  a  claimant  will  not  receive  extraordinary  aid  from 
the  court  if  he  unreasonably  delays  asking  for  it,  or  encourages 
or  acquiesces  in  any  infringement  of  his  rights.^ 

The  alleged  prior  inventor,  in  order  to  intercept  one  who  gets 
hold  of  the  invention  and  surreptitiously  secures  the  first  patent, 
must  have  used  reasonable  diligence  in  adapting  and  perfecting 
his  invention,  so  as  to  keep  clear  of  any  presumed  abandonment 
on  his  part.  Yet  our  courts  are  disposed  to  favor  the  true  in- 
ventor as  far  as  they  safely  may.  And  it  is  well  settled  that  the 
mere  forbearance  on  an  inventor's  part  to  apply  for  a  patent  dur- 
ing the  progress  of  experiments,  and  until  he  has  perfected  his 
invention  and  tested  its  value  by  -actual  practice,  affords  no  just 
grounds  for  any  presumption  that  he  has  abandoned  his  invention, 
and  surrendered  or  dedicated  it  to  the  public.'^  ]^or  will  his 
silence,  or  open  acts  or  conduct,  so  far  as  they  have  not  caused 
injury  to  others,  be  construed  to  his  own  detriment  under  such 
circumstances.^  Justifiable  causes  of  delay  in  applying  for  a 
patent  are  fairly  considered  in  such  oases.^  But  a  patentee  may 
claim  the  whole  or  only  part  of  his  invention;  and  by  claiming 
only  a  part  he  is  presumed  to  -have  abandoned  the  residue  to  the 
public.^ 

399;    McClurg  v.   Kiiisland,    1    How.  Wall.   47.     An   inventor   must,   how- 

202;   Suffolk  Co.  V.  Hayden,  3  Wall.  ever,    comply    with    statutory    condi- 

315.     There  may  be  an  abandonment  tions.      He   should   not  unreasonably 

or  dedication  to  the  public  use,  though  hold  'his   application   pending  during 

but  one  machine  be  permissively  used  a  long  period  of  years.    Planing  Maeh. 

by  one  person.     Egbert  v.  Lippmann,  Co.  v.  Keith,  101  U.  S.  479.    Cf.  Bates 

104  U.   S.   333.     And  see  Worley  v.  v.  Coe,  98  U.  S.  31. 

Tobacco"  Co.,   104   U.   S.    340;    Marsh  9.  Beedle  v.  Bennett,  132  U,  S.  71, 

v.   Nichols   &  Co.,    140   U.   S.   355,   9  7  S.  Ct.  1090. 

S.  Ct.  168.     Long  acquiescence  in  the  1.  McClain  v.  Ortmayer,  141  U.  S. 

grant  of  a   patent  to   another   infers  419. 

abandonment.     Hartshorn  v.  Saginaw  As    to    abandonment    or    anticipa- 

Co.,  119  U.  S.  664,  7  S.  Ct.  421.  tion,   see    (1917)    American   Foundry 

6.  See  Curt.  Pat.,  §  440;  Abb.  Nat.  Co.    v.    Hoadley    Co.,    2'22    Fed.    327 
Dig.  "Patents,"  9.  (Mass.    D.    C.     1915),    affinned    267 

7.  Agawam  Co.  v.  Jordan,  7  Wall.  Fed.     90     (Mass.     C.     C.     A.),     Im- 
583.  perial     Bi'ass     Co.     v.     Njelson,     191 

8.  Railroad  Company  v.  Dubois,  12  Fed.    83''';    Edison   v.   Allis-Chalmers 

792 


CHAP.  X.]  PATENTS    AND    COPYEIGHTS.  §    525 

§  524.     Priority  Among  Conflicting  Claimants  of  a  Patent. 

As  to  the  person  entitled  to  a  patent,  where  there  are  coniiict- 
ing  claimants,  the  settled  rule  is,  that  whoever  first  brings  a 
machine  to  perfection,  and  makes  it  capable  of  useful  operation, 
is  the  real  inventor,  and  entitled  to  the  patent,  although  others 
may  previoudy  have  had  the  idea,  and  made  some  experiments 
towards  putting  it  in  practice.^  And  while  it  is  true  that  persons 
employed  are  entitled  to  their  own  independent  inventions,  as 
well  as  their  employers,  it  is  ako  a  rule  th^at  where  the  employer 
has  conceived  the  plan  of  an  invention,  and  is  engaged  in  experi- 
ments to  perfect  it,  no  suggestions  from  an  employee,  not  amount- 
ing to  a  new  method  or  arrangement  which  in  itself  is  a  complete 
invention,  will  suffice  to  deprive  the  employer  of  the  exclusive 
property  in  the  perfected  improvement."' 

§  525.     Proceedings  for  Procuring  a  Patent. 

The  proceedings  requisite  in  order  to  obtain  a  patent  are  next 
to  be  considered.  According  to  our  statutes,  the  inventor  or 
discoverer  must  make  a  written  application  to  the  Commissioner 
of  Patents,  and  file  what  is  commonly  known  among  professional 
men  as  a  specification;  or,  to  use  the  words  of  our  Patent  Act  of 
1870,  "  a  written  description  "  of  the  invention  or  discovery, 
"  and  of  the  manner  and  process  of  making,  constructing,  com- 
pounding, and  using  it,  in  such  full,  clear,  concise,  and  exact  terms 
as  to  enable  any  person  skilled  in  the  art  or  science  to  which  it 
appertains,  or  with  which  it  is  most  nearly  connected,  to  make, 
construct,  compound,  and  use  the  same."  And  it  is  further  pro 
vided  that,  "  in  case  of  a  machine,  he  shall  explain  the  principle 
thereof,  and  the  best  mode  in  which  he  has  contemplated  applying 

Co.,  191  Fed.  8.37   (N.  Y.  C.  C.  1911)  The    rrovornmcnt    cannot    appropriate 

(experimental,  not  a  public  use).  without  compensation  a   man's  prop- 

2.  Agawam  Co.  v.  Jordan,  7  Wall.  erty  investwl  in  a  patent,  althoufrh  the 

5g3  inventor  was  in  the  povernmcnt  em- 

3    lb      And   see  Dalzell   v.   Dueber  ploy.     Solomons  v.  United  States,  137 

Co.,    149   U.    S.    315,    13    S.    Ct.    886.  U.  S.  342,  11  S.  Ct.  88. 

793 


§  925  THE  LAW  OF  PERSONAL,  PBOPEBTY.      [PAKT  III. 

that  principle,  so  as  to  distinguish  it  from  other  inventions;  and 
shall  particularly  point  out  and  distinctly  claim  the  part,  improve- 
ment, or  combination  which  he  claims  as  his  invention  or  discov- 
ery." This  specification  and  claim  is  to  be  signed  by  the  inventor, 
and  attested  by  two  witnesses."*  The  applicant  likewise  furnishes 
a  drawing,  specimen,  or  model,  as  the  case  m'ay  be,  to  illustrate 
his  claim;  and,  finally,  he  must  make  oath  or  affirmation  that  he 
does  verily  believe  himself  to  be  the  original  and  first  inventor  or 
discoverer  of  the  art,  machine,  manufacture,  composition,  or  im- 
provement for  which  he  solicits  a  patent ;  th-at  he  does  not  know, 
and  does  not  believe,  that  the  same  was  ever  before  known  or 
used;  stating,  also,  of  what  country  he  is  a  citizen.^  So  much 
for  the  claimant's  papers,  which,  of  course,  he  must  not  file  with- 
out paying  to  government  the  preliminary  fee  in  advance.  But, 
on  his  compliance  with  all  these  formalities,  his  claim  is  taken  up 
and  considered  at  the  Patent  Office  in  Washington;  and  if,  on 
examination,  it  appears  that  the  claimant  is  justly  entitled  to  a 
patent,  the  Commissioner  will  issue  the  lettersrpatent  accordingly ; 
not,  however,  without  requiring  him  to  pay  a  final  fee  to  govern- 
ment according  to  law.^ 

4.  Act   July    8,    1870,    §    26.       The  Commissioner    has    considerable    lati- 

claim  is  a  statutory  requirement,  pre-  tude  to   correct   or   require   modifica- 

scribed    for    the    purpose    of    making  tion    of    the    claim.      Phoenix    Co.    v. 

the  inventor  define  precisely  what  his  Spiegel,  133  U.  S.  360,  10  S.  Ct.  409; 

invention  is.     Howe  v.  National  Co.,  Topliff   v.   Topliff,    145   U.    S.    156,   7 

134   U.    S.   388-    10  S.   Ct.    570.      Dis-  S.  Ct.  1057. 

tinct  and  formal  claims  are  necessary  5.  lb.,    §§    27-30.       And    see    U.    S. 

to  ascertain   the  scope   of  the   inven-  Rev.  Sts.    (1876),  §§  4888-4890.     See 

tion.      Grant  v.    Wa'lker,    148    U.    S.  Godfrey  v.  Eames,  1  Wall.  317;   Suf- 

547,  13   S.  Ct.  6SQ.     The  claim  is  to  folk  Co.  v.  Harden,  3  Wall.  315.     As 

be  construed   in   connection  with  the  to  the   date   of   application,    see    The 

explanation-  eontain'ed   in   the   speeifi-  Barbed  Wire  Patent,   143   U.   S.   275. 

cation;    but   specifications   and   draw-  The   oath   must  be   made   by    the    in- 

ings   are   only   explanatory,   and   can-  ventor.      Kennedy    v.    Hazleton,    128 

not    be    used    to    enlarge    the    claim.  U.  S.  667,  9-  S.  Ct.  202. 
McClain  v.  Ortmayer,  141  U.  S.  419,  6.  There   are   other   patent-fees   im- 

12   S.   Ct.   76;   Howe  Co.  v.  National  posed  in  sundry  instances,  which  it  is 

Co.,  134  U.  S.  388,  10  S.  Ct.  570.    The  not  our  purpose  to  detail,— the  grftnd 

794 


CHAP.  X.]  PATENTS    AND   COPYEIGIITS.  §    526 

§  526.     The  Same  Subject;  Specifications. 

The  preliminaries,  then,  are  simple  enough,  except  as  to  pre- 
paring  the  specification.  Here  it  is  that  legal  knowledge  and 
scientific  aptitude  are  most  severely  tested; -for  a  badly  drawn 
specification,  such  as  claims  too  much,  or  not  enough,  or  the  wrong 
thing,  may  defeat  the  wishes  of  the  inventor  altogether,  and 
render  the  latters-patent,  even  though  he  secure  them,  mere  worth- 
less paper.  In  the  United  States  the  specification  is  referred  to 
in  the  patent  itself  when  granted,  a  copy  being  always  annexed ; 
and  thus  our  rule,  unlike  that  prevalent  in  England,  is  to  construe 
patent  and  specification  together,  in  order  to  ascertain  the  subject- 
matter  of  the  invention ;  and  the  same  is  true  of  drawings  annexed 
to  the  specification.  Hence,  the  general  terms  of  the  patent,  of 
which  these  form  a  part,  may  be  controlled  by  the  specification  and 
its  accompanying  drawings.^ 

The  leading  objects  of  a  specification  are  two,  as  writers  on 
patent-law  have  shown :  first,  to  inform  the  public  what  the  thing 
really  is  of  which  the  patentee  claims  to  be  the  inventor  and  (dur- 
ing the  existence  of  his  patent )  the  exclusive  owner ;  second,  to 
enable  the  public,  from  the  specification  itself,  to  practise  the 
invention  so  described  after  the  patent  'has.  expired.*  To  meet 
the  first  object,  the  specification  ought  to  clearly  present  the  sub- 
ject-matter of  the  discovery  or  invention, —  not,  indeed,  with 
technical  or  scientific  exactness  necessarily,  but  in  language  reason- 
ably accurate;  distinguishing  between  the  old  and  new  with  ful- 
ness sufficient  to  enable  the  court  to  understand  what  he  claims 
to  have  first  introduced,  and  avoiding  that  ambiguity  and  dark- 
ness of  description,  or  misuse  of  terms,  which,  wherever  found, 
most  likely  indicates  that  the  patentee  or  his  attorney  groped  in 

aggregate  going  to  swell  the  receipts  219-221,    and    cases    cited;    Hopg    v. 

of  the  treasury,  and  tending  to  make  Emerson,  6  How,  478 ;  Turrill  v.  Mich- 

the  Patent  Office  an  institution  prac-  igan,  &c.,  R.  R.,  1  Wall.  491. 

tically  self-supporting.     See  Act  July  8.  Curt.  Pat.,  §  228:  Phillips  Pat. 

8,  1870,  §§   31,  68,  69.  237;   Evans  v.   Eaton,  7   Wheat.   356. 
7.  Act  1870,   §   22;    Curt.   Pat.,   §§ 

795 


THE  LAW  OF  rSKSONAL  PKOPEETY. 


[part  III. 


the  dark  for  some  patentable  feature,  without  a  clear  idea  whether 
the  thing  would  bear  a  patent  or  not.^  To  meet  the  second  object, 
he  should  not  omit  any  step  or  process  in  his  specification  which 
facilitates  description,  though  in  a  long  and  complicated  process 
this  legal  requirement  would  doubtless  be  liberally  construed ;  he 
should  make  no  false  statem»ents;  nor  should  he  so  far  conceal 
as  in  eifect  to  cover  up,  instead  of  display,  his  invention,  as  an 
inventor  is  often  strongly  tempted  to  do  where  pecuniary  success 
may  depend  largely  on  secrecy  as  to  his  process ;  and,  in  brief,  the 
language  of  the  specification  should  be  such  as  to  enable  persons 
skilled  in  the  particular  ^art  or  science  to  apply  the  invention  for 
themselves,  without  invention  or  addition  of  their  owti,  or  even 
repeated  experiments.^  What  the  drawings  or  model  might  sug- 
gest is  no  part  of  the  invention,  apart  from  what  the  specification 
intended.^ 


9.  Curt.  Pat.,  §§  229-250,  and  cases 
cited;  Prouty  v.  Ruggles,  16  Pat.  336; 
O'Reilly  v.  Morse,  15  How.  62; 
Blanchard  v.  Sprague,  2  Story,  164 ; 
Bright.  Dig.  "  Patents." 

1.  See  Curt.  Pat.,  §§  252-261,  and 
cases  cited;  Wood  v.  Underbill,  5 
How.  1.  Thus,  where  a  patent  is 
claimed  for  a  discovery  of  a  new  sub- 
stance, by  means  of  chemical  combi- 
nations of  known  materials,  it  should 
state  the  component  parts  of  the  new 
manufacture  claimed  with  clearness 
and  precision,  and  not  leave  the  per- 
son attempting  to  use  the  discovery 
to  find  it  out  by  experiment.  Tyler 
V.  Boston,  7  Wall.  327.  The  scope  of 
letters-patent  must  be  limited  to  the 
invention  covered  by  "  the  claim ;  " 
and  the  latter  cannot  be  enlarged  by 
the  language  used  in  other  parts  of 
the  specification.  Railroad  Co.  v. 
Mellon,  104  U.  S.  112.  As  to  stiffi- 
ciency    of    expres&ion    in   a    specifica- 


tion, see  Loom  Co.  v.  Higgins,  105 
U.  S.  580 ;  Carlton  v.  Bokee,  17  Wall. 
463;  Telephone  Cases,  126  U.  S.  1. 
A  specification  is  sufficiently  clear 
and  descriptive  when  expressed  in 
terms  intelligible  to  a  person  skilled 
in  the  art  to  which  it  relates.  Sea- 
bury  V.  Am.  Ende,  152  U.  S.  561,  14 
S.  Ct.  683. 

2.  Flower  v.  Detroit,  127  U.  S.  563. 

As  to  Patent  Ofiice  procedure,  see 
Hall-Borchert  Co.  v.  EUanan  Co.,  213 
Fed.  341,  130  C.  C.  A.  193  (specifica- 
tion claim)  ;  Horton  Mfg.  Co.  v. 
White  Lily  Mfg.  Co.,  213  Fed.  471, 
130  C.  C.  A.  117  (claim  construed)  : 
Van  Ness  v.  Layne,  213  Fed.  804,  130 
C.  C.  A.  462;  Ottumwa  Co.  v.  Christy 
Co.,  213  Fed.  804,  130  C.  C.  A.  462: 
Fowler  v.  MeCrum-HoAvell  Co.,  215 
Fed.  905;  Bush  Co.  v.  Becker  Bros., 
209  Fed.  233,  reversed,  222  Fed.  902 
(design  patent). 


796 


CHAP.  X.]  PATENTS    AND   COPYEIGHTS.  §    528 

§  527.     Patents;  How  Issued;  Their  Tenor. 

In  this  country,  letters-patent  —  or  patents,  as  they  are  usually 
called  —  are  issued  in  the  name  of  the  United  States  of  America, 
under  the  seal  of  the  Patent  Office.  They  are  signed  by  the  Sec- 
retary of  the  Interior  and  countersigned  by  the  Commissioner  of 
Patents.  And  under  existing  statutes,  patents  are  granted  for  the 
term  of  seventeen  years  to  the  patentee,  his  heirs  or  assigns,  and 
confer  "  the  exclusive  right  to  make,  use,  and  vend  "'  the  inven- 
tion or  discovery  throughout  the  United  States  and  the  Territories 
thereof.  Every  patent  dates  as  of  a  day  not  later  than  six  months 
from  the  time  at  which  it  was  passed  and  allowed,  and  notice  sent 
to  the  applicant  or  his  agent.^  Whether  an  invention  or  improve- 
ment should  be  embraced  in  one,  two,  or  more  patents,  is  a  matter 
of  discretion  with  the  head  of  the  Patent  Office.'* 

§  528.     Legal  Title   to    Letters-Patent;    Heirs,    Assignees,    and 
Licensees. 

The  right,  it  is  seen,  is  in  the  patentee,  *'  his  heirs  or  assigns.'* 
So  far  are  the  rights  of  heirs  and  assigns  protected,  that  if  the 
inventor  dies  before  the  patent  is  granted,  the  right  of  applying 
for  and  obtaining  the  patent  will  devolve  on  his  executor  or  admin- 
istrator, in  trust  for  his  heirs-at-law, —  or  otherwise,  in  accord- 
ance with  his  testamentary  disposition ;  and  if  the  right  has  been 
assigned  by  the  inventor  before  the  patent  is  granted,  the  patent 
may  be  granted  and  issued  and  reissued  to  the  assignee,  provided 
the  assignment  be  first  recorded  in  the  Patent  Office;  though  the 
claim  papers  should  be  executed  by  the  inventor  himself  if  ho  be 
alive.^  It  is  thus  evident  that  the  patentee  is  frequently  a  dif- 
ferent person  from  the  inventor.  The  patentee,  of  course,  holds 
the  legal  title  to  the  patent ;  and  when  the  inventor's  assignee  has 
the  patent  issued  to  himself,  the  exclusive  right  is  vested  in  the 

3.  See  Act  July  8,  1870.  §§  21-23.  4.  Bennet  v.  Fowler,  8  Wall.  445. 

All  officers  desijrnated  by  the  statute  5.  Act  July  8.  1S70.  §§  33.  34.    See 

must    sign,   or   the    letters   are   void.  Curt.    Pat..    §?    107-174;    Gaylcr    v. 

Marsh  v.  Nichols,  128  U.  S.  605.  Wilder,  10  How.  477. 

797 


§  528  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

assignee  as  a  legal  estate,  and  the  inventor  is  divested  of  the  legal 
title.  Where  a  patent  is  granted  to  one  as  executor,  he  can  main- 
tain a  suit  on  the  patent  in  all  respects  as  if  he  had  been  designated 
in  the  patent  as  trustee  instead  of  executor.^  If  the  patent  be  void, 
it  is  void  as  to  the  assignee  as  well  as  the  inventor.''  The  title  to 
a  patent  passes  to  the  patentee's  assignee  in  bankruptcy,  subject 
to  the  latter's  election  to  accept  it.^  But  the  patent  monopoly  is 
an  entire  right,  and  cannot  be  divided  up  by  assigning  separate 
claims  under  the  same  patent.^ 

The  exclusive  right  conferred  by  the  patent  is  "  to  make,  use, 
and  vend "  the  invention.  It  is  specially  provided  by  statute 
that  not  only  the  patent,  but  any  interest  therein,  shall  be  assign- 
able in  law  by  an  instrument  in  writing;  and  in  this  manner  may 
be  granted  an  exclusive  right  under  the  patent  to  the  whole  or  any 
specified  part  of  the  United  States ;  but  such  assignment  or  grant 
shall  be  void  as  against  any  subsequent  purchaser  or  mortgagee 
for  a  valuable  consideration  without  notice,  unless  recorded  in  the 
Patent  Office  within  three  months  from  its  date.^  Thus,  then,  a 
patent-right  may  be  assigned  after  the  issue  of  letters,  as  well  as 
before,  on  compliance  with  certain  requirements  of  law;  though 
as  to  the  extent  of  the  right  tbus  transferred  and  the  mutual 
relations  of  assignor  and  assignee  there  is  still  some  uncertainty. 
One  point,  however,  which  was  formerly  in  doubt,  seems  to  have 
been  well  established  by  the  decisions  of  the  Supreme  Court  of 

e.  Rubber  Co.  v.  Goodyear,  9  Wall.  Rev.    Sts.,    §    4898.      See   Curt.    Pat., 

788.     See  Abb.  Nat.  Dig.  "Patents,"  §    182   et  seq.;  Pitts  v.   Whitman,   2 

5.     And  see,  as  to  rights  of  assignee,  Story,     609,     614.       As    against     the 

Littlefield  v.  Perry,  21  Wall.  205.  patentee  and  third  persons  not  above 

7.  Worley  v.  Tobacco  Co.,  104  U.  S.  indicated,  the  requirement  of  record 
340.  within   three  months  appears  not  es- 

8.  Sessions  v.  Romadka,  145  U.  S.  sential  to  the  validity  of  the  assign- 
29,  12   S.  Ct.  799.  ment.      State  restrictions  on  sales  of 

9.  Pope  Man.  Co.  v.  Gormully  Mfg.  patents.  Book  22,  N.  Y.  Rpts.,  Ben- 
Co.,  144  U.  S.  248;  Waterman  v.  der  ed.,  note,  p.  730.  Assignment  of 
Mackenzie,  138  U.  S.  252,  11  S.  Ct.  rights  to  inventions.  Book  29,  N.  Y. 
334.  Rpts.,  Bender  ed.,  note,  p.  734. 

1.  Act  July   8,   1870,   §    36;    U.    S. 

798 


CHAP.  X.]  PATENTS    AND    COPYRIGHTS.  §    528 

the  United  States:  and  this  is,  that  the  patentee's  assignment  or 
grant  of  an  extension  or  renewal  of  a  patent,  before  any  extension 
has  issued,  will  carry,  if  the  terms  of  the  grant  be  proper  ones,  the 
legal  as  well  as  the  equitable  interest  in  the  patent;  and  that  by 
a  sweeping  transfer  of  all  his  property  both  patent-rights  and 
extensions  thereof  may  pass.^ 

But  the  decisions  in  our  courts  recognize  a  distinction  between 
the  right  to  make  and  vend  and  the  right  to  use  a  patent.  And 
there  is  a  kind  of  contract  to  which  a  patentee  often  makes  him- 
self a  party,  namely,  a  license  to  use  the  patent;  and  this  is  obvi- 
ously different  from  an  assignment  or  grant  of  the  right ;  for  the 
entire  monopoly  "  to  the  whole  or  any  specified  part  of  the  United 
States  "  is  not  thereby  granted.  Our  statutes  provide  that  those 
who  have  purchased  or  acquired  by  consent  the  right  to  construct 
any  newly  invented  machine  before  the  patent  is  applied  for  may 
use,  or  sell  for  use,  the  specific  thing,  without  incurring  liability. 
And,  in  order  that  the  rights  of  patentees  and  their  assigns  may 
be   fully   protected,   patented    articles    should  be   marked.^     The 

2.  Railroad  Co.  v.  Trimble,  10  Wall.  others  for  use  within  a  specified  ter- 

367.     And  see  WiLson  v.  Rousseau,  4  ritory,  authorizes  the  assignee  to  vend 

How.  646 ;  Bloomer  v.  McQuewan,  14  elsewhere,  out  of  that  territory,  arti- 

How.     539;     Hartshorn    v.     Day,     19  cles    manufactured    by    the    machine. 

How.    211 ;    Bloomer    v.    Millinger,    1  Simpson  v.  Wilson,  4  How.  709.    Such 

Wall.  340;   Chaffee  v.  Boston  Belting  transfers    are   not   revocable    without 

Co.,    22    How.    217.       An    assignment  cause.       St.     Paul     Plow     Works     v. 

of  an  interest  in  a  patented  invention  Starling,  140  U.  S.  184,  8  S.  Ct.  1327. 

is  a  contract,  and  like  other  contracts  As  to  correcting  a  wrongful  use  by  a 

should   be   so   construed   as   to   carry  subsequent    purchase    of    a    right    to 

out  the  intention  of  the  partie-s  to  it.  vend,  see  Emerson  v.  Dodge,  18  Wall. 

Mr.  Justice  Davis  in  Nicholson  Pave-  414. 

ment   Co.   v.   Jenkins,    14   Wall.    452.  For    the    right    of    a    recorded    as- 

See,  as  to  the  right  to  assign,  Gott-  signee  to  sue  for  an  infringement,  see 

fried  v.  Miller,   104  U.  S.   521.     And  Littlefield  v.  Perry,  21  Wall.  205. 

see  Rude  v.  Westcott,  130  U.  S.  152,  3.  See  Act  July  8,  1870,  §§  37-39; 

9  S.  Ct.  463.  U.  S.  Rev.  Sts..  §§  489'9-4901 ;  Brooks 

As  to  the  right  of  a  purchaser  from  v.    Byam,    2    Story,   525;    Curt.    Pat., 
an  assignee  to  use  the  machine,   see  §§    211-218;    Abb.    Nat.    Dig.    "Pat- 
Adams  V.  Burke,  17  Wall.  453.     The  ents,"  4;   Rubber  Co.  v.  Goodyear,  9 
assignment  of  an   exclusive  right  to  Wall.  788. 
use    a    machine,    and    to   vend    it    to 

799 


§    529  THE    LAW    OIV    PEKSONAL    PKOPEKTY.  [PART  III. 

licensee  must  assert  his  legal  rights  in  the  name  of  the  original 
owner;  he  cannot  in  his  own  name  prosecute  for  infringement.* 
A  license  to  use  an  invention  implied  from  circumstances  is  not 
transferable  unless  the  patentee  waives  his  own  rights.^  jSTor  is  an 
oral  license  to  use  available  against  a  subsequent  assignee  of  the 
patent  without  notice.^ 

§  529.     Caveat,  Surrender,  Reissue,  and  Disclaimer. 

Where  the  inventor  desires  time  to  mature  his  invention  he  will 
do  well  to  file  a  caveat.  Our  statutes  provide  that  any  citizen  of 
the  United  States  (and,  upon  certain  conditions,  an  alien  resident 
likewise)  who  makes  a  new  invention  or  discovery,  and  desires 
further  time  to  mature  it,  may,  on  payment  of  the  fees,  file  in  the 
Patent  Office  a  caveat,  setting  forth  the  design  thereof,  and  pray- 
ing protection  of  his  right  until  he  shall  have  matured  his  inven- 
tion. This  caveat  is  filed  in  the  confidential  archives  of  the  office ; 
and  the  effect  of  its  presentation  is  to  protect  the  inventor  a  year 
against  applications  which  may  meantime  be  presented  by  other 
persons.^ 

Then,  again,  the  privilege  of  surrender  and  reissue  and  dis- 
claimer become  of  importance  to  the  patentee  where  his  original 
patent  claims  too  much,  or  is  in  any  respect  defective.  If  a 
patent  be  inoperative  or  invalid,  because  of  some  such  reason, — 
the  error  being  honestly  made,  and  not  with  fraudulent  intent, — • 
the  patentee  may  surrender  his  original  patent  and  have  a  new 
one  issued  for  its  unexpired  term.     The  object  of  conferring  this 

4.  Paper-bag  Cases,  105  U.  S.  766;  U.  S.   1,  32'  S.  Ct.  364    (licensee  re- 
138  U.  S.  252.  stricted). 

5.  Hapgood   V.   Hewitt,   119  U.   S.  Government  may  upon  one  recom- 
226,  7  S.  Ct.  193.  pense  have  the  benefit  of  an   inven- 

6.  153  U.  S.  332.  tion.      Firth    Sterling   Co.    v.   Bethle- 
The  patent  certificate,  like  a  title      hem   Co..    216    Fed.    755    (Pa.    D.    C. 

deed,  is  a  personal  chattel.     Paine  v.  1914)  ;    Solomons    v.    United    States, 

Parkhurst,  205  Fed.  740,  126  C.  C.  A.  137  U.   S.  342,  11  S.  Ct.  88 

195.    See  as  to  assignments,  Johnston  7.  Act  July  8,   1870,   §   40;   TJ.  S. 

V.  Southern  Well  Co.,  208  Fed.   145,  Rev.  Sts.,  §  49'03. 

125   C.   C.  A.  361;   In  re  Henry,  224 

800 


CHAP.  X.]  PATENTS    AND   COPYRIGHTS.  §    529 

power  of  surrender  and  reissue  is  to  enable  patentees  to  remedy 
accidental  mistakes ;  and  the  law  endeavors  to  place  parties  as 
thej  would  have  stood  in  case  the  original  specification  had  been 
made  out  in  the  corrected  form.  But  interpolations  in  a  reissued 
patent,  of  new  features,  ingredients,  or  devices-,  are  not  allowable, 
though  parties  often  try  to  get  reissues  from  the  Patent  Office  for 
the  purpose  of  inserting  some  expanded  or  equivocal*  claim.^  The 
statute  permits  of  a  reissue  in  divisions;  and  several  reissues  may 
be  required  to  constitute  a  complete  machine,  and  on  a  proceeding 
for  infringement  these  may  be  introduced  in  one  bill.^  The  error 
to  be  corrected  may  be  either  that  of  specification  or  claim,  it  mat- 
ters not  which ;  and  the  patentee  has  a  right  to  restrict  or  enlarge 
his  claim,  so  as  to  give  it  validity  and  carry  out  the  purposes  of 
the  invention.' 

Specifications  may  also  be  amended  by  filing  a  disclaimer  at  the 
Patent  Office,  whenever  through  inadvertence,  accident,  or  mis- 
take, and  without  fraudulent  intent,  a  patentee  has  claimed  more 
than  that  of  which  he  was  the  original  or  first  inventor.  The 
patent,  in  this  case,  is  valid  for  all  that  part  which  is  justly  and 
truly  his  own,  provided  it  be  a  material  or  substantial  part  of  the 

8.  See  Act  July  8,  1870,  §  53;  were  issued.  Manufacturing  Co.  v. 
U.  S.  Rev.  Sts.,  §  4916;  Act  March  Corbin,  103  U.  S.  786;  Miller  v.  Brass 
24,  1871 ;  Eureka  Company  v.  Bailey  Co.,  104  U.  S.  350 ;  Wing  v.  Anthony, 
Company,  11  Wall.  488;  Burr  v.  106  U.  S.  39,  142,  1  S.  Ct.  9'3 ;  Carlton 
Duryee,  1  Wall.  531:  Curt.  Pat.,  §§  v.  Bokee,  17  Wall.  463.  As  to  reissue 
279-285 :  Shipman  v.  Stratesville,  158  for  expanding  and  generalizing  a 
U.  S.  366,  15  S.  Ct.  886;  Corbin  v.  claim  not  defectively  specified,  see 
Eagle  Co.,  150  U.  S.  38,  14  S.  Ct.  38.  James   v.    Campbell,    104    U.    S.    356. 

9.  Eureka  Company  v.  Bailey  Com-  And  see  Gill  v.  Wells,  22  Wall.  1; 
pany,  supra.  Railway  Co.  v.  Sayles,  97  U.  S.  554. 

1.  See  Battin  v.  Taggert.  17  How.  A   reissued    patent    is   invalid    where 

74;  Rubber  Co.  v.  Goodyear,  9  Wall.  it  is  not  for  the  same  invention  as 

788;   O'Reilly  v.   Morse,  15  How.   62.  the  original   patent;   but  makes  new 

And  as  to  surrender  after  an  exten-  or    expanded    claims    and    shows    no 

sion,  see  Wilson  v.  Rousseau,  4  How.  inadvertence,     accident,     or     mistake 

646.     Reissued  letters-patent  are  void  when  corrected.     139  U.  S.  481;   145 

if  they  embrace  a  broader  claim  than  U.  S.  226;   137  U.  S.  258. 
that   for   which    the   original   letters 

51  801 


§  530  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

thing  patented.  This  disclaimer  is  to  be  in  writing  and  attested, 
and  it  should  be  recorded, —  all  in  accordance  with  the  statute 
requirements;  and  it  is  then  considered  a  part  of  the  original 
specification  to  the  extent  of  the  interest  of  the  claimant  and  those 
claiming  under  him  after  the  record.  But  no  disclaimer  shall 
affect  any  action  pending  at  the  time  when  it  was  filed,  except  so 
far  as  may  relate  to  the  question  of  unreasonable  neglect  or  delay 
in  filing  it.^ 

§  530.     Rule  as  to  Extension  of  Patents. 

The  policy  of  Congress  has  varied  considerably  with  regard  to 
the  extension  of  patents.  By  the  act  of  1836,  the  Secretary  of 
State,  the  Commissioner  of  the  Patent  Office,  and  the  Solicitor  of 
the  Treasury  were  constituted  a  Board  of  Commissioners  to  hear 
evidence,  and  decide  upon  granting  an  extension  of  the  term  of 
any  patent,  where  such  extension  was  paid  for ;  and  the  question 
for  their  consideration  was  whether,  having  due  regard  to  the 
public  interest  therein,  it  was  just  and  proper  to  grant  the  exten- 
sion, because  the  patentee  had  failed  to  obtain  a  reasonable  re- 
muneration. Upon  their  favorable  decision  the  patent  was  to  be 
extended  for  seven  years  beyond  its  original  expiration.  As  the 
duties  of  government  officers  increased,  it  became  necessary  to 
change  the  board;  and  Congress,  by  the  act  of  1848,  vested  the 
sole  power  of  extension  in  the  Commissioner  of  Patents. 

But  the  arbitrary  power  thus  exercised  by  a  department  officer 
became  obnoxious;  and  the  more  the  patent  business  grew,  the 
greater  became  the  danger  that  improper  influences  would  be 
brought  to  bear  upon  an  officer  who  already  was  burdened  with 

2.  Act  July   8.    1870,   §    54;    U.    S  the  character  of  the  invention.   Hailes 

Rev.  Stats.,     §  4917;  Abb.  Nat.  Dig.  v.  Albany  Co.,  123  U.  S.  582,  8  S.  Ct. 

"Patents,"  6.     See  Leggett  v.  Avery,  262;    Collins   Co.  v.   Goes,   130  U.   S. 

101  U.  S.  256;   Smith  v.  Nichols,  21  56,  9  S.  Ct.   514. 

Wall.  112;  Sessions  v.  Romadka,  145  As  to   reissue,  etc.,   see  Witzell  v. 

U.  S.  29,   12   S.  Ct.  793;   Collins  Co.  Berman,  212   Fed.   734,   129   C.   0.  A. 

V.  Goes,   130  U.   S.   56,  9   S.  Ct.   514.  344. 
A  disclaimer  cannot  he  used  to  change 

802 


CHAP.  X.]  PATENTS    AND   COPYHIGHTS.  §    531 

duties ;  and  there  were  good  reasons,  besides,  for  leaving  all  pat- 
ents to  expire  at  the  same  reasonable  period,  subject  to  such  redress 
in  special  instances  as  might  be  furnished  by  legislation.  Hence 
Congress,  by  the  act  of  1861,  extended  the  original  term  from 
fourteen  to  seventeen  years,  as  it  now  remains,  and  prohibited  all 
extensions  of  patents  to  be  granted  in  the  future.  Xo  patent 
granted  since  the  2d  of  March,  1861,  can  lawfully  be  extended.^ 
But  Congress  may,  and  frequently  does,  authorize  by  special  act 
the  extension  of  a  patent ;  and  such  legis-lation  avails,  as  it  would 
appear,  even  though  the  invention  may  have  already  been  intro- 
duced to  public  use."^  Extended  or  reissued  letters-patent  cannot 
be  annulled  in  any  collateral  proceeding  for  fraud. ^ 

§  531.     Appellate  Proceedings  for  Obtaining  a  Patent. 

There  is  a  sort  of  special  procedure  in  the  matter  of  obtaining 
letters-patent,  by  wliich  the  controversy  may  sometimes  be  brought 
into  the  courts,  though  originating  in  an  executive  department. 
The  rules  applicable  in  such  cases  are  fully  detailed  by  statute; 
and  the  right  secured  to  the  applicant  for  a  patent  or  its  reissue  is 
substantially  that  of  an  appeal,  in  case  he  is  dissatisfied,  from  the 
primary  examiner  to  a  board  of  examiners-in-chief;  from  this 
board  to  the  Commissioner  in  person ;  and  from  the  Commissioner 
in  person  to  the  Supreme  Court  of  the  District  of  Columbia  sitting 
in  banc.  And,  finally,  the  applicant,  if  his  patent  be  still  refused, 
may  resort  to  a  bill  in  equity.     Cases  of  interference,  where  appli- 

3.  See  Curt.  Pat.,  §  287 ;  Act  March  tend  beyond  the  term  durinj?  which 
2,  1861,  c.  88,  §  16;  Act  July  8,  1870,  the  license  was  given.  Paper-bag 
§§  22,  63-67,  Cases,    105    U.    S.    76.       And    as    to 

4.  See  Abb.  Nat.  Dig.  "Patents,"  cases  of  extension,  see  Bloomer  v. 
10;  Bourne  V.  Goodyear,  9  Wall.  811;  McQuewan,  14  How.  539;  Bloomer 
Agawam  Co.  v.  Jordan,  7  Wall.  583.  v.  Millinger,  1  Wall.  340;   Wilson  v. 

5.  Rubber  Co.  v.  Goodyear,  9  Wall.  Simpson,  9  How.  109;  Rubber  Co.  V. 
788;  Seymour  v.  Osborne,  11  Wall.  Goodyear,  9  Wall.  788;  Eunson  v. 
516.  The  absolute  owner  of  a  patent  Dodge,  18  Wall.  414.  See  also.  §  541; 
may  use  or  transfer  his  rights  dur-  Cameron  Co.  v.  Knoxville,  227  U.  S. 
ing  an  extended  term ;  but  the  license  39,  33  S.  Ct.  209. 

to  use  a  patent  is  not  presumed  to  ex- 

803 


§    532  THE    LAW    OF    PERSONAL    PROPERTY.  [PART  IIL 

cation  is  made  for  a  patent  which  appears  to  interfere  with  any 
pending  application,  or  with  any  unexpired  patent,  are  subject  to 
a  like  right  of  appeal.^  The  law  prescribes,  further,  how  far 
copies  of  records  and  foreign  patents  shall  be  admissible  in 
evidence/ 

The  decision  of  the  Commissioner  of  Patents  in  the  allowance 
and  issue  of  a  patent  creates  a  prima  facie  right  only ;  ^  and  upon 
all  the  questions  involved  therein,  the  validity  of  the  patent  is 
subject  to  judicial  examination,^  which  should  be  searching  on  the 
issue  of  patentable  invention/ 

§  532.     Infringement  of  Patents;    Remedies,  etc. 

But  the  great  subject  of  infringement  of  patents  belongs  more 
especially  to  the  courts ;  and  here  it  is  that  an  injured  party  has 
his  more  impx>rtant  remedies,  whether  it  be  by  action  at  law  to 
recover  damages,  or  through  the  more  ample  process  of  a  bill  in 
equity.  The  word  ''  infringement "  is  used  in  the  patent  law  to 
d'enote  the  act  of  trespassing  upon  the  incorporeal  right  secured 
by  a  patent.  Any  person  who,  without  legal  permission,  shall 
"  make,  use,  or  vend  to  another  to  be  used,"  the  thing  which  is 
the  subject-matter  of  an  existing  patent,  commits  the  wrong  of 
infringement.  For  this  wrong  the  choice  is  of  two  remedies, — 
either  damages  may  be  recovered  against  him  at  law  by  an  action 
on  the  case,  or  else  there  may  be  a  bill  in  equity  for  an  injunction 
and  account.^     What  constitutes  an  infringement,  however,  within 

6.  See  Act  July  8,  1870,  §§  41-52;  434.  The  grant  of  letters-patent  does 
U.  S.  Eev.  Stats.,  §§  4909-4915;  Aibb.  not  conclude  the  question  of  abandon- 
Nat.  Dig.  "  Patents,"  3  ;  Seymour  v.  ment.  Planing  Co.  v.  Keith,  101  U.  S. 
Osborne,  11  Wall.  516.  47?.     Courts  should  not  unreasonably 

7.  Act  July  8,  1870,  §   57.  by    construction     enlarge     the    claim 

8.  The  Commissioner's  disallowance  which  the  Patent  OflBce  has  admitted, 
of  a  patent  may  control  in  a  doubt-  Burns  v.  Meyer,  100  U.  S.  671. 

ful    case.      Morgan    v.    Daniels,    153  1.  Hill  v.   Wooster,   132  U.   S.   693, 

U.  S.  120,  14  S.  St.  772.  10  S.  Ct.  229. 

9.  Reckendorfer  v.  Faber,  92  U.  S.  2.  See  Curt.  Pat.,  c.  8;  Bouv.  Diet. 
347.  As  to  suits  for  annulling  a  pat-  "Infringement;  "  U.  S.  Rev.  Stats., 
ent,  see  Mowry  v.  Whitney,  14  Wall.  §§  4918,  4919.     Jurisdiction  of  courts 

804 


CHAP.  E.]  PATENTS    AND   COPYEIGHTS.  §    532 

the  meaning  of  our  patent  laws,  is  left  mainly  for  the  courts  to 
determine;  and  upon  this  point  there  are  a  number  of  decisions 
in  the  Circuit  and  District  Courts  of  the  United  States,  which  it 
is  not  our  purpose  to  set  forth,  though  they  should  be  carefully 
examined  by  every  patent  lawyer.^  But,  in  general,  it  may  be 
said  that,  since  the  wrong  consists  in  making,  using,  or  vending 
to  be  used,  it  is  not  regarded  an  infringement  to  make  a  patented 
machine  merely  as  an  experiment ;  nor  to  vend  the  materials  of  a 
patented  machine ;  nor  to  sell  the  articles  which  it  may  have  pro- 
duced, unless  the  patent  covers  both  process  and  product;  nor, 
where  the  proportions  of  certain  ingredients  are  essential,  to  vary 
them. 

What  constitutes  infringement  of  a  machine  is  not  determinable 
by  fixed  rules ;  but  it  may  arise  where  the  invention  is  used  with- 
out such  variation  as  constitutes  a  new  discovery;  and  here  the 
doctrine  of  mechanical  equivalents  is  properly  applicable.  In  a 
manufacture  the  question  is  one  of  substantial  identity,  and  so 
with  any  applied  principle."^  Nothing  can  be  held  an  infringe- 
over  patents.  Book  22,  N.  Y.  Rpts.,  in  Caldwell  v.  Van  Vlissingen,  9  E.  L. 
Bender  ed.,  note,  p.  449.  Jurisdic-  &  Eq.  51.  See  Keplinger  v.  Do  Young, 
tion  of  State  courts  in  patent  cases.  10  Wheat.  358.  And  in  an  important 
Book  31,  N.  Y.  Rpts.,  Bender  ed.,  note,  case  the  question  is  considered,  how 
p.  214.  Power  of  courts  over  fees  for  far  either  the  inventor  of  a  device,  or 
service  of  patent  claimant.  Book  of  an  entire  machine,  or  of  a  mere 
29,  N.  Y.  Rpts.,  Bender  ed.,  note,  combination,  can  invoke  the  aid  of 
p,  264.  the  doctrine  of  equivalents.    Seymour 

3.  See    Curt.    Pat.,    c.    8,    passim;      v.  Osborne,  11  Wall.  516. 

Bright     Fed.     Dig.     "Patents,"     12;  The    introduction    of   a   newly   dis- 

Abb.  Nat.  Dig.  "  Patents,"  9.  covered     element     or    ingredient,     or 

4.  lb.  And  see  Winans  v.  Den-  one  not  previously  known  to  be  an 
mead,  15  How.  330;  Prouty  v.  Rug-  equivalent,  would  not  constitute  an 
gles,  16  Pet.  336;  Hogg  v.  Emerson,  infringement.  Gould  v.  Rees,  15  Wall. 
11  How.  587;  supra,  §  520.  It  has  187.  Nor  is  there  an  infringement 
been  held  by  the  Supreme  Court  of  wliere  a  single  important  element  is 
the  United  States  that  the  right  cov-  left  out.  Knapp  v.  Morss,  150  U.  S. 
ered  by  a  patent  does  not  extend  to  221,  14  S.  Ct.  81.  But  the  substantial 
a  foreign  vessel  lawfully  entering  one  equivalent  of  a  thing  is  the  same  as 
of  our  ports.  Brown  v.  Duchesne,  19  the  thing  itself  in  patent  law;  and, 
How.  183.     Contra,  English  doctrine  notwithstanding  diflferences  of   name 

805 


§  533  THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

ment  of  a  patent  which  does  not  fall  wUhin  the  terms  in  which 
the  patentee  has  himself  chosen  to  express  his  invention.^ 

As  the  liability  for  infringing  a  patent  sounds  in  tort  there  was 
no  redresa  for  an  inventor  whose  patent  was  infringed  by  the 
government  imtil  the  enactment  of  a  special  statute  in  1910  pro- 
viding compensation  for  such  inventors  in  the  Court  of  Claims. 
The  effect  of  this  statute  is  to  establish  the  right  of  the  government 
to  take  a  patent  by  right  of  eminent  domain ;  and  a  bill  to  enjoin 
the  carrying  out  of  a  government  contract  involving  the  violation 
of  a  patent  will  not  be  sustained.^ 

§  533.     The  Same  Subject. 

Our  statutes  provide  that  damages  for  the  infringement  of  any 
patent  may  be  recovered  by  action  on  the  case  in  certain  specified 
courts  of  the  United  States ;  such  action  being  brought  in  the 
name  of  the  party  interested,  either  as  patentee,  assignee,  or 
grantee.  And  it  is  further  declared  that  whenever,  in  any  such 
action,  a  verdict  shall  be  rendered  for  the  plaintiff,  the  court  may 
enter  judgment  thereon  for  any  sum  above  the  amount  found  by 
the  verdict  as  the  actual  damages  sustained,  according  to  the 
circumstances  of  the  case,  not  exceeding  three  times  the  amount  of 
such  verdict,  together  with  the  costs.''  So  much  for  the  remedy  at 
law.     As  to  remedies  in  equity,  jurisdiction  of  patent  cases  is  also 

and  form,  there  may  be  an  infringe-  Sessions  v.  Eomadka,   145  U.   S.   29, 

ment.      Machine    Co.    v.    Murphy,    97  12  S.  Ct.  79^. 

U.  S.  120.  See,  further,  §  520.  Put-  6.  United  States  v.  Berdan  Fire- 
ting  the  patented  device  to  some  other  Arms  Mfg.  Co.,  156  U.  S.  552;  U.  S. 
use,  or  slightly  improving  upon  it,  is  Comp.  St.;  Crozier  v.  Krupp,  224: 
an  infringement.  Morley  Co.  v.  Lan-  U.  S.  290;  Marconi  Wireless  TeL 
caster,  129  U.  S.  263,  9  S.  Ct.  299;  Co.  v.  Simon,  227  Fed.  906,  231  Fed. 
Western  Co.  v.  Larue,  139  U.  S.  601,  1021. 

11   S.   Ct.  670.  7.  Act   July   8,    1870,    §    59;    U.    S. 

5.  McClain  v.  Ortmayer,  141  U.  S.  Rev.  Stats.,  §  4919.     For  practice  in 

419,  12  S.  Ct.  76.    Where  the  patentee  matters  at  law,  see  Curt.   Pat.,  c.  9. 

is    the    pioneer,    his    patent    deserves  For  the  cost  or  damages  recoverable, 

liberal  construction.  Morley  Co.  V,  Lan-  see   Parks   v.    Booth,    102    U.    S.    96; 

caster,  129  U.  S.  263,  9  S.  Ct.   299;  Elizabeth  v.  Pavement  Co.,  97  U.  S. 

126. 

806 


CHAP.  X.]  PATENTS    A2iT>    COPYKIGIITS.  §    534 

conferred  on  courts  of  the  United  States;  and  upon  the  filing  of 
a  bill  in  equity  by  any  party  aggrieved,  the  court  has  power  to 
grant  injunction,  according  to  the  usual  principles,  to  prevent  the 
violation  of  a  patent-right.  The  terms  in  such  a  case  are  such  as 
the  court  may  deem  reasonable;  and  the  complaining  party,  if 
successful,  is  entitled  to  recover  not  only  the  defendant's  profits 
to  be  accounted  for,  but  also  the  damages  he  may  have  sustained, 
which  are  to  be  assessed  under  the  direction  of  the  court.^  One 
co-owner  of  a  patent  can  enjoin  an  infringement  by  a  use  of  the 
invention  by  another  co-owner  without  his  consent.^ 

§  534.     Miscellaneous  Points  as  to  Patent  Suits. 

As  a  general  rule,  patents  are  libenally  construed  in  our  courts, 
and  with  a  disposition  to  protect  the  patentee  against  every  sub- 
stantial violation  of  his  rights.  There  is  some  uncertainty  as  to 
the  province  of  court  and  jury  respectively,  in  determining  upon 
the  validity  and  effect  of  an  invention;  -but  a  fair  distinction  is 
to  be  taken  between  the  construction  of  written  instruments  (which 
is  a  judici-al  duty)  and  discrimination  as  to  the  character  of  the 
thing  invented  in  questions  of  unity  and  diversity  of  invention; 
and  the  court  need'  not  compare  two  specifications,  and  instruct  a 

8.  Act   July   8,    1870,    §    56;    U.    S.  827,  134  C.  C.  A.  515;  Detroit  Co.  v. 

Kev.  Stats.,  §  4921.     For  practice  in  Mine  Supply  Co.,  215  Fed.  100   (U.  S. 

matters   in  equity,   see   Curt.   Pat.,   c  C.   C.  A.   1914)  ;   Wright  Co.  v.  Her- 

10.     And  see  Moore  v.  Marsh,  7  Wall.  ring-Curtiss  Co.,  211  Fed.  654   (N.  Y. 

515;  and  Digests  of  Bright,  and  Abb.  C.  C.  A.  1914)    (infringement  part  of 

supra.      Appeal    or   error    lies    in    all  the    time)  ;    Murray    v.    Detroit    Co., 

patent  controversies,  whether  at   law  206  Fed.  465,  124  C.  C.  A.  371.     The 

or   in*  equity,   to   the  -Supreme   Court  test  of  infringement  of  a  machine  is 

of   the    United    States.      Act   July    8,  not  its   physical   appearance,   but    the 

1870,   §    56.     See   Pliilip   v.   Nock,   13  principle   of   its  operation.      Interna- 

Wall.  185;   §  357.  tional  Co.  v.  William  Cramp  Co.,  211 

One   infringing   a   patent   is  a   tor-  Fed.  124   (U.  S.  C.  C.  A.  19'14).     And 

tious    wrongdoer.      Decker    v.    Smith,  see  F.   D.   Cummer  v.   Atlas  Co..   193 

225  Fed.  776  (N.  Y.  D.  C.  1915).     See  Fed.  993,  113  C.  C.  A.  611  (disclaimer 

as  to  infrequent   remedies,   Stockland  of  invalid  claims) . 
V.  Russell  Co.,  222  Fed.  906,  138  C.  C.  9.  Cescinsky   v.    Routledge   &    Sons 

A.  336;  Mygatt  v.  Schaflfer,  218  Fed.  (1916),  2  K.  B.  325. 

807 


§  534a        THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

jury,  as  matter  of  law,  whether  the  inventions  are  or  are  not  iden- 
tical.^ The  rule  of  estimating  damages  in  patent  suits  is  now 
pretty  well  established.  And,  as  to  evidence,  rules  have  been  set 
forth  in  considerable  detail  by  the  Supreme  Court.-  Our  patent 
statutes,  in  this  latter  particular,  require  a  defendant  who  relies 
upon  special  matter,  such  as  the  previous  invention,  knowledge, 
or  use  of  the  thing  patented,  to  give  thirty  days'  notice  of  the 
names  and  places  of  residence  of  his  witnesses ;  and  this  require- 
ment is  strictly  construed.^  And  that  there  may  be  an  end  of 
patent  controversies,  our  courts  incline  strongly  to  uphold  all 
agreements  made  between  rival  patentees  upon  consideration  and 
for  the  sake  of  peace."^ 

§  534a.     The  Effect  of  the  Anti-Trust  Laws  on  Commerce  in 
Patented  Articles. 

The  purpose  of  the  patent  laws  is  to  create  a  monopoly;  the 
purpose  of  the  recent  anti-trust  laws  is  to  prevent  a  monopoly ;  and 
the  necessary  conflict  between  these  two  principles  has  presented 
many  interesting  questions  and  resulted  in  some  valuable  decisions. 
The  present  state  of  the  law  seems  to  be  that  the  anti-trust  laws 
do  not  restrict  the  monopolies  created  by  the  patent  and  copyi'ight 
laws,  but  that  beyond  the  inherent  limitations  of  their  monopolies 
patents  and  copyrights  are  of  no  value  as  a  protection  against  the 
penalties  of  the  anti-trust  laws.^ 

1.  Bischoff  V.  Wethered,  9  Wall.  pany,  11  Wall.  488.  As  between 
812:  Curt.  Pat.,  §§  222-225.  The  Federal  and  State  jurisdiction  all 
court  defines  the  invention  to  the  suits  directly  touching  the  validity  of 
jury.    155  U.  S.  565.  a  patent,  or  raising  a  Federal  ques- 

2.  Seymour  v.  Osborne,  11  Wall.  tion,  should  be  brought  in  the  United 
516;  Rubber  Co.  v.  Goodyear,  9"  Wall.  States  courts;  but  a  mere  contract 
788;  Railroad  Co.  v.  Dubois,  12  Wall.  relating  to  a  patent  is  not  necessarily 
47.  See  Tucker  v.  Spalding,  13  Wall.  of  this  character.  Marsh  v.  Nichols. 
453  ;  Bates  v.  Coe,  98  U.  S.  31.  140  U.  S.  344,  11  Sup.  Ct.  798  :  Dale 

3.  Blanchard  v.  Putnam,  8  Wall.  Tire  Co.  v.  Hyatt,  125  U.  S.  46.  54, 
420;  Wise  v.  Allis,  9  Wall.  737;  Aga-  8  Sup.  Ct.  756. 

warn  Co.  V.  Jordan,  7  Wall.  583.  5.  See,  for  example,  United  States 

4.  Eureka  Company  v.  Bailey  Com-      v.  Winslow,  227  U.  S.  202,  33  Sup.  Ct. 

808 


CHAP.  X.]  PATENTS    AND   COPTEIGHTS.  §    535 

§  534b.     Controlling  Price  of  Patented  Articles. 

There  have  been  many  attempts  made  in  recent  years  by  manu- 
facturers to  control  the  retail  price  of  patented  articles.  No  such 
limitation  of  the  sale  of  a  chattel  is  valid  at  common  law,  as  it  is 
an  illegal  restraint  on  the  absolute  ownership  of  the  chattel ;  and 
our  Supreme  Court  has  recently  decided  that  the  patent  laws  give 
no  more  right  than  existed  at  common  law  for  the  patentee  to  limit 
the  retail  price  by  notice.^  But  patented  articles  may  be  sold 
with  a  restriction  that  they  be  used  only  with  supplies  of  the 
patentee's  manufacture,  and  a  breach  of  this  condition  will  be  held 
an  infringement.'' 

§  535.     Copyright;    Statute  Protection,  etc. 

II.  i^ext,  as  to  that  sort  of  literarj^  property  which  is  known 
as  "  copyright,"  or  the  "  right  of  copy,"  by  which  we  mean  the 
sole  right  of  printing,  publishing,  and  selling  one's  literary  com- 
position. Copyright  is  the  creature  of  statute;  and  no  common- 
law  protection  is  given  to  a  work  of  literature  or  art  after  it  is 
once  published.^  An  author  in  this  country  has  no  exclusive  prop- 
erty in  his  published  work  except  as  granted  by  the  Constitution 
of  the  United  States  and  the  laws  of  Congress  made  in  pursuance 
thereof;  although  he  has  at  common  law  an  absolute  property  in 
his  work  before  its  publication.^  And  the  act  of  July  8,  1870, 
as  embodied  in  the  Revised  Statutes,  defines  the  extent  to  which 
copyright  is  to  be  recognized  and  protected  in  this  country,  i^ot 
only  book-writers,  but  artists,  are  entitled  to  the  benefits  of  a  liter- 
ary  property ;    for  it  is  expressly  provided  that  "  any  citizen  of 

253;   standard  Sanitary  Manufactur-  8.  Jefferys  v.  Boosey,  4  H.  L.  Cas. 

ing  Co.   V.   United   States,   226   U.   S.  815;  Reade  v.  Conquest,  9  C.  B.  N.  s. 

20,  33   Sup.  Ct.  9;   Straus  v.  Ameri-  755. 

can  Publishers'  Association,  231  U.  S.  9.  Wheaton   v.   Peters,   8   Pet.    591. 

222,   34   Sup.   Ct.   84.     See   article   in  See  Kerr  Injunctions,  cs.  13,  20;  Jef- 

28  Harvard  Law  Review,  394.  ferys   v.   Boosey,   4   H.   L.   Cas.    815 ; 

6.  Bauer  &  Cie  v.  O'Donnell,  Prince  Albert  v.  Stranfje,  1  Mac.  & 
(U.  S.),  33  Sup.  Ct.  Rep.  616.  G.  25;  Parton  v.  Prang,  3  Cliff.  537. 

7.  Henry   v.    A.    B.    Dick    Co.,    224 
U.  S.  1,  32  Sup.  Ct.  64. 

809 


§  536  THE  LAW  OF  PERSONAL  PROPEETY.       [PART  III. 

the  United  States,  or  resident  therein,  who  shall  be  the  author, 
inventor,  designer,  or  proprietor  of  any  book,  map,  chart,  dramatic 
or  musical  composition,  engraving,  cut,  print,  photograph  or  nega- 
tive thereof,  or  of  a  painting,  drawing,  chromo,  statue,  statuary, 
and  of  models  or  designs  intended  to  be  perfected  as  works  of  the 
fine  arts,  and  his  executors,  administrators,  or  assigns,  shall,  upon 
complying  with  the  provisions  of  this  chapter,  have  the  sole  liberty 
of  printing,  reprinting,  publishing,  completing,  copying,  executing, 
finishing,  and  vending  the  same ;  and  in  the  case  of  a  dramatic 
composition,  of  publicly  performing  or  representing  it,  or  causing 
it  to  be  performed  or  represented  by  others ;  and  authors  may 
reserve  the  right  to  dramatize  or  to  translate  their  own  works."  ^ 
News  is  not  protected  either  at  common  law  or  under  the  statute 
as  such,  although  the  form  in  which  it  is  written  is  protected ;  ^  and 
there  may  be  a  property  right  in  compiled  early  information  of 
commercial  value,  even  apart  from  the  copyright  law.^ 

§  536.     The  Same  Subject;    Legal  Principles. 

The  law  of  copyright  has  received,  as  yet,  no  great  attention 
from  the  Supreme  Court  of  the  United  States ;  but  many  interest- 
ing questions  are  discussed  in  the  lower  federal  tribunals;  the 
decision  turning  considerably  upon  the  construction  of  statutes, 
which  of  course  are  liable  to  amendment.  Some  doctrines  appear 
to  be  well  established ;  and  among  them  that  neither  the  official 
report  of  a  government  officer  is  a  subject  of  copyright,  nor  a  news- 
paper, nor  tiie  republished  work  of  any  foreign  author.'*     Nor  can 

1.  Act  July  8,  1870,  §  86;  U.  S.  Dodge  Co.  v.  Construction  Informa- 
Rev.  Stats.  (1878),  §  4952.  Act  tion  Co.,  183  Mass.  62,  66  N.  E.  204, 
March  3,  1891,  c.  565,  amends.  The  60  L.  R.  A.  810,  97.  Am.  St.  Rep.  412. 
law  of  copyright  was  codified  and  ex-  Where  fiction  is  published  under  the 
tended  by  the  Act  of  March  4,  1909,  guise  of  news  the  dramatization  of  it 
c.  320,  §  20,  35  Stat,  at  Large,  1080.  cannot  be  prevented.  Davies  v. 
Cf.  §  537,  post.  Bowes,  219  Fed.  178. 

2.  Walter  v.  Steinkopf,  (1892)  3  4.  See  Abb.  Nat.  Dig.  "Copyright," 
Ch.  489.  1>  and  eases  cited;  Bright.  Fed.  Dig. 

8.  National  Tel.  News  Co.  v.  West-  "  Copyright,"  1 ;  Act  July  8,  1870, 
ern  Un.  Tel.  Co.,  119  Fed.  294 ;  F.  W.      §§86,103.     See  §  541,  note. 

810 


CHAP.  X.]  PATENTS    AND   COPYRIGHTS.  §    536 

judges  themselves  have  any  pecuniary  interest  in  the  fruits  of  their 
judicial  labors  as  against  the  public.^  But  by  the  common  law  a 
person  had  property  in  his  own  manuscripts ;  and  a  court  of  equity 
would  enjoin  the  improper  use  of  them  by  a  third  party;  and 
hence,  too,  the  author  of  letters  is  allowed  to  have  a  property  — 
or,  it  may  be,  a  copyright  —  in  his  own  letters,  and  no  person  has 
a  right  to  publish  them  without  his  consent,  unless  the  publication 
be  requisite  to  establish  a  personal  right  or  claim  or  for  self-vindi- 
cation.^ The  reporter  of  a  court  has  no  copyright  in  the  written 
opinions  delivered  by  the  judges,^  although  he  may  as  author 
(unless  restrained  by  statute)  obtain  a  copyright  for  a  volume  of 
reports  so  as  to  cover  such  parts  of  the  book  as  he  prepares.* 
Copyrights,  then,  are  not  permitted  in  the  case  of  certain  persons 
and  certain  subjects. 

But  again,  there  is  no  copyright  where  the  element  of  originality 
is  wanting  in  the  production.  To  be  entitled  to  a  copyright  the 
composition  should  be  essentially  original  and  meritorious.  Thus, 
to  constitute  one  an  author,  he  must  by  his  owm  intellectual  labor 
applied  to  the  materials  of  his  composition  have  produced  an  ar- 
rangement or  compilation  new  in  itself;  and  as  to  any  inventor 
or  designer,  a  similar  observation  applies;  something  new  must 
have  been  brought  forth.  But  exactly  where  the  line  should  be 
drawn  between  a  compilation  which  may  be  copyrighted  and  an 
appropriation  of  materials  which  may  not,  it  is  difficult  to  say; 
except  that  the  plan,  arrangement,  and  combination  of  materials 
should  be  new,  or  at  least  that  there  should  be  that  substantial 
condensation  of  original  materials  which  constitutes  a  bond  fide 
abridgment ;  in  short,  that  a  fair  degree  of  intellectual  labor  and 
judgment  should  have  been  expended  by  the  person  on  whose  behalf 

5.  Not   even   where  the   judge    pre-  prepared,  of  which  he  is  not  the  au- 

pares  the  head  notes  as  well  as  the  thor,  no  essential  rijrht  exists, 

opinion.      Banks    v.    Manchester,    128  6.  lb.;     Kerr    Injunctions,    c.     13; 

U.  S.  244,  &  Sup.  Ct.  36.     And  if  the  Pope  v.  Curl,  2  Atk.  342. 

reporter   of   a   court   takes   out   copy-  7.  Wheaton  v.  Peters,  8  Pet.  591. 

right  for  the  State  for  matter  thus  8.  Callaghan  v.   Myers,    128   U.   S. 

617,  9  Sup.  Ct.  177. 

811 


§  536 


THE  LAW  OF  PERSONAL  PROPERTY. 


[PAET  III. 


a  copyright  is  claimed;  and  this,  we  may  add,  to  some  new  and 
useful  result.^  The  "  proprietor  "  of  a  work  is  allowed  by  our 
present  statute  to  take  out  a  copyright  as  well  as  the  author, 
inventor,  or  designer ;  yet  the  courts  have  always  discouraged  such 
an  interpretation  of  the  law  as  would  entitled  mere  employers  to 
exclusive  privileges  of  this  sort.^ 


9.  See  Bright,  and  Abb.,  supra;  At- 
will  V.  Ferrett,  2  Bl.  C.  C.  40;  Gray 
V.  Russell,  1  Story,  11 ;  Folsom  v. 
Marsh,  2  Story,  100.  See  Callaghan 
V.  Myers,  128  U.  S.  617,  9"  Sup.  Ct. 
177,  where  infringement  by  copying 
was  shown.  Copyright  is  infringed 
only  when  the  persons  produce  a  sub- 
stantial copy  of  the  whole,  or  of  a 
material  part  of  the  book  or  other 
thing  for  which  copyright  was  se- 
cured. Hence,  maps  of  New  York 
City  having  been  copyrighted  upon  a 
certain  plan,  the  publication  of  maps 
of  Philadelphia  upon  a  similar  plan 
constitutes  no  infringement.  Perris 
V.  Hexamer,  99  U.  S.  674.  Nor  can 
the  author  of  a  peculiar  system  of 
bookkeeping  claim,  tinder  his  copy- 
right for  a  treatise  on  tbat  subject, 
an  exclusive  property  in  the  system 
itself.  Baker  v.  Selden,  101  U.  S.  99. 
See,  as  to  the  difference  between  a 
patent  and  a  copyright,  opinion  of 
Mr.  Justice  Bradley,  ib. 

1.  Act  July  8,  1870,  §  86.  And  see 
§  537. 

Among  the  latest  cases  (1917),  see 
De  Bekker  v.  Frederick  A.  Stokes  Co., 
157  N.  Y.  S.  576  (breach  of  publish- 
er's contract  with  author ) . 

As  to  the  right  to  dramatize,  &c., 
and  1912  amendment  to  law  concern- 
ing motion  pictures,  &c.,  see  Photo- 
drama  Co.  V.  Social  Corporation,  220 
Fed.  448  (N.  Y.  D.  C.  1915);  s.  c. 
313  Fed.  374;   Froman  v.  Fitch,  164 


App.  Div.  231,  149  N.  Y.  S.  633; 
Universal  Co.  v.  Copperman,  218  Fed. 
577,  134  C.  C.  A.  305. 

As  to  joint  authors,  see  Maurel  v. 
Smith,  220  Fed.  195  (N.  Y.  D.  C. 
1915).     And  see  2  K.  B.  325. 

For  infringement  of  copyright  as 
applied  to  criticism  or  a  parody  or 
quotation,  see  Hill  v.  Whalen,  220 
Fed.  359'  (N.  Y.  D.  C.  1914).  For  a 
copyrighted  musical  comedy,  as  dis- 
tinguished from  the  lyrics  and  music, 
see  Herbert  v.  Fields,  152  N.  Y.  S. 
487  (1915,  moving  pictures)  ;  T.  B. 
Harms  v.   Stern,  229'  Fed.  42,  145   C. 

C.  A.  531;  Hill  v.  Whalen,  220  Fed. 
359  (cartoons  infringed  upon)  ; 
Cooper  V.  James,  213   Fed.   871    (Ga. 

D.  C.  1914)  (no  copyright)  ;  Collier 
V.  Imp  Films  Co.,  214  Fed.  272  (N.  Y. 
D.  C.  1913)  (author's  change  of 
title)  ;  Chappell  v.  Fields,  210  Fed. 
864,  127  C.  C.  A.  448  (scene  of  a 
play)  ;  Davie's  v.  Bowes,  209  Fed.  53, 
134  C.  C.  A.  552  (infringement  of  a 
newspaper  story)  ;  Hoffman  v.  Le 
Traunik,  209  Fed.  375  (N.  Y.  D.  C. 
1913)  (use  of  old  materials)  ;  Chau- 
tauqua School  v.  National  School,  211 
Fed.  1014  (N.  Y.  D.  C.  1914);  Bu- 
reau of  National  Literature  v.  Sells, 
211  Fed.  379  (Wash.  D.  C.  1914)  (sale 
of  second-hand  copies)  ;  G.  Eicordi  v. 
Mason,  201  Fed.  182  (N.  Y.  C.  C. 
1911)  (opera  stories)  ;  Da  Prate  Co. 
v.  Giuliani  Co.,  189  Fed.  90  (Minn. 
C.  C.  1911)    (trade  catalogue)  ;  In  re 


812 


CHAP.  X.]  PATENTS    AND   COPYRIGHTS.  §    537 

And  again,  the  author,  inventor,  or  designer  of  a  work  for 
which  he  might  have  obtained  a  copyright,  may,  under  some  cir- 
cumstances, similar  to  other  inventors,  be  considered  to  have  dedi- 
cated his  work  to  the  public ;  though  no  such  dedication  is  to  be 
readily  presumed.^  The  further  proposition  is  well  established, 
that  the  literary  composition  intended  to  be  protected  is  not  to  be 
chiefly  determined  by  the  title  of  the  work,  nor  by  the  size,  form, 
or  shape  in  which  it  makes  its  appearance,  but  rather  by  the 
subject-matter  which  it  contains. 

§  537.     Length  of  Copyright  Term. 

The  length  of  time  for  which  copyrights  are  to  be  granted  has 
long  been  twenty-eight  years ;  with  the  further  right  of  an  exten- 
sion for  fourteen  years,  which  may  always  be  secured  by  the 
author,  inventor  or  designer,  or  his  widow  or  children.^  And  as 
no  copyright  existed  at  common  law  there  is  no  authority  for 
obtaining  copyright  beyond  the  extent  to  which  Congress  may  have 
authorized  it,  generally  or  specially.'^ 

West  Pub.  Co.,  184  Fed.  74:9   (N.  Y.  Co.  v.  Harper,  222  U.  S.  55,  32  Sup. 

C.  C.  1911)    (law  reports)  ;  White  v.  Ct.  20. 

Bender,    185   Fed.   921    (N.   Y.    C.   C.  2.  See   U.    S.    Rev.    Stats.     (1878), 

1911)    (law  books).  §  4952;  Act  Joily  8,  1870,  §  86. 

Of    course    the    composition    to    be  3.  Act  July  8,  1870,  §§  87,  88;  U. 

copyrighted  should  be  free  from  ille-  S.    Rev.    Stats.,    §§    4953,    4954.      See 

gality  or  immorality.     Hoffman  v.  Le  Paige      v.      Banks,      13      Wall.      608. 

Traunik,  209   Fed.   375    (N.   Y.   D.   C.  Amended  by  Act  March  3,  1891,  as  to 

1913).  formalities   of   extension,   by   publica- 

There  is  no  copyright  on  an  arti-  tion. 

cle  made   up   from    a   public   report.  4.  Banks  v.  Manchester,  128  U.  S. 

Du   Puy   V.   Post  Telegram   Co.,    210  244,  9  Sup.  Ct.  36. 

Fed.   883,   127   C.   C.  A.   493.     As   to  A  liberal  extension  of  the  renewal 

dedication   to  the  public,   see  O'Neill  term    is   given,    under    express    condi- 

V.    General    Film   Co.,    152    N.    Y.   S.  tions  and  restrictions,  extending  such 

599    (1915)    (motion  pictures).  term    to   twenty-eight  years,   by   Act 

For  conditions  of  suit  for  infringe-  March  4,  1909,  c.  320.  See  White- 
ment  under  Act  of  March  4,  1909,  see  Smith  Co.  v.  Goff,  187  Fed.  247,  109 
New  York  Times  Co.  v.  Star  Co.,  195  C.  C.  A.  187  ("proprietor"  not  in- 
Fed.  110   (N.  Y.  C.  C.  1912)  ;  Kalem  eluded). 

813 


§  539  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

§  538.     How  Copyright  is  Procured. 

The  executive  supervision  of  our  copyright  system  belongs  now 
to  the  Librarian  of  Congress,  at  Washington ;  though  formerly  it 
was  vested  in  the  clerks  of  the  various  District  Courts  of  the 
United  States.  And,  in  order  that  a  copyright  may  be  perfected, 
three  things  are  essential  on  the  part  of  the  copyright  claimant : 
first,  a  deposit  in  tbe  mail,  before  publication,  of  the  printed  title, 
addressed  to  the  Librarian  of  Congress  (the  legal  fees  being  like- 
wise payable)  ;  second,  a  deposit,  within  ten  days  after  publica- 
tion, of  two  complete  copies  of  the  work  (or,  in  case  of  a  work  of 
art,  a  photograph  of  the  same)  ;  and  third,  by  way  of  public  cau- 
tion against  infringement,  the  insertion  or  inscription  upon  each 
copy  of  the  work  of  the  words,  "  Entered  according  to  Act  of 

Congress,  in  the  year ,  by  A.  B.,  in  the  office  of  the  Librarian 

of  Congress,  at  Washington,"  or  the  statute  equivalent.^ 

§  539,     Assignment  of  Copyright. 

Copyrights  are  made  assignable  in  law  by  any  instrument  in 
writing;  but  the  assignment,  unless  recorded  in  the  office  of  the 
Librarian  of  Congress  within  sixty  days  after  its  execution,  is  void 
against  any  subsequent  purchaser  or  mortgagee  for  a  valuable 
consideration  without  notice.^  It  is  not  uncommon  for  contracts 
to  be  made  between  author  and  publisher  which  may  amount  to  an 
assignment  of  copyright,  or  a  license  to  publish,  according  to  cir- 

5.  Act  July  8,  1870,  §§  ffO-G? ;  U.  S.  copies  of  the  copyrighted  book  within 
Rev.  Stats.,  §§  4956-4959,  4962.  See  ten  days  after  publication  is  an  es- 
amendments,  Act  March  3,  1891.  sential  condition  to  the  statute  pro- 
Government  fees  are  to  be  paid  in  teetion.  As  to  the  proof  of  such 
such  cases.  Cf.  statute  for  full  de-  deposit,  by  certificate  or  otherwise, 
tails.  And  see  Wheaton  v.  Peters,  8  in  a  suit  for  infringement,  see  Mer- 
Pet.  591.  Act  June  18,  1874,  permits  rell  v.  Tice,  104  U.  S.  557.  Deposit 
the  author  to  insert  or  inscribe,  at  just  before  publication  complies  with 
his  option,  instead  of  the  above  no-  statute.  The  three  requirements  are 
tice,  the  following:  "Copyright,  discussed  in  Belford  v.  Schriber,  144 
18—  by  A.  B."  See  further,  as  to  U.  S.  488;  Callaghan  v.  Myers,  128 
the  place  of  copyright  mark  on  cer-  U.  S.  617,  12  Sup.  Ct.  734. 
tain  works  of  art.  Act  Aug.  1,  1882.  6.  Act   July   8,    1870,   §    89';    U.   S. 

The    delivery    or    deposit    of    two  Rev.  Stats.,  §  4955. 

814 


CHAP.  X.]  PATENTS    AND   COPYRIGHTS.  §    540 

cumstances ;  and  publishers  in  these  days  frequently  take  out  the 
copyright  in  their  own  names,  a  course  especially  proper  in  the 
case  of  magazines  which  they,  and  not  the  editors  or  contributors, 


§  540.     Infringement  of  Copyright;    Remedies,  etc. 

The  remedies  for  the  infringement  of  copyright  are  not  unlike 
those  in  the  case  of  patents;  and  the  injured  party  may  proceed 
either  by  bill  in  equity  and  obtain  an  injunction,  or  by  action  at 
common  law  for  damages.  The  general  jurisdiction  of  contro- 
versies arising  under  the  copyright  laws  belongs  to  the  courts  of 
the  United  States;  and  the  rules  of  pleading,  of  proceedings  on 
appeal,  of  damages  for  infringement  (whether  the  infringement 
relates  to  a  book,  map,  engraving,  dramatic  composition,  manu- 
script, or  any  other  subject  of  literary  copyright),  and  of  limita- 
tions, are  affected  largely  by  statute  provisions  liable  to  change.^ 
The  right  of  action  for  infringing  copyright,  as  well  as  the  copy- 
right itself  and  the  means  of  securing  redress,  are  only  those 
prescribed  by  Congress.^  It  has  been  held,  however,  that  a  copy- 
righted song  may  be  put  on  phonograph  records  without  infringe- 
ment of  the  copyright.' 

7.  See  Bright.  Fed.  Dig.  "  Copy-  see  Thompson  v.  Schreiber,  124  U.  S. 
right,"  4;  Little  V.  Hall,  18  How.  165.  612;    Belford   v.   Scribner,   144   U.    S. 

8.  Act  July  8,  1870,  §§  98-108 ;  488,  12  Sup.  Ct.  734.  Where  portions 
U.  S.  Eev.  Stats.  (1878),  §§  4964-  only  are  copied,  but  so  int«rmingled 
4971;  Bright.,  supra,  5,  6;  Abb.  Nat.  with  the  rest  of  the  work  as  not  to  be 
Dig.  "  Copyright,"  5.  The  unauthor-  distinguishable,  the  entire  profits  may 
ized  printer  and  the  publisher  of  a  bo  recovered  in  a  suit.  Belford  v. 
copyrighted  book  are  equally  liable  for  Scribner,  144  U.  S.  488,  12  Sup.  Ct. 
an    infringement;    and    both    may   be  734. 

required  to  account  for  the  profits  of  For   the   efi'ect   of   non-assertion   of 

the    unauthorized    publication.      Bel-  copyright,    see    Paige    v.    Banks,    13 

ford  V.   Scribner,   144   U.   S.   488,   12  Wall.  608. 

Sup.   Ct.   734.     See  Bureau   v.    Sells,  1.  Monckton    v.    Gramophone    Co., 

211    Fed.    379    (Wash.   D.    C.    1914)  ;  106  L.  T.  84,  56  S.  J.  270,  28  T.  L.  R. 

Chautauqua  School  V.  National  School,  205    (A.  C.      [1912]),    132    L.    T.    J. 

211  Fed.  1014   (N.  Y.  D.  C.  1914).  295.      See   19    Harvard    Law   Review, 

9.  Thompson  v.  Hubbard,  131  U.  S.  134. 
123,  9  Sup.  Ct.  710.     As  to  damages, 

815 


§  541 


THE  LAW  OF  PEBSONAL  PROPERTY. 


[part  in. 


§  541.     English  and  Foreign  Patent  and  Copyright  Laws. 

We  have  dwelt,  in  this  chapter,  more  particularly  upon  the 
American  law  of  patents  and  copyrights,  because  this  system  is  sui 
generis,  and  not  fairly  to  be  compared  with  that  of  England  and 
other  countries  whose  statutes  are  so  different  from  our  own. 
English  patent  law  is  founded  upon  an  old  "  statute  of  monopo- 
lies ;  "  ^  ours  draws  its  inspiration  rather  from  the  constitutional 
policy  of  promoting  the  progress  of  science  and  usef vil  arts ;  and 
there  are  some  nations,  such  as  Holland  and  Switzerland,  whose 
legislators  have  deemed  it  better  to  dispense  with  patent  rights 
altogether.-'  Our  copyright  laws  have  been  frequently  criticised 
as  imperfect,  inasmuch  as  they  permit  of  piracy  in  foreign  works ;  "^ 


2.  Supra,  §  519. 

3.  See  Whitman  Pat.  Laws,  pt.  ii., 
passim. 

4.  Aliens  and  non-residents  of  the 
United  States  were  not  formerly  pro- 
tected under  our  copyright  laws. 
U.  S.  Rev.  Stats.,  §  4971.  But  see 
new  international  copyright  men- 
tioned in  next  note.  For  English  law 
of  patents  and  copyrights,  see  Kerr 
on  Injunctions,  cs.  19,  20;  Wms.  Pers. 
Prop.,  pt.  iii.,  c.  2;  Fisher's  Dig. 
"  Patents,"  &c.  Trademark  protec- 
tive legislation  is  held  unconstitu- 
tional as  concerns  the  United  States, 
and  not  within  the  punview  of  the 
Federal  constitution.  Trademark 
Cases,  100  U.  S.  82.  Labels  simply 
intended  to  designate  articles  cannot 
be  copyrighted.  Higgins  v.  Keuffel, 
140  U.  S.  428.  As  to  design  patents, 
see  Gorham  Co.  v.  White,  14  Wall. 
511. 

The  English  statute,  8  Anne,  c.  19, 
§  1,  gave  a  copyright  in  books  then 
printed  for  twenty-one  years,  and  to 
authors  and  their  assignees  the  ex- 
clusive copyright  for  fourteen  years; 
and  by  §   9,  after  the  expiration  of 

816 


the  fourteen  years,  another  similar 
period  if  the  author  was  living.  This 
act  was  extended  to  the  United  King- 
dom by  41  Geo.  III.,  c.  107.  By  later 
acts  the  statute  of  Anne  is  repealed, 
and  the  period  of  copyright  is  ex- 
tended, so  as  at  all  events  to  provide 
copyright  for  the  full  period  of  an 
author's  life,  and  seven  years  later. 
See  54  Geo.  III.,  c.  156;  5  &  6  Vict., 
c.  45;  Fisher's  Harrison's  Dig. 
"  Copyright."  English  copyright  is 
to  be  entered  at  Stationers'  Hall; 
and  certain  public  libraries  must  be 
supplied  with  copies  in  order  to  make 
the  proprietorship  complete.  Stat.  5 
&  6  Vict.,  c.  45.  By  the  English  law, 
copyright  may  be  taken  out  by  news- 
papers or  other  "  serial  publications." 
40  Ch.  D.  500;  (1894)  3  Ch.  663. 
Or  in  the  translation  of  a  foreign 
play.  (1892)  3  Ch.  402.  Or  for  de- 
signs. The  form  of  expression  in 
which  news  is  conveyed  becomes  thus 
the  subject  of  English  copyright. 
(1892)  3  Ch.  489.  As  to  compiling 
circular  tours,  as  distinguished  from 
copying  mere  time-tables,  see  (1894) 
App.  C.  335. 


CHAP.  X.]  PATENTS    AND   COPYRIGHTS.  §    541 

and  doubtless  an  international  copyright  system,  which  would 
fairly  secure  to  authors  the  just  fruits  of  their  toil  the  world  over, 
is  desirable,  and  may  yet  be  partially  reared.^ 

5.  Since  the  text  was  written  an  and  more  extensive  work  (1895). 
international  copyright  system  with  See  also  Merwin  on  the  Patentability 
Europe  has  (1895)  been  secured.  See  of  Inventions;  Bump's  Law  of  Pat- 
Act  March  3,  1891,  c.  565,  and  procla-  ents,  Copyrights,  &c.  The  recent 
mations  of  same  year.  See  also  Chap-  treatises  of  Curtis  and  Drone  on  copy- 
I)ell  V.  Fields,  210  Fed.  864,  127  C.  C.  right  deserve  mention;  also  the  Eng- 
A.  448.  lish  work  of  Copinger;  and  Morgan's 

On  the  subject  of  Patents,  see  latest  Law  of  Literature.     See,  also,  A.  H. 

edition  of  the  text-book  of  Mr.  George  Walker  on  Patents    (1917). 
T.  Curtis,  or  W.  C.  Kobinson's  later 


52  817 


CHAPTER  XI 

ANNUITIES,    PENSIONS,    AND    INSURANCE    POLICIES 

§  542.     Annuities ;    Their  Nature  and  Incidents. 

I.  That  species  of  incorporeal  chattel  which  is  known  as  the 
"  personal  annuity  "  plays  rather  an  important  part  in  English 
property  law;  though  in  America  it  seems  to  have  attained  little 
consequence  in  comparison.  Personal  annuities  are  annual  or 
periodical  payments  of  money  not  charged  on  real  estate,  and  such 
payments  to  a  beneficiary  are  expressed  sometimes  for  years 
though  usually  for  life.  An  annuity  in  general  may  be  charged 
only  upon  real  estate,  or  only  upon  personal ;  or  it  may  be  charged 
generally  upon  one's  whole  estate,  real  and  personal  combined. 
Annuities  are  sometimes  limited  to  the  "  heirs  "  or  "  heirs  of  the 
body  "  of  the  grantee,  in  which  latter  case  they  descend  on  his 
dying  intestate,  just  like  real  estate.  But,  for  all  this,  a  personal 
annuity  is  personal  property;  and  it  will  pass  by  a  person's  will 
under  the  bequest  of  all  his  personal  estate ;  while  if  it  be  given  to 
one  forever,  the  executor  and  not  the  heir  of  the  grantee  takes  it.^ 
Questions  regarding  annuities  generally  arise  thu's  under  the  con- 
struction of  wills ;  and  where  an  annuity  is  given  by  will  without 
direction  as  to  the  time  of  its  commencement,  the  rule  is  that  it 
commences  at  the  testator's  death.^  Blackstone,  while  classifying 
annuities  under  the  head  of  incorporeal  hereditaments,  has  distin- 
guished them  from  "rent  charges;  "  a  rent  charge,  as  he  says, 
being  a  burden  imposed  upon  and  issuing  out  of  lands,  whereas  an 
annuity  is  a  yearly  sum  chargeable  only  upon  the  person  of  the 
grantor.^  At  the  present  day,  and  in  this  country,  some  life 
insurance  companies  issue  life  annuities  as  a  branch  of  their  busi- 

1.  See  Wms.  Pers.  Prop.  5th  Eng.         2.  Craig  v.  Craig,  3  Barb.  Ch.  76; 
ed.  180-1&2;   Co.  Lit.   144  b;   Earl  of      Wiggin    v.    Swett,    6   Met.    194;    Hil- 
Stafford  v.  Buckley,  2  Ves.  Sen.  171 ;       yard's  Estate,  5  W.  &  S.  30. 
Taylor  v.  Martindale,  12  Sim.  158.  3.  2  Bl.  Com.  40,  41. 

818 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    543 

ness ;  and  such  annuities  are  found  convenient  to  bestow  in  various 
other  instances."* 

An  annuity  payment  is  to  be  distinguished  from  interest  for  a 
debt;  since  the  latter  accrues  from  day  to  day,  notwithstanding 
a  contract  for  payment  at  fixed  periods;  whereas  an  annuity  is 
payable  at  regular  consecutive  periods,  whether  of  greater  or  less 
extent  than  a  year.^  At  the  common  law,  therefore,  there  could 
be  no  apportionment  of  an  annuity  where  the  life  dropped  off  in 
the  middle  of  a  period ;  ^  and  the  rule  is  that  an  annuity  is  not 
apportionable.'^  But  as  regards  -annuities,  as  well  as-  rents,  wages, 
and  salaries,  the  old  rule  has  greatly  relaxed ;  and  the  right  of  an 
apportionment  is  at  the  present  day  sometimes  given  by  statute, 
and  sometimes  may  be  inferred  from  the  nature  of  the  contract.^ 
The  rule  itself,  moreover,  as  construed  in  courts  of  equity,  does 
not  apply  to  dower  or  sums  for  the  maintenance  of  a  wife  or  child  ; 
while  even  an  annuity  to  a  widow  "  in  lieu  and  full  satisfaction  of 
all  dower  "  is  within  the  exception,  and  runs  to  the  last  day  of  her 
life,  although  it  was  payable  quarterly  and  the  widow  died  in  the 
middle  of  a  quarter.^ 

§  543.     The  Same  Subject. 

English  writers  and  the  English  courts  have  also  much  to  say 
of  "  bank  annuities,"  or  stock  in  the  public  funds.  Mr.  Williams 
says  that  soon  after  the  revolution  of  1688  a  portion  of  the  public 
debt  was  funded  or  transferred  into  "  perpetual  annuities ;  "  and 
he  further  speaks  of  the  "  consolidated  bank  annuities,"  in  which 

4.  Annuities  have  been  part  of  our      Moore  v.   Downey,  8'3  N.  J.  Eq.   428, 
national  policy  in  dealing  with  Indian      91  Atl.  116. 

tribes.     148  U.  S.  691.  8.  See  3  Kent  Com.   471,  n.;   St.   4 

5.  2   Bl.   Com.   41,  nptes  by   Chitty  Wm.   IV.,  c.  22.     Right  to  apportion 
and  others.  income     cannot     be     prejudiced     by 

6.  2  Bl.   Com.   43,  n.;    1   Salk.   65;  changes   in    the   character   of   the    in- 
supra,  §   145.  vestment.      11    Phila.    134. 

7.  Heizer   v.    Heizer,    71    Ind.    526;  9.  Hay  v.  Palmer,  2  P.  Wms.  501; 

Blight  v.  Blight,  51  Penn.  St.  420. 

819 


§  543a        THE  LAW  OF  PEESONAL  PEOPEETY.       [PAET  m. 

one  has  a  right  to  receive  a  certain  percentage.^  But  the  period- 
ical payments  on  all  loans  of  this  character  which  may  be  issued 
by  our  government  are  regarded  in  the  light  of  interest  on  a  loan, 
and  not  as  annuities  at  all." 

Annuities  given  by  will  are  to  be  regarded  as  legacies,  in  the 
absence  of  some  special  reason  for  treating  them  otherwise;  and 
as  to  their  abatement,  the  same  general  rule  is  mainly  applicable 
as  to  other  legacies.  But  it  is  sometimes  a  matter  of  question 
whether  an  annuity  is  payable  out  of  the  capital  or  income  of  an 
estate.^ 

§  543a.     Pensions,  Salaries,  Wages,  etc. 

A  speci'es  of  property  similar  to  the  annviity  is  the  pension; 
though  the  term  "  pen'sion  "  is  most  commonly  applied  to  a  stated 
and  certain  allowance  of  the  annuity  character,  which  government 
grants  to  an  individual,  or  those  who  represent  him,  for  valuable 
services  performed  for  the  country."^  In  England  civil,  as  well  as 
military,  pensions  are  granted  in  a  variety  of  cases,  agreeably  to 
custom  or  statute;  to  judges,  political  incumbents,  and  various 
public  servants  upon  their  retirement,  as  well  as  to  soldiers  and 
sailors  and  their  dependents,  from-  highest  to  the  lowest  grade; 
so  that  one's  public  service  and  salary  become  fortified  by  the 
usual  consideration  of  half -pay  or  provision  for  one's  family  when 
active  service  shall  end.^     We  have  a  later  tendency,  somewhat  in 

1.  Wms.  Pers.  Prop.   5th  Eng.  ed.      «4  N.  Y.  16.    And  see  146  S.  W.  1008 
181,182.     See  Baker  V.  Farmer,  L.  R.       (Tex.). 

3  Ch.  537.  4.  Bouvier    Law    Diet.    "  Pension." 

2.  Supra,  §  478.  Exemptions  of   pensions  from   execu- 

3.  2  Redf.  Wills,  2d  ed.  451,  n.,  and  tion.     Book  24,  N.  Y.  Rpts.,  Bender 
cases    cited;     Perry    Trusts,    §     566;  ed.,  note,  p.  772. 

Croly  V.  Weld,  3  De  G.,  M.  &  G.  993 ;  5.  To  superannuation  allowances  in 

Bates  V.  Barry,  125  Mass.  83.    Where  various   municipa)  and  miscellaneous 

an  annuity  is  bequeathed  payable  out  instances,   and   even   in   private   indi- 

of  the  income  of  the  estate,  and  the  vidual   relations   of   employment,    the 

income  fails,  the  principal  cannot  be  word  "  pension  "  is  popularly  applied, 

resorted  to.     Delaney  v.  Van  Aulen,  especially  in  England.     See  24  Q.  B. 

D.  371. 

820 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.       §    543a 

tne  same  direction,  so  far  as  judicial  allowances  are  concerned; 
but  civil  pensions  or  half-pay  have  always  been  deemed  foreign  to 
American  and  popular  institutions  where  public  office  is  held 
rather  by  popular  favor  than  as  the  vested  right  of  individuals.^ 
But  so  far  as  army  and  navy  service  is  concerned,  and  with  refer- 
ence to  State  volunteers  besides  in  some  great  war  or  conflict,  our 
policy  has  been  constantly  liberal,  almost  approaching  sometimes 
to  lavish  expenditure ;  and  all  such  legislation  and  policy  devolves 
rather  upon  the  United  States,  the  national  regulator  of  war  and 
peace,  than  upon  the  several  State  governments ;  though  they,  too, 
have  granted  military  pensions  from  their  own  considerations  of 
public  gratitude/ 

Salaries  and  wages,  whether  by  virtue  of  public  or  private 
employment,  are  the  periodical  emolument  of  a  living  and  active 
individual  under  his  normal  contract  relation  with  the  employer. 
Salaries  and  wages  are  often  regarded  as  terms  synonymous;  but 
the  siiade  of  difference  seems  to  come  in  treating  the  wage-earner 
as  the  more  humble,  and  the  recipient  of  a  salary  the  more  honor- 
able, of  those  who  engage  in  serving  another.^     Compensation  or 

6.  Pensions  are  usually  matters  of  granted,  by  way  of  annuity  (though 
grace  and  not  of  right.  Hayes  v.  not  as  a  strict  service  pension ) ,  to 
Waggener,  92  Kan.  632,  141  Pac.  584.  the  discharged  who  were  disabled  in 
But  legislative  intent  must  have  full  the  line  of  duty ;  also  to  the  widow  or 
scope.  Ryan  v.  Forman,  262  111.  175,  children  under  sixteen  of  one  killed 
104  N.  E.  189.  or   similarly   di.sabled   in   the   .service, 

7.  The  vast  pension  business  of  the  or  to  his  dependent  parents.  A 
United  States  government  is  trans-  pledge,  mortgage,  or  sale  of  a  pension 
acted  through  the  Pension  Bureau  in  is  expressly  forbidden  by  statute; 
the  Department  of  the  Interior  at  and  various  exemptions  of  pension 
Washington;  and  under  the  legisla-  money  are  granted  under  national  and 
tion  of  Congress,  as  applied  partieu-  local  legislation. 

larly  to  the  American  Revolution,  the  8.  See  Am.  Cyclop,  of  Law,  "  Sal- 
War  of  1812,  the  Mexican  War,  and,  ary,"  "  Wages."  In  Cowdin  v.  Huff, 
above  all,  to  the  great  civil  conflict  of  10  Ind.  85,  it  is  maintained  that 
1861.  See  U.  S.  Rev.  Stats.,  §  4692  salary  is  a  per  annum  or  periodical 
et  seq.;  also  Fourteenth  Amendment  compensation,  while  wages  are  com- 
to  Constitution,  forbidding  the  grant  pen.sation  payable  by  the  day,  week, 
of  pensions  to  those  who  fought  etc.  And  see  Thompson  v.  Phillips, 
against  the  Union.    Pensions  are  thus  12   Ohio  St.  617.     But  the  per  diem 

821 


§  544         THE  LAW  OF  PERSONAL  PROPERTY.      [PART  III. 

recompense  may  apply  to  either  kind  of  emolument,  and  with  per- 
haps a  still  wider  legal  significance ;  but  here  there  is  no  beneficial 
enjoyment    without   active   work,    such    as    annuity   or    pension 

implies.^ 

§  544.     Life  Insurance;   Modern  Development  as  a  Business. 

II.  A  species  of  personal  property  akin  to  that  of  personal 
annuities  is  the  money  claim  payable  on  a  certain  contingency 
which  is  commonly  represented  by  a  life-insurance  policy.  In  this 
country  the  business  of  life  insurance  is  quite  modern, —  the  oldest 
policy  now  in  force  dating  back,  as  a  recent  writer  has  said,  from 
1843, —  and  it  was  ten  years  later  that  the  business  began  to 
develop  largely.^  The  contract  of  life  insurance  appears,  how- 
ever, to  have  originated  in  Continental  Europe;  and  in  the  ear- 
liest distinct  allusion  to  the  subject  by  legal  writers  the  practice 
of  insuring  human  lives  is  spoken  of  as  something  inconsistent  with 
the  dignity  of  freemen,  and  more  appropriate  to  slaves  or  captives. 
Public  opinion,  after  a  time,  changed  in  this  respect ;  though  very 
slowly,  for  the  laws  of  France,  Holland,  and  other  countries, 
expressly  forbade  "  the  making  of  any  insurance  on  the  life  of 
men,"  at  various  times  during  the  sixteenth  and  seventeenth 
centuries.^ 

In  England  the  first  life  insurance  ofiice  was  established  in 
1699,  by  the  Mercers'  Company,  as  a  "widow's  fund;"    and  a 

compensation   to   legislators   has  been  appears     from     the     further     circum- 

construed  as  rather  a  Salary,  and  not  stance,  that  the  annual  premiums  had 

wages.     Commonwealth  v.  Butler,  99  increased  from  less  than  five  million 

Penn.  St.  542.    "Fees"  apply  usually  dollars   in    1860,   to  nearly   one   hun- 

to  the  casual  recompense  of  lawyers,  dred  millions  in  1870.     See  Bliss  Life 

physicians,  and  others  of  professional  Ins.    preface.      Many    life    insurance 

or  official  standing.  eases  have  been  decided  in  our  courts 

9.  Salaries     and    wages     (not    per  since  the  first  edition  of  the  present 

diem)    follow  the  rule  of  non-appor-  work  was  issued. 

tionment  at  the  conunon  law,  like  an-  2.  Bliss  Life  Ins.  2,  3,  citing  Ordi- 

nuities,  and  subject  to  similar  quali-  nance  of  Wish.,  art.  66 ;  Guidon,  with 

fications.     See  §  542.  note  of   Cleirac;    Boulay-Paty,   Cours 

1.  How  rapidly  it  is  now  growing  de  Droit,  tome  iii.,  366,  &c. 

822 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    545 

few  years  later  a  society  "  for  a  Perpetual  Assurance  OflSce  "  was 
chartered;  sometimes,  too,  individuals  insured  one  another,  just 
as  the  underwriters  at  Lloyd's  insure  shipping.  But  life  insur- 
ance fell  into  disrepute,  as  a  betting  business,  and  it  was  not  until 
about  the  commencement  of  this  century  that  it  began  to  be  re- 
garded with  favor  in  the  community.  When,  however,  men  came 
to  insure  their  houses  and  goods,  the  advantages  of  insuring  their 
lives  likewise  were  brought  home  to  them.  Whether  such  con- 
tracts were  under  any  circumstances  lawful  and  enforceable  in  the 
courts  was  a  matter  of  some  doubt  at  first;  and  in  the  United 
States,  prior  to  1812  at  least,  many  good  lawyers  deemed  them 
illegal.  •^ 

This  subject  of  life  insurance,  then,  unlike  that  of  fire  and 
marine  insurance,  is  at  this  day  so  far  in  its  primitive  condition 
that  we  can  trace  its  progress  in  the  courts  with  comparative  ease. 

§  545.     Contract  of  Life  Insurance ;   Various  Forms  of  Policy. 

The  contract  of  life  insurance  presents,  as  in  fire  and  marine 
risks,  two  parties, —  the  insurer  and  insured,  the  former  of  whom, 
taking  his  pay  in  premiums,  issues  a  policy  to  the  latter ;  but  the 
rights  of  a  third  party  or  parties  are  usually  involved  besides, — 
namely,  some  person  or  persons  for  whose  benefit  the  policy  is 
issued.  In  this  contract  the  insurer  —  usually  a  company  — 
agrees  to  pay  a  given  sum  upon  the  happening  of  a  particular 
event,  contingent  upon  the  duration  of  human  life,  in  consider- 
ation of  the  immediate  payment  by  the  insured  of  a  smaller  sum, 
or  periodical  payments,  by  way  of  equivalent.'* 

The  contract  of  life  insurance,  however,  presents  already  some 
new  modifications ;  and  in  these  days  of  business  ingenuity  it  may 
assume  many  more.  Thus,  while  in  its  original  and  simplest 
form  the  insured  is  held  bound  to  pay  an  annual  premium  to  the 

3.  See  Lord  v.  Dall.  12  Mass.  115;  4.  Dalby  v.  India,  &'C.,  Life  Ass.  Co., 

Park  Ins.  609;  1  Atk.  338;  March  v.  15  C.  B.   365;    Biinyon   Ins.  2d  Eng. 

Pigot,  5  Burr.  2802;  Bliss  Life  Ins.  ed.    1;    Paterson   v.    Powell,    9    Bing. 

2-4.  320;  Bliss  Life  Ins.  4,  5. 

823 


§  546  THE  LAW  OF  PERSONAL  PKOPEETY.       [PART  III. 

insurer  till  his  death,  when  the  insurer  is  to  pay  the  amount  of 
insurance  over  to  the  executors  or  administrators  of  the  insured 
(in  other  words,  for  the  general  benefit  of  the  latter's  estate  J,  or 
to  his  widow,  or  children,  or  such  others  with  an  insurable  interest 
as  the  insured  may  have  designated,  we  yet  find  insurance  pre- 
miums massed  sometimes  into  annual  payments  for  a  few  years 
only;  or,  again,  what  are  called  "  endowment  policies  "  are  issued, 
these  providing  that  the  party  insured  shall  have  the  insurance 
money  absolutely,  if  he  lives  to  a  certain  date,  or  if  he  die  mean- 
while, some  other  person  indicated. 

In  any  case,  life  insurance  bears  reference  to  the  length  of 
existence  of  the  person  insured ;  and  the  business,  which  is  best 
transacted  by  the  undying  corporation  as  an  insurer,  rests  upon 
general  statistical  tables  concerning  the  average  term  of  human 
life,  the  insurer  taking  the  risks  of  a  longer,  and  the  insured  of  a 
shorter  period,  in  computing  the  profits  of  such  transactions.  In 
England  the  chances  are  largely  taken  on  some  contingent  event, 
as  if  A  should  die  before  B ;  but  in  this  country  the  event  insured 
against  is  certain,  and  the  question  is  only  one  of  the  time  which 
must  necessarily  elapse  before  the  insurance  becomes  payable.^ 
Delivery  of  the  policy  to  the  agent  is  delivery  to  the  insured.^ 

§  546.     Insurable  Interest  in  a  Life. 

IvTotwithstanding  the  general  rule  of  law,  that  there  must  be  an 
insurable  interest  in  the  person  who  seeks  to  procure  insurance  on 
another's  life,  the  laws  of  our  several  States  are,  for  the  most  part, 
very  liberal  in  construing  the  nature  of  this  interest;  more  so, 
doubtless,  than  in  England,  where  the  gambling  element  of  insur- 
ance proves  more  of  a  stumbling-block.  Statutes  to  a  considerable 
extent  regulate  the  subject;  but  whether,  independently  of  statute, 

5.  Bliss   Life   Ins.    5-8;    Briggs   v.  Co.,   217   Mass.   47,   104  N.   E.   553; 

McCullough,  36  Cal.  542;  Bunyon,  6;  Williams  v.  New  York  Ins.  Co.,  122 

Phill.    Ins.,    §    2.      See   Northwestern  Md.  141,  89  Atl.  97. 

Ins.  Co.  V.  Adams,  155  Wis.  335.  144  6.  New  York  Life  Ins.  Co.  v.  Pike, 

N.  W.  1108;  Curtis  v.  New  York  Ins.  51  Col.  238,  117  Pac.  899. 

824 


CHAP.  XI.]      AXI!?TITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    546 

a  wager  policy  upon  a  life  would  be  void,  is  a  point  upon  which 
authorities  are  at  variance,''  though  the  better  authority  is  in  the 
negative.  Indemnity  for  the  loss  of  some  valuable  interest  distin- 
guishes life  insurance  from  a  mere  wager,  in  principle. 

Supposing  an  interest  of  some  kind  to  be  necessary,  how  exten- 
sive, it  may  be  asked,  is  the  nature  of  this  interest  to  satisfy  the 
requirements  of  law  ?  Kelationship  to  the  insured  may  constitute 
a  sufficient  interest ;  and  though  the  English  rule  seems  to  require 
that  this  relationship  be  accompanied  with  some  claim  to  support, 
the  tendency  in  this  country  is  strongly  to  sustain  the  policy  wher- 
ever there  is  any  well-founded  expectation  of  advantage  to  accrue 
from  the  insured  relative's  life.^  A  debtor  may  insure  his  life 
in  favor  of  his  creditor;  and  members  of  a  partnership,  or  quasi- 
partners  in  a  common  venture,  may,  for  protection,  insure  the 
lives  of  one  another.^  Even  though  the  debt  be  less  than  the 
insurance,  or  not  legally  collectible  at  all,  because  barred  by  limi- 
tations, the  full  insurable  interest  of  a  creditor  remains.^  A  hus- 
band may,  of  course,  insure  for  the  benefit  of  his  wife  or  children, 
or  both,  and  legislation  encourages  him  to  do  so;  sisters-  may 
insure  the  lives  of  brothers*;  a  mother  the  life  of  a  son;  a  be- 
trothed girl  the  life  of  her  intended  husband ;  master  or  servant 
reciprocally;  and  pecuniary  reasons  are  sufficient  to  permit  of  a 
father's  insuring  the  life  of  his  minor  child,^  or  of  a  wife  and 
children  insuring  the  life  of  husband  and  father.'' 

7.  1  Big.  Life  Ins.  Rep.  158,  159;  Roberts,  64  N.  C.  G^o ;  Reserve  Life 
Dalby  v.  India  &  London  Life  Ass.  Ins.  Co.  v.  Kane,  81  Penn.  St.  154; 
Co.,  15  C.  B.  364,  overruling  Godsall  Connecticut  Life  Ins.  Co.  v.  Scliaefer, 
V.  Boldero,  9  East,  72;  Lord  v.  Dall,  94  U.  S.  457. 

la    Mass.    115;    Rawls    v.    American  9.  Valton   v.   National    Loan    Fund 

Life   Ins.   Co.,   36   Barb.   357;    Crotty  Ass.  Society,  20  N.  Y.  32;  Morrell  v. 

V.  Union  Life  Ins.  Co.,  144  U.  S.  621.  Trenton  Mut.  Life  Ins.  Co..  10  Cush. 

See  the  "Gambling  Act"  of  14  Geo.  282;   Connecticut  Mut.  Life  Ins.   Co. 

111.,  C.  48.  V.  Luchs,  108  U.  S.  498. 

8.  Cases  supra;  Miteliell  v.  Union  I.  Rawls  v.  American  Life  Ins.  Co., 
Life  Ins.  Co.,  45  Me.  104;  Loomis  v.  27  N.  Y.  282;  American  Life,  Ac.  Ins. 
Eagle  Life,  &c.,  Ins.  Co.,  6  Gray,  396;  Co.  v.  Robcrtshaw,  26  Penn.  St.  189. 
Bliss  Life  Ins.  10,  27,  35;  Roberts  v.  2.  See  May  Ins.,  c.  vi.,  at  length. 

825 


§  547 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


In  the  presumptions  and  methods  of  proof,  the  tendency  in  this 
country  is  decidedly  against  the  defence  of  non-insurable  interest, 
where  the  policy  itself  appears  regular ;  and,  of  course,  the  insur- 
able interest  is  contemplated  with  reference  to  the  commencement 
of  the  risk,  and  not  a  later  period."*  Indirect  advantage,  rather 
than  a  direct  pecuniary  claim,  appears  then  in  many  parts  of  this 
country  to  be  the  true  groundwork  which  sustains  the  insurable 
interest  in  a  human  life.^ 

§  547.     Assignment  of  Life  Insurance  Policies. 

Life  insurance  companies  usually  express  their  policies  in  such 
terms  as  to  require  the  assent  of  the  insurer  to  any  assignment  of 
the  policy;  and,  notwithstanding  important  differences  between 
fire  and  life  policies,  it  is  a  matter  of  doubt  whether  the  rule  of 


There  are  some  late  cases  which  tend 
to  limit  the  right  to  insure,  as  among 
relatives  mature  and  entirely  inde- 
pendent of  one  another  pecuniarily. 
Guardian  Mut.  Life  Ins.  Co.  v.  Hogan, 
80  111.  35;  Lewis  v.  Phoenix  Life  Ins. 
Co.,  39  Conn.  100;  Singleton  v.  St. 
Louis  Life  Ins.  Co.,  66  Mo.  63;  15 
Wall.  643.  And  so  as  to  creditors 
and  others  where  the  transaction  is 
one  of  speculation  rather  than  pro- 
tection. May  Ins.,  §§  107,  108.  But 
indemnity  alone  is  favored. 

When  a  party  insures  his  own  life, 
it  is  held  that  he  may  afterwards  dis- 
pose of  the  policy  at  will,  if  the  con- 
tract is  to  representatives  and  as- 
signs, and  it  is  no  defence  that  the 
assignee  has  no  interest  in  the  life. 
Valton  V.  Loan  Fund  Society,  20  N.  Y. 
32 ;  May,  §  398.  And  see  Campbell  v. 
N.  E.  Mut.  Life  Ins.  Co.,  98  Mass. 
381;  5  Sneed,  269.  But  siee  Stevens 
V.  Warren,  101  Mass.  564. 

3.  Central  Bank  v.  Hume,  128  U.  S. 
195,  9  Sup.  Ct.  41. 


4.  Mowry  v.  Home  Ins.  Co.,  9  K.  I. 
346;   1  Big.  Life  Ins.  Cases,  375. 

5.  See  Trenton  Mut.  Life,  &c.,  Ins. 
Co.  V.  Johnson,  4  Zabr.  576.  And  see 
Bliss,  Life   Ins.   9-48,  passim. 

As  to  insurable  interest,  see  (1917) 
New*  York  Life  Ins.  Co.  v.  Murtagh, 
137  La.  760,  69  So.  16'5 ;  Humphrey 
v.  Mut.  Ins.  Co.,  86  Wash.  672,  151 
Pac.  100  (divorce  of  wife)  ;  Langford 
V.  National  Ins.  Co.,  116  Ark.  527, 
173  S.  W.  414;  Crismond  v.  Jones, 
117  Va.  34,  83  S.  E.  1045;  Mutual 
Ins.  Co.  V.  Board  Corp.,  1-15  Va.  836, 
843,  80  S.  E.  565,  567  (corporation 
officers)  ;  Marquet  v.  Aetna  Ins.  Co., 
128  Tenn.  213,  159  S.  W.  733;  In  re 
Phillips'  Estate,  238  Pa.  423,  86  Atl. 
289  (brother  and  sister)  ;  McFarlane 
V.  Robertson,  137  Ga.  132,  73  S.  E. 
490. 

An  endoAvment  contract  is  not  in- 
surance. Curtis  V.  New  York  Ins. 
Co.,  217  Mass.  47. 


826 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    547 

assignability  differs  essentially  in  these  classes  of  insurance,  save 
so  far  as  the  validity  of  assignment  may  have  been  affected  by 
statute.^  Supposing,  however,  these  preliminaries  to  have  been 
complied  with,  or  even,  perhaps,  without  the  insurer's  consent  or 
notice  to  him,  so  far  as  no  hindrance  has  arisen  in  consequence,  an 
assignment  by  way  of  security  or  outright  will  certainly  be  pro- 
tected; and  indeed  such  assignments  are  matters  of  every-day 
experience.  There  are  even  cases  which  go  to  sustain  the  partial 
assignment  of  a  life  policy  with  due  notice  to  the  insurer ;  though 
the  right  to  break  up  a  policy  in  this  manner  cannot  be  regarded 
as  clearly  settled.^  On  general  reasoning  any  assignee  would  take 
the  policy  subject  to  all  the  equities  which  attached  to  it  in  the 
hands  of  the  assignor;  and  fraud  on  the  part  of  the  assignee  in 
procuring  the  assignment  vitiates  the  transaction.^ 

It  is  sometimes  a  matter  of  difficulty  to  determine  who  shall  be 
entitled  to  the  money  payable  under  a  policy  of  life  insurance; 
and  here  the  insurance  company,  wherever  it  is  bound  to  pay,  may 
find  it  convenient  to  pay  the  money  into  court,  and  interplead  in 
equity  the  conflicting  claimants  to  the  fund.  These  claimants  are 
usually  wife,  children,  or  others,  for  whose  benefit  the  policy  was 
originally  made  out ;  the  administrator  or  executor  of  the  insured, 
who  would  have  no  interest  in  the  fund  as  part  of  the  estate,  if 
the  policy  was  made  expressly  payable  to  some  other  person,  such 

6.  See  New  York  Life  Ins.  Co.  v.  Ins.  Co.,  40  111.  398;  Palmer  v.  Mer- 
Flack,  3  Md.  341;  Stevens  v.  Warren,  rill,  6  Cush.  282.  For  the  English 
101  Mass.  564.  The  question,  how-  rule  as  to  what  constitutes  an  assign- 
ever,  might  be  material,  whetlier  as-  mont,  see  Bliss,  511-514,  and  cases 
signment  under  these  circumstancesi  cited;  Bunyon,  332-337.  See,  on  this 
was  to  one  having  an  insurable  inter-  general  subject.  May  Ins.,  §§  377-399'. 
est.  But  see  Mut.  Protection  Ins.  Co.  On  the  whole,  the  assignment  of  a  life 
V.  Hamilton,  5  Sneed,  269;  Bliss  Life  insurance  policy  appears  more  favored 
Ins.  514,  515;  preceding  section;  than  that  for  fire  insurance.  May, 
Valton    V.    Loan    Fund    Society,    20  §  388. 

N.  Y.  32;   St.  John  v.  Am.  Mut.  Life  8.  Bliss,     515,     516;      Mangles     v. 

Ins.   Co.,   3   Kern.   31;    Bunyon,   253;  Dixon,  3  H.  L.  Cas.  702;    Succession 

Stocks  V.  Dobson,  4  De  G.  M.  &  G.  11.  of  Risley,  11  Rob.  La.  298. 

7.  Cf.   Pomeroy  v.  Manhattan  Life 

827 


§  547 


THE  LAW  OF  PERSONAL  PKOPEETY.      [PART  III. 


as  wife  or  child;    and  creditors,  whose  claims  it  is  sometimes 
sought  to  secure  by  an  assignment  of  the  policy.^ 


9.  A  married  woman  can,  according 
to  several  cases  arising  under  the 
married  women's  acts,  join  in  the 
transfer  of  an  insurance  policy  on  her 
husband's  life,  even  though  it  were  to 
secure  his  own  creditors;  but  where 
benefits  under  a  policy  are  to  several 
persons  in  the  alternative,  or  various 
interests  are  to  be  affected  by  an 
assignment,  all  should  concur,  in  or- 
der to  render  the  assignment  complete. 
See  Bliss  Life  Ins.  496  et  seq.;  Bun- 
yon,  208 ;  Gould  v.  Emerson-,  99  Mass. 
154;  Chapin  v.  Fellowes,  36  Conn. 
132 ;  Knickerbocker  Life  Ins.  Co.  v. 
Weitz,  Q'g  Mass.  157.  And  ,as  to  the 
power  of  married  women  to  assign, 
see  Emerick  v.  Coakley,  35  Md.  188; 
Pomeroy  v.  Manhattan  Life  Ins.  Co., 
40  111.  398.  But  see  Eadie  v.  Slim- 
mon,  26  N.  Y.  9;  Connecticut  Mut. 
Life  Ins.  Co.  v.  Burroughs,  34  Conn. 
30'5;  Bliss,  527-552.  See,  further, 
May,  §§  390,  391.  For,  wMle  one  with 
the  right  of  disposing  may  sell  what 
is  his  own,  he  cannot  dispose  of  an- 
other's interest.  The  assignment  of 
a  life  insurance  requires  no  delivery 
of  the  policy  to  vest  the  title  in  the 
assignee,  for  the  question  as  between 
assignor  and  assignee  in  such  cases  is 
one  of  mutual  intent,  and  notice  to 
the  insurer  is  only  for  prudence  as 
respects  adverse  claims.  Otis  v. 
Bectnith,  49  111.  121;  Bliss  Life  Ins. 
513;  Wood  v.  Phoenix  Mut.  Life  Ins. 
Co.,  22  La.  Ann.  617;  May,  §§  395, 
39'6;  Chapman  v.  Chapman,  13  Beav. 
308;  Wells  v.  Archer,  10  S.  &  E.  412. 
A  policy  of  life  insurance,  expressed 
to  be  for  the  benefit  of  widow  and 
child  of  assured,   cannot  be  affected 


by  his  will.  Gould  v.  Emerson,  99 
Mass.  154.  But  see  Kerman  v.  How- 
ard, 23  Wis.  108,  apparently  contra, 
though  decided  on  a  different  state  of 
facts.  Gould  V.  Emerson  turned  upon 
construction.  The  general  ground  is 
that  rights  vest  when  a  policy  issues, 
and  cannot  be  divested  without  a 
beneficiary's  consent. 

See,  as  to  attachable  interest  of 
wife  in  a  policy  expressed  for  her 
benefit,  Troy  v.  Sargent,  132  Mass. 
408. 

See  further  (1917),  as  to  assign- 
ment or  surrender,  Breard  v.  New 
York  Ins.  Co.,  138  La.  774,  70  So. 
799;  Maryland  Casualty  Co.  v.  Grace, 
110  Miss.  488,  70  So.  577  (assignee's 
right)  ;  Humphrey  v.  Mutual  Ins.  Co., 
86  Wash.  672,  151  Pac.  100;  Tripp  v. 
Jordan,  177  Mo.  App.  339,  164  S.  W. 
158;  In  re  Phillips'  Estate,  238  Pa. 
423,  86  Atl.  289;  Keckley  v.  Coshocton 
Co.,  86  Ohio  St.  213,  99  N.  E.  299; 
Johnston  v.  Scott,  76  Misc.  641,  137 
N.  Y.  S.  243;  In  re  De  Haven's  Es- 
tate, 236  Pa.  146,  84  Atl.  676  (col- 
lateral security)  ;  Grigsby  v.  Russell, 
222  U.  S.  149,  32  Sup.  Ct.  58  (assign- 
ment to  one  having  no  insurable  in- 
terest) ;  Fitzgerald  v.  Rawlings,  114 
Md.  470,  79  Atl.  915;  Stone  v.  Sar- 
gent, 221  Mass.  445,  107  N".  E.  1014 
(no  transfer  of  policy  apart  from 
notes  which  accompany) . 

Some  courts  have  even  gone  so  far 
as  to  hold  that  the  insured  cannot 
surrender  the  policy  without  the  con- 
sent of  the  beneficiary,  although  the 
policy  left  him  the  right  to  change 
beneficiaries.  So  where  the  insured 
did  surrender  the  policy  for  value  and 


828 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSUEANCE    POLICIES.  §    548 

§  548.  Contract  of  Life  Insurance;  Preliminary  Questions; 
Medical  Examination. 

The  contract  of  life  insurance  is  almost  invariably  represented 
by  a  policy.  As  a  basis  of  the  agreement  between  insurer  and 
insured,  the  latter  makes  formal  application,  and  preliminary 
questions  are  put  to  him,  which  ho  must  answer  in  writing ;  the 
testimony  thus  elicited  being  chiefly  to  the  point  of  probable  length 
of  existence.  A  medical  examination  is  sometimes  required  be- 
sides. And  here  the  principle  of  warranty  and  representation 
applies, —  since  the  questions  and  answers  become  -a  part  of  the 
policy,  and  may  be  quite  material,  so  far  as  concerns  the  general 
health,  habits  of  life,  occupation,  age,  and  other  circumstances 
bearing  directly  upon  the  risk  which  the  insurer  takes ;  facts  which 
are  better  known,  moreover,  to  the  applicant  for  insurance  than  to 
the  insurer. 

Companies  put  their  questions  more  carefully  now  than  for- 
merly, and  their  tendency  is  to  throw  upon  the  applicant  consid- 
erable responsibility,  by  turning  written  statements  made  by  the 
insured  at  the  time  of  his  application  into  conditions  precedent, 
upon  whose  substantial  correctness  the  validity  of  the  policy  must 
depend.  Where  these  questions  and  answers,  however,  are  by 
language  of  doubtful  import  made  part  of  the  policy,  the  disposi- 
tion in  the  courts  is  to  make  them  representations  rather  than 
conditions  precedent  or  warranties,  in  which  case  the  insurer 
would  hardly  escape  the  responsibility  of  payment,  imless  it  could 
be  shown  that  the  insured  had  made  a  palpable  material  error,  or 
had  knowingly  sought  to  defraud  the  company.  And  even  though, 
as  now  more  commonly  happens,  the  questions  and  answers  are,  by 
apt  words,  made  literal  warranties  in  the  policy,  a  casual  misstate- 
ment by  the  applicant,  if  in  itself  immaterial  to  the  risk,  appears 

died,  the  beneficiary  may  still  recover  E.  200;  In  re  Peckham,  29  R.  I.  250. 

on  the  policy.    Roberts  v.  N.  W.  Nat'l  69^  Ail   1002;  Lockwood  v.  Mich.  Mu- 

Life  Ins.  Co.,  143  Ga.  780,  85  S.  E.  tual  Life  Ins.  Co..  108  Mich.  334,  66 

1043.     As  to  the  vested  right  of  the  N.   W.   229;   Sullivan  v.   Maroney,  76 

beneficiary,  see  further.  Mutual   Life  N.  J.  Eq.  104,  73  Atl.  842. 
Ins.  Co.  V.  Allen,  212  111.  134,  72  N. 

829 


§  548  THE  LAW  OF  PERSONAL  PROPERTY.       [pART  III. 

to  be  regarded  with  indulgence;  the  courts  not  failing  to  observe 
that  there  are  statements  of  opinion  or  belief,  as  well  as  state- 
ments of  fact  or  of  future  promise,  and  that  with  regard  to  the 
existing  state  of  any  man's  health  th-ere  are  uncertainties  which 
medical  science  itself  fails  to  probe.  To  this  may  be  added 
another  circumstance;  namely,  that  agents  of  the  company  in 
these  days  very  often  solicit  insurance  business,  draft  an  applica- 
tion, and  not  only  reduce  the  applicant's  answers  to  writing,  but 
explain  the  questions  and  suggest  the  proper  answers  to  be  put 
down  on  the  paper.  ^  And  it  is  held,  furthermore,  that  where  a 
company  issues  a  life  policy  or  accepts  a  premium  with  knowledge 
that  a  breach  of  condition  exists,  forfeiture  for  such  breach  is 
waived.^ 

Where  a  fire  insurance  policy  provides  that  a  policy  should  be 
void  if  the  insured  did  not  own  the  property  in  fee,  and  also  that  the 
premiums  shall  in  that  event  be  returned  if  the  company  learns  of 
a  defect  in  the  title  of  the  insured  even  after  a  loss,  it  should 
return  the  premiums  at  once  or  it  runs  the  risk  that  the  court  may 
hold  that  it  has  waived  the  condition  and  is  held  on  the  policy.^ 

1.  See,  on  this  point  of  warranty  ments)  ;  Gardner  v.  North  Ins.  Co., 
and  representation  in  life  insurance  163  N.  C.  367,  79  S.  E.  806 ;  Grange  v. 
policies,  Vose  v.  Eagle  Life  Ins.  Co.,  Penn.  Ins.  Co.,  235  Pa.  320,  84  Atl. 
6  Cush.  42;  Rawls  v.  American  Life  392;  Downing  v.  Farmers'  Ins.  Co., 
Ins.  Co.,  27  N.  Y.  282 ;  Kelsey  V.  Univ.  158  Iowa,  1  (resort  to  courts); 
Life  Ins.  Co.,  35  Conn.  225';  Miles  v.  Grange  v.  Penn  Ins.  Co.,  235  Pa.  320, 
Conn.  M.  L.  Ins.  Co.,  3  Gray,  580;  84  Atl.  392;  Stone  v.  Old  Colony  Ry. 
98  Mass.  381;  Valton  v.  Nat.  Loan  Co.,  212  Mass.  459,  99  N.  E.  218; 
Fund  Ass.  Society,  20  N.  Y.  32;  Germania  Ins.  Co.  v.  Bouldin,  100 
Phoenix  Ins.  Co.  v.  Raddin,  120  U.  S.  Miss.  660,  56  So.  609;  Yeomen  of 
183,  7  Sup.  Ct.  500;  Bliss  Life  Ins.  America  v.  Rott,  145  Ky.  604,  140 
49-133,  and  English  and  American  S.  W.  1018  (warranty)  ;  Bonewell  v. 
cases  cited;  May  Ins.,  cs.  vi.,  vii. ;  North  American  Ins.  Co.,  167  Mich. 
Bunyon,  32  e*  seg.;  Ang.  Ins.,  §§  140,  274,  132  N.  W.  1067;  Griggsby  v. 
148,  150;  Arnould,  §  182.  Russell,  222  U.  S.  149,  32  Sup.  Ct.  58 

2.  Phoenix    Ins.    Co.    v.    Raddin,    7  (breach  of  condition  waived). 

Sup.  Ct.   500,  120  U.   S.   183.     Ques-  As  to  actual  delivery  of  the  policy, 

tions  imperfectly  answered  cannot  be  see  Monast  v.  Manhattan  Ins.  Co.,  32 
relied    upon.      lb.      And    see     (1917)       R.  I.  557. 

McManus  v.  Peerless  Co.,  114  Me.  98,  3.  Scott  v.   Liverpool   &   London   & 

95    Atl.    510    ("warranty"   of    state-      Globe  Ins.,  102  S.  C.  115,  86  S.  E.  484. 

830 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    541) 

A  doctrine  prevailing,  however,  in  some  jurisdictions,  holds  that 
a  temporary  breach  of  the  condition  which  arises  after  the  policy 
is  issued,  which  breach  was  not  existing  at  the  time  of  death,  does 
not  avoid  the  policy.'* 

A  provision  in  a  policy  that  it  is  incontestible  from  its  date  is 
a  bar  to  a  defence  of  fraud  in  obtaining  it,^  as  is  also  a  provision 
that  it  is  incontestible  after  a  certain  time  after  the  expiration  of 
the  policy.^  As  a  large  bulk  of  property  in  this  country  is 
subject  to  mortgage,  a  standard  statutory  form  of  insurance 
policy  provides  that  it  may  be  payable  to  the  mortgagee  as  his 
interest  may  appear.  This  clause  renders  the  insurer  liable  to  the 
mortgagee  even  though  the  insured  set  fire  to  the  property 
himself.^ 

§  549.     The  Same  Subject. 

The  most  material  inquiries  pressed  upon  the  applicant  for  his 
statement  of  facts  relate,  of  course,  directly  to  his  health,  or  more 
remotely  to  the  probable  length  of  his  life.  He  is  generally  ques- 
tioned as  to  his  past  and  present  health ;  also,  as  to  his  age,  habits, 
occupation,  and.  residence,  since  all  these  circumstances  bear  upon 
the  risk;  also,  as  to  the  health  and  causes  of  death  of  others  in  his 
family,  this  aiding  in  determining  hereditary  diseases  to  which 
the  insured  might  be  subject.  And  by  way  of  caution,  or  to 
elicit  further  information,  he  is  also  asked  for  the  name  of  his 
usual  or  last  medical  attendant,  and  whether  insurance  has  been 
already  applied  for  on  the  same  life ;  and,  if  so,  to  what  amount, 
if  any,  is  it  insured.  Of  these  the  most  material  inquiries  relate 
to  health,  present  and  past.  The  applicant  may  be  questioned  as 
to  his  general  health ;    and  as  the  answers  so  drawn  out  could  not 

4.  See,    for    example,    Edmonds    v.  doing  after  the  expiration  of  the  year. 

Mutual    Life    Ins.    Co.,   33    S.    D.    55,  5.  Duvall   v.   National  Ins.   Co.,  28 

144  N.   W.   718,   where  a  policy  con-  Idaho,  356,  154  Pac.  632. 

tained    a   condition   that   the   insured  6.  Murray  v.  State  Mutual  Life  As- 

should  not  engage  in  handling  electric  surance  Co.,  22  R.  I.  524,  48  Atl.  800. 

wires  for  a  year,  and  he  did  so  within  7.  Stamey   v.   Royal    Exchange   As- 

the  year   and   was   injured   while    so  sur.  Co.,  96  Kan.  99,  150  Pac.  227. 

831 


§  549 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


be  very  satisfactory,  be  may  likewise  be  asked  whetHer  he  has  been 
subjected  to  specific  diseases.  Where  life  insurance  is  renewed, 
and  no  new  conditions  respecting  health  are  imposed,  and  only  a 
general  condition  that  the  party  is  in  "  good  health,"  this  expres- 
sion must  be  construed  by  the  terms  and  statements  contained  in 
the  original  policy;  and  as  these  words  do  not  imply  perfection, 
but  a  reasonable  degree  of  health,  they  are  rather  vague  at  best, 
and  deserve  a  construction  favorable  to  the  insured  where  his 
answers  were  honest.^ 


8.  Peacock  v.  N.  Y.  Life  Ins.  Co., 
20  N".  Y.  293.  On  this  point  see,  also. 
Park  Ins.  933;  Ross  v.  Bradshaw,  1 
Bl.  312,  and  other  English  cases  cited 
in  Bliss  Life  Ins.  134-142;  Illinois 
Society  v.  Winthrop,  85  111.  537; 
Scoles  V.  Universal  Life  Ins.  Co.,  42 
Cal.  523;  May,  §§  295-29'8;  Cushman 
V.  U.  S.  Ins.  Co.,  70'  N.  Y.  72.  While 
admissions  as  to  ill-health  made  by 
an  insured  not  interested  in  the  pol- 
icy have  been  held  not  receivable  in 
evidence  in  certain  cases  to  contradict 
the  terms  of  the  policy,  there  are 
strong  instances  of  apparent  collusion, 
as  in  the  case  of  a  husband  procuring 
his  wife's  life  to  be  insured  for  his 
own  benefit,  where  these  admissions 
were  not  only  received,  but  upon  the 
strength  of  them  the  policy  was  con- 
sidered a  fraud  upon  the  insurer.  Cf. 
Kelsey  v.  Univ.  Life  Ins.  Co.,  35  Conn. 
225;  Rawls  v.  American  Life  Ins.  Co., 
27  N.  Y.  282.  See  May,  §  295  et  seq. 
Inquiries  as  to  whether  the  insured 
has  any  disea.se  tending  to  shorten 
life  are  sometimes  made ;  or  to  put 
it  more  favorably  for  him,  whether 
he  is  aware  of  any  disease  tending  to 
shorten  his  life.  See  Fowkes  v.  Man- 
chester, &c.,  Association,  3  B.  &  S. 
917 ;  Watson  v.  Mainwaring,  4  Taunt. 
763;    Bliss    Life    Ins.    142-148.      Con- 


cerning special  diseases,  questions  are 
put  as  to  gout,  vertigo,  fits,  and  the 
like.  N.  Y.  Life  Ins.  Co.  v.  Flack,  3 
Md.  341;  Bliss,  149,  150;  Park  Ins. 
934;  Cazenove  v.  British  Ins.  Co.,  6 
C.  B.  Nw  S.  437;  6  Jur.  N.  S.  826. 
Bronchitis,  consumption,  and  coughs 
prolonged,  are  also  among  the  disea.ses 
into  which  special  inquiry  is  made  by 
the  insurer;  also  "  spitting  of  blood," 
which  usually  indicates  a  disease  of 
the  lungs.  See  Geach  v.  Ingall,  14 
M.  &  W.  95 ;  Campbell  v.  N.  E.  Mut. 
Life  Ins.  Co.,  9'8  Mass.  381;  Vose  v. 
Eagle  Life  &  Health  Ins.  Co.,  6  Cush. 
42.  On  these  and  other  points  the 
insurer  makes  it  conditional  that  the 
answers  to  the  questions  proposed 
shall  be  full,  fair,  and  true;  and  upon 
the  issue  of  warranty  or  representa- 
tion the  effect  of  wrong  or  imperfect 
replies  must  often  be  determined.  In 
tbe  former  case,  or  in  general,  where 
the  insurance  company  protects  itself 
by  stringent  language,  the  ignorance 
of  the  insured  that  he  is  afflicted  with 
a  disease  material  to  the  risk  will  not 
save  the  policy,  if  he  was  so  afflicted; 
though,  as  to  the  proof  of  that  fact 
the  insurer  should  be  held  within  rea- 
sonable bounds,  and  not  permitted  to 
avail  himself  of  any  ambiguous  re- 
sults of  a  post  mortem  examination. 


832 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSUKANCE    POLICIES.  §    550 

§  550.     Conditions  Subsequent  Vitiating  the  Policy. 

But  besides  these  statements  of  an  applicant  which  may  be 
embodied  in  the  policy  and  made  a  part  of  it  by  suitable  terms, 


See  Vose  v.  Eagle  Life,  &c.,  Ins.  Co., 
6  Cush.  42;  1  Big.  Life  Ins.  Cases, 
165,  166;  Murphy  v.  Mutual  Benefit 
Life  Ins.  Co.,  6  La.  Ann.  518.  Con- 
cerning the  occupation  of  the  insured, 
upon  which  few  can  fail  to  give  such 
intelligent  information  as  is  material 
to  the  risk,  a  false  statement  may 
often  prove  fatal;  though  here  we 
should  note  that  the  occupation  thus 
regarded  is  that  in  which  the  insured 
is  actually  engaged  when  the  appli- 
cation is  made,  and  that  any  state- 
ment of  present  occupation  constitutes 
no  warranty  that  it  shall  continue 
unchanged, —  a  condition  which  would 
certainly  be  oppressive  under  any  in- 
surance contract.  Prov.  Life,  &c.,  Co. 
V.  Martin,  32  Md.  310;  Prov.  Life  Ins. 
Co.  V.  Fennell,  49  111.  180;  Hartman 
V.  Keystone  Ins.  Co.,  21  Penn.  St. 
466;  Bliss  Life  Ins.  162-165.  Age  may 
be  the  subject  of  warranty  as  well  as 
representation,  and  the  same  is  true 
of  residence  and  occupation ;  and 
while  persons  are  proverbially  care- 
less in  their  statements  on  these 
points,  deeming  them  of  trivial  im- 
portance to  others,  even  in  a  contract 
of  this  nature,  yet  there  are  cases  in 
which,  through  variance  from  the 
truth,  the  rate  of  premium  charged  is 
less  than  it  ought  to  be,  or  the  risk 
run  becomes  essentially  greater;  and 
here  we  think  the  policy  would  be 
vitiated.  See  Bliss  Life  Ins.  165,  166, 
citing  6  Taunt.  186,  and  other  Eng- 
lish cases  of  less  importance;  May, 
§§  305,  306.  As  to  personal  habits  of 
the  insured:  though  intemperate 
habits,  if  gross  and  confirmed  at  the 


time  of  application,  ought  to  vitiate 
the  policy,  yet  the  occasional  use,  even 
largely,  of  intoxicating  liquors  does 
not  come  within  a  provision  against 
the  excessive  use  of  liquors  or  opium ; 
nor  even  because  a  man  has  delirium 
tremens  or  dies  of  drink,  does  it  fol- 
low that  he  was  intemperate  in  his 
habits  when  he  applied  for  insurance. 
See  Mowry  v.  Home  Ins.  Co.,  9  E.  I. 
346;  Reichard  v.  Manhattan  Life  Ins. 
Co.,  31  Mo.  518;  1  Big.  Life  Ins. 
Cases,  313;  Bliss  Life  Ins.  167-170. 
For  questions  concerning  the  medical 
attendant  of  the  applicant  for  insur- 
ance, &c.,  see  Bliss,  170-180;  May, 
§  304;  New  York  Life  Ins.  Co.  v. 
Flack,  3  Md.  341;  Morrison  v.  Mus- 
pratt,  4  Bing.  60;  Anderson  v.  Fitz- 
gerald, 4  H.  L.  Cas.  484.  Upon  the 
subject  of  intemperance,  see  May, 
§  299  et  seq.,  and  eases  cited;  John 
Hancock  Ins.  Co.  v.  Dalj',  65  Md.  6. 
The  point  of  inquiry  u.sually  relates 
to  habits  and  character  at  the  time 
of  application,  not  to  habits  as  ac- 
quired or  confirmed  later.  But  a 
policy  prospectively  conditioned  to  be- 
come void  for  excessive  use  of  liquor 
so  as  to  impair  health,  must  operate, 
^tna  Life  Ins.  Co.  v.  Davey,  123 
U.  S.  739.  This,  however,  does  not 
refer  to  alcoholic  stimulants  taken 
bond  fide  upon  medical  advice.  /Etna 
In&.  Co.  V.  Ward.  140  U.  S.  76.  11 
Sup.  Ct.  720.  And  sucli  provisions 
should  receive  reasonable  interpreta- 
tion. 

Statements  by  the  applicant  fairly 
as  to  his  occupation,  &c.,  should  be 
liberally  construed  where  no  essential 


53 


833 


§  550 


THE  LAW  OF  PERSONAL  PROPERTY. 


[part  III. 


a  life  policy  is  usually  found  to  contain  certain  other  stipulations 
hinging  upon  the  future,  or  conditions  subsequent,  for  any  breach 
of  which  forfeiture  of  rights  is  threatened.  Among  these  are  to 
be  found  conditions  of  forfeiture  for  non-payment  of  future  pre- 
miums at  the  periodical  dates  fixed ;  conditions  limiting  the  travel 
or  residence  of  the  insured  to  certain  specified  regions,  or  restrict- 
ing employment,  so  as  to  keep  the  insured  out  of  the  army  or  navy 
or  from  pui*suits  which  expose  himian  life  to  extraordinary  perils, 
without  express  permission  from  the  insurer, —  a  permission  fre- 
quently granted,  however,  with  or  without  asking  payment,  for 
the  time  being,  of  extra  rates;  sometimes,  prospectively,  a  con- 
dition against  habitual  intemperance;  and  conditions  voiding  the 
policy  for  death  by  the  insured's  own  hand,  by  the  hands  of 
justice,  in  a  duel,  or  in  consequence  of  a  violation  of  law.^ 

Such  conditions  being  violated,  no  matter  how  honorable  the 
motives,  the  policy  is  worthless,  if  so  the  insurer  chooses  to  regard 
it,  and  if  no  waiver  or  permit  can  be  set  up  against  him.^ 


harm  results.  Grattan  v.  Metropoli- 
tan Life  Ins.  Co.,  80  N.  Y.  281.  Also, 
as  to  "  knowledge  of  pernicious 
habits,"  see,  further,  Knecht  v.  Mutual 
Life  Ins.  Co.,  90  Pcnn.  St.  18;  M 
Penn.  St.  59;  Knickerbocker  Life  Ins. 
Co.,  Re,  105  U.  S.  350.  Entire  omis- 
sion to  answer  a  question  does  not 
vitiate.  Armenia  Ins.  Co.  v.  Paul, 
91  Penn.  St.  520.  But  equivocation 
is  of  the  nature  of  falsehood.  Smith 
V.  ^tna  Life  Ins.  Co.,  49  N.  Y.  211. 
As  to  previous  injuries,  see  Insurance 
Co.  V.  Wilkinson,  13  Wall.  222. 

A  medical  examiner  Avho  writes  out 
answers  may  be  regarded  as  agent  of 
the  company  for  reporting  answers. 
Grattan  v.  Metropolitan  Life  Ins.  Co., 
80  N.  Y.  281;  May,  §  303. 

9.  The  policies  issued  by  American 
companies  will  be  commonly  found 
very  stringent  in  these  and  similar 
restrictions;     more    so   than    English 


policies,  which  frequently  distinguish 
in  favor  of  a  iond  fide  holder,  while 
in  this  country  the  rights  of  a  party 
having  an  insurable  interest  in  an- 
other's life  are  in  continual  jeopardy 
from  the  latter's  imprudence.  See 
Bliss  Life  Ins.  300,  301;  Bunyon,  67. 
"  Illegal  traffic,"  carried  on  by  in- 
sured, does  not  prejudice  rights  of 
beneficial  party  under  a  policy,  where 
such  traffic  is  not  prohibited  in  terms. 
Lord  V.  Dall,  12  Mass.  115. 

1.  Thus,  an  Episcopal  Bishop  of 
Rhode  Island,  some  years  ago,  went 
beyond  the  limits  named  in  the 
policy  on  his  life,  on  a  holy  errand; 
and  though  his  death  was  neither 
caused  nor  hastened  by  the  change 
of  climate,  but  grew  out  of  constitu- 
tional causes  alone,  it  was  adjudged 
that  no  insurance  money  could  be 
recovered;  for  the  policy  was  con- 
ditioned to  be  void  under  the  circum- 


834 


CHAP.  XI.]      ANNUITIES,    ETC.,   AND    INSUEANCE    POLICIES. 


551 


But  policies  may  differ  in  the  form  of  clauses  restricting  resi- 
dence and  travel ;  and  upon  the  construction  of  a  particular  phrase 
the  decision  will  often  depend.^  And  where  the  visitation  of  God 
prevents  the  insured  from  fulfilling  his  part  of  the  contract,  or 
where  some  waiver  by  the  insurance  company  or  its  agents  can  be 
inferred,  courts  are  not  reluctant  to  save  the  insmrer  from  the 
harsh  consequences  of  conduct  which  under  some  circumstances 
might  involve  the  breach  of  a  condition.^  And  to  any  permission 
or  license,  such  as  the  insurance  company  is  always  at  liberty  to 
grant,  the  insurer  is  pretty  strictly  held.'*  ' 

§  551.    The  Same  Subject;    Manner  of  Death. 

Death  "  in  the  known-  violation  of  law  "  —  another  condition  to 
be  found  in  policies  —  appears  to  be  confined  to  criminal  offences 
and  to  death  flagrante  delicto  and  not  to  extend  to  mere  trespasses 
upon  property  or  other  infringement  of  private  rights,  or  to  a 
later  death  provoked  by  an  earlier  crime.^     But  death  by  the 


stances  shown,  except  with  consent 
of  the  insurer.  Nightingale  v.  State 
Mut.  Life  Ins.  Co.,  5  R.  I.  38.  And 
see  Hathaway  v.  Trenton  M.  L.  Ins. 
Co.,  11  Cush.  448;  Evans  v.  United 
States  Life  Ins.  Co.,  64  N.  Y.  304. 

2.  See  Casler  v.  Conn.  Mut.  Life 
Ins.  Co.,  22  N.  Y.  427,  as  to  the  phrase 
"  settled  limits." 

3.  See  Forhes  v.  Am.  Mut.  Life  Ins. 
Co.,  15  Gray,  249;  1  Big.  Life  Ins. 
Cases,  504. 

4.  Welts  V.  Conn.  M.  L.  Ins.  Co., 
46  Barb.  412;  Taylor  v.  iEtna  Life 
Ins.  Co.,  13  Gray,  434.  And  see  Bliss 
Life  InS.  302-323,  and  cases  cited; 
Notman  v.  Anchor  Assurance  Co.,  4 
C.  B.  N.  s.  476;  Bevin  v.  Conn.  Mut. 
Life  Ins.  Co.,  23  Conn.  244.  For  a 
policy  vitiated  because  the  insured 
went  to  Europe  without  the  written 
assent  of  the  company,  see  Douglas 
V.    Knickerbocker    Life    Ins.    Co.,    83 


N.  Y.  49'2.  And  see,  as  to  residing 
out  of  prescribed  limits,  Bennecke  v. 
Connecticut  Life  Ins.  Co.,  105  U.  S. 
355;  Ayer  v.  N.  E.  Mut.  Life  Ins.  Co., 
109  Mass.  430. 

5.  CluflF  V.  Mut.  Ben.  Life  Ins.  Co., 
13  Allen,  308;  s.  c.  9fl  Mass.  317; 
Harper  v.  Phcenix  Ins.  Co.,  18  Mo. 
109;  Bradley  v.  Mut.  Ben.  Life  Ins. 
Co.,  45  N.  Y.  422;  Bliss  Life  Ins. 
334-337;  May,  §§  327-331.  Death  by 
abortion  held  to  vitiate.  Hatch  v. 
Mut.  Life  Ins.  Co.,  120  Mass.  550. 
As  to  "  death  by  hands  of  justice," 
see  May,  §  326;  4  Bligh,  N.  S.  19*4. 
As  to  death  in  military  service,  see 
May,  §§  332-334;  N.  Y.  Ins.  Co.  v. 
Hendren,  24  Gratt.  540;  Dillard  v. 
Mahattom  Ins.  Co.,  44  Ga.  119. 

Sundry  provisions  respecting  time 
and  manner  of  death  are  to  be  con- 
strued according  to  the  terms  of  the 
policy.     See  Jennes  v.   Northwestern 


835 


§  551  THE  LAW  OF  PERSONAL  PROPERTY.       [PART  III. 

hands  of  justice  appears  to  be  accepted  always  by  implication  on 
grounds  of  public  policy.^  On  the  other  hand,  death  by  violence 
is  covered  by  a  policy  unless  expressly  excepted/ 

Finally,  death  by  suicide,  or  by  the  insured's  "  own  hand,"  as 
the  phrase  goes,  is  something  against  which  insurance  companies 
almost  always  seek  to  protect  themselves,  but  often  unsuccessfully. 
Acts  of  suicide  are  traceable  in  a  large  number  of  instances  to 
insanity ;  and  the  tests  of  insanity  are  in  these  days,  as  all  intelli- 
gent men  well  know,  strangely  contradictory  and  inconclusive. 
Long-continued  madness  preceding  the  commission  of  the  fatal 
act  may  fairly  be  thought  to  render  the  insured  so  far  irrespon- 
sible as  to  sustain  the  policy;  but  in  the  doubtful  cases  of  tem- 
porary insanity  or  suicidal  depression,  the  better  opinion  is  that 
a  policy  providing  against  death  by  one's  o^vn  hand,  or  suicide  or 
self-destruction,  will  be  avoided  whenever  the  act  of  self-destruc- 
tion is  the  wilful  act  of  a  man  having  at  the  time  sufficient  powers 
of  mind  and  reason  to  understand  the  physical  nature  and  conse- 
quences of  the  act  of  suicide,  and  having  at  the  time  a  purpose  to 
cause  his  own  death  by  that  act.^     But  if  death  is  caused  by  one 

Life  Ins.  Co.,  26  Minn.  271.     Death  ing  general  principles  as  concerns  sui- 

from  intemperance  is  sometimes  pre-  cide ;    but   there   will    be    found    less 

scribed  in  policies  as  a  cause  of  for-  variance  when  the  facts   in  the  dif- 

feiture.    See  May  InS.,  §  302.  ferent    cases    are    closely    compared. 

6.  May,  §  326;  5  M.  &  G.  659;  1  The  rule  announced  in  the  text  (that 
Jones  (N.  C.)   Law,  126.  of  Dean  v.  American  Mutual  Life  Ins. 

7.  May,  §  330.  Co.)     is   not    favored    in    Kew    York, 

8.  See  Borradaile  v.  Hunter,  5  M.  where  it  is  considered  that  one  must 
&  Gr.  639;  Dean  v.  American  Mutual  have  been  able  to  appreciate  moral 
Life  Ins.  Co.,  4  Allen,  96;  St.  Louis  consequences  in  order  to  defeat  the 
Mut.  Life  Ins.  Co.  v.  Graves,  6  Bush,  policy, —  that  the  suicide  must  have 
268;  Hartman  v.  Keystone  Ins.  Co.,  been  felonious.  Newton  v.  Mutual 
21  Penn.  St.  466;.  Eastabrook  V.Union  Benefit  Life  Ins.  Co.,  76  N.  Y.  426. 
Mut.  Life  Ins.  Co.,  54  Me.  224 ;  See  also  next  note.  The  precise  words 
Breasted  v.  Farmers'  Loan  &  Trust  of  the  policy  as  to  suicide  vary  in 
Co.,  4  Hill,  73;  Cooper  v.  Mass.  Mut.  different  policies.  See  Bigelow  v. 
Life  Ins.  Co.,  102  Mass.  227.  And  Berkshire  Life  Ins.  Co.,  93  U.  S.  284. 
see  Bunyon,  73;  Bliss  Life  Ins.  346-  "Dying  by  one's  own  hand  or  act, 
400;  May,  §§  307-325.  The  author-  whether  sane  or  insane,"  is  often  pre- 
ities  are  quite  discordant  in  announc-  ferred    now    by    companies    to    "  sui- 

836 


CHAP.  XI.]      ANNUITIES,    ETC.,   AND    INSURANCE    POLICIES.  §    552 

who,  while  intending  to  kill  himself,  was  so  disordered  in  his 
reasoning  faculties  that  he  cannot  understand  the  general  nature 
and  consequences  of  the  act  or  is  impelled  thereto  by  an  irresistible 
insane  impulse,  which  he  cannot  resist,  the  insurer  is  liable.^ 

§  552.     When  the  Insurance  Risk  Commences. 

When  does  the  risk  under  a  life  insurance  policy  commence? 
As  in  other  kinds  of  insurance  it  may  commence  from  any  time 
mutually  agreed  upon ;  whenever,  according  to  the  facts  presented, 
there  was  ameeting  of  the  minds  of  the  parties  on  all  essentials  of 
the  contract.  But  usually  the  life  insurer  issues  a  written  policy, 
based  upon  a  preliminary  application,  with  questions  and  answers 
filed;  and  it  is  agreed  that  the  policy  shall  not  be  delivered,  nor 
the  contract  take  effect  until  the  first  premium  is  paid  by  the 


cide."  See  May,  §  311.  Intention 
of  self-destruetion,  with  conscious- 
ness of  physical"  consequences,  held 
sufficient  —  under  such  expression  — 
to  avoid,  although  one  was  not  con- 
scious of  the  moral  nature  of  the  act. 
Adkins  v.  Columbia  Life  Ins.  Co.,  70 
Mo.  27.  See  further,  May,  §  322. 
Innocently  taking  a  fatal  overdose  of 
medicine  is  not  dying  by  one's  own 
hand  or  act.  Penfold  v.  Universal 
Life  Ins.  Co.,  85  N.  Y.  317.  To  pry 
farther  into  the  inaccessible  regions 
of  a  flickering  intellect  seems  all  the 
more  inappropriate,  when  we  reflect 
that  insurance  contracts  are  made 
between  parties  who  are  supposed  to 
have  in  mind  the  common-sense  in- 
terpretation of  familiar  expressions, 
and  not  those  nice  distinctions  which 
some  medical  experts  would  fain 
force  upon  us. 

9.  Mut.  Life  In.s.  Co.  v.  Terry,  15 
Wall.  58.  Here  the  rule  with  its 
alternative    appears    on    appeal    con- 


sistently announced;  and  still  more  so 
by  Mr.  Justice  Miller  on  the  circuit. 
1  Dill.  C.  C.  403.  There  is  still,  how- 
ever, muct  uncertainty;  the  rule  of 
some  cases  insisting  apparently  upon 
the  distinct  element  of  "  moral  " 
comprehension,  and  so  affording  all 
possible  favor  to  those  who  claim 
under  the  policy  in  cases  of  suicide. 
And  to  that  latter  rule  the  Supreme 
Court  of  the  United  States  has  fully 
(1896)  committed  itself.  Connecti- 
cut Life  Ins.  Co.  v.  Akens,  150  V.  S. 
468,  473,  and  cases  cited. 

There  should  be  no  presumption 
of  law,  prima  faoie  or  otherwise,  that 
self-destruction  arises  from  insanity. 
Terry  v.  Life  Ins.  Co.,  1  DilL  C.  C. 
403. 

See  further  (1917).  Security  Ins. 
Co.  V.  Dillard,  84  S.  E.  656;  Vicars 
V.  .^tna  Ins.  Co.,  158  Ky.  1,  164 
S.  W.  106;  In  re  McCue,  223  U.  S. 
234,  32  Sup.  Ct.  220.  56  L.  ed.  49' 
(death  by  legal   execution). 


837 


§  553  THE  LAW  OF  PERSONAL  PROPERTY.      [pART  111. 

insurer.'     The  date  when  the  risk  commences  and  the  date  of  its 
termination  are  both  indicated  clearlj  in  all  well-drawn  policies.^ 

Where  one  of  joint  beneficiaries  murders  the  insured  he  cannot 
recover  on  the  policy,  but  the  other  beneficiaries  may  do  so.^ 

§  553.     Forfeiture  Through  Non-Payment  of  Premiums. 

We  have  seen  that  life  insurance  policies  are  made  forfeitable, 
during  the  continuance  of  that  life  upon  which  the  risk  was 
taken,  for  breach  of  various  conditions.  Among  these  conditions 
is  that  of  non-payment  of  premiums.  Fire  and  marine  policies 
run  for  short  periods,  and  are  frequently  renewed ;  but  life  policies 
commonly  run  for  an  uncertain,  and  that  perchance  a  very  long, 
period.  While,  then,  the  payment  of  a  single  premium  in  advance 
may  insure  a  house  against  fire  or  a  ship  against  the  perils  of  the 
sea,  premiums  under  a  single  life  insurance  policy  are  usually 
receivable  by  the  insurer  in  periodical  and  generally  anmial  sums. 
Any  failure  on  the  part  of  the  insured  to  pay  the  premium 
promptly  when  the  day  comes  round  forfeits  the  policy,  if  the 
contract  be  thus  conditioned ;  and  it  is  only  as  a  favor,  under  such 
circumstances,  not  as  a  right,  that  a  continuance  of  the  risk  can 
be  claimed  on  the  part  of  the  delinquent.'* 

1.  There  may  be,  of  course,  a  waiver  ham,  L.   R.   2  H.  L.   296 ;    St.   Louis 

of  prepayment  on  the  part  of  the  in-  Mut.    Life    Ins.    Co.    v.    Kennedy,    6 

surer;    or  a  binding  oral  contract  of  Bush,  450;  Faunce  v.  State  Mut.  Life 

insurance  to  be  inferred  from  acts  or  Ass.    Co.,    101    Mass.    279:    Myers   v. 

words;   or  a   contract  which  fails  to  Keystone  Mut.  Life  Ins.  Co.,  27  Penn. 

express  the  mutual   intention   of  the  St.  268. 

parties,  and  reformable  in  equity;  or  2.  See  Ruse  v.  Mut.  Ben.  Life  Ins. 

a  new  insurance  contract  which  has  Co.,   23   N.  Y.    516;   Am.   Horse  InS. 

superseded   the   existing  one;    but   in  Co..  v.   Patterson,   28   Ind.   17;    Bliss, 

all  such  cases  the  party  claiming  the  248-250.     And  see  May,  §  340. 

benefit  of  something  so  unusual  should  3.  Sharpless  v.  Grand  Lodge  A.  O. 

establish  his  right  by  clear  and  con-  U.  W..   (Minn.  1917)   159  N.  W.  1086. 

vincing    proof.      See    Bliss    Life    Ins.  4.  May  Ins.,  §  341.     In  Windus  v. 

181-248,    and    cases   cited    in    general  Lord  Tredegar,  15  L.  T.  N.  s.  108,  the 

works  on  fire  and  marine  insurance;  House   of  Lords  denied   the   right  to 

Com.  Mut.  Ins.  Co.  v.  Union  Mut.  Ins.  relief   in  equity  on    a  lapsed   policy, 

Co.,    19    How.    318;    Xenos   v.    Wick-  even   though    the  lapse  was   without 

838 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    IXSUKANCE    POLICIES.  §    553 

But  the  waiver  of  a  forfeiture  for  such  cause  may  be  evinced 
by  acts,  as  well  as  by  the  express  agreement  of  the  company; 
and  no  form  of  waiver  is  more  common  than  that  of  a  receipt  by 
the  company  or  its  authorized  agent  of  a  premium  after  the  day 
when  it  became  payable.  Waivers  of  this  sort  are  regarded  with 
favor  to  the  insured,  and  the  company  receiving  a  new  premium 
is  held  bound  to  knowledge  of  the  actual  time  of  pa\Tnent.^ 
Where,  as  often  happens  in  this  country,  the  annual  premium  is 
paid  in  part  by  a  note,  and  the  policy  by  its  t<>rms  is  forfeited 
on  the  non-payment  of  the  note  at  maturity,  like  considerations 
apply;  and  if  the  insured  dies  after  the  note  becomes  due  and  the 
note  is  not  paid,  the  insurer  is  released  from  liability.^ 


culpable  negligence  on  the  part  of  the      §  345.     The  last  day  for  pajinent  oc- 


insured.  To  the  same  effect,  see  Klein 
V.  Life  Ins.  Co.,  104  U.  S.  88 ;  Knick- 
erbocker Ins.  Co.  V.  Dietz,  52  Md.  16. 
Insanity  of  the  insured  affords  no  ex- 
cuse. Wheeler  v.  Conn.  Life  Ins.  Co., 
S3  N.  Y.  543. 

5.  lb. ;  Hodsdon  v.  Life  Ins.  Co., 
97  Mass.  144;  May,  §  361;  Wing  v. 
Harvey,  5  De  G.  M.  &  G.  265;  Bouton 
V.  Am.  M.  L.  Ins.  Co.,  25  Conn.  542  ; 
Bliss,  253  et  seq.;  Catoir  v.  Am.  Life 
Ins.  &  Trust  Co.,  33  N.  J.  487.  Days 
of  grace  are  sometimes  allowable  to 
the  insurtKl  by  custom ;  and  even  tlie 
want  of  a  notification  habitually  given 
by  the  company  may  in  some  in- 
stances relieve  the  insured  from  for- 
feiture. See  Helme  v.  Phil.  Life  Ins. 
Co.,  61  Penn.  St.  107;  Bliss,  286;  1 
Big.  Life  Ins.  Cases,  m,  621.  But 
want  of  a  notice  is  not  a  good  excuse 
as  a  rule.  Girard  Ins.  Co.  v.  Mutual 
Ins.  Co.,  97  Penn.  St.  15;  Thompson 
V.  Ins.  Co.,  104  U.  S.  252.  Premiums 
may  be  payable  in  labor  or  sei-vices. 
Schwartz  v.  German ia  Ins.  Co.,  18 
Minn.  448;  Kentucky  M.  L.  Ins.  Co. 
V.  Jenks,  5  Ind.  96.    See  further.  May, 


curring  on  Sunday,  the  premium  i.s 
not  payable  until  Monday.  Rowland 
V.  Continental  Ins.  Co..  121  Mass. 
499;  Hammond  v.  Am.  Mut.  Life  Ins. 
Co.,  10  Gray,  306.  And  see  Campbell 
v.  Int.  Life  Ass.  Co.,  6  Cush.  42: 
Howard  v.  Continental  Life  Ins.  Co., 
48'  Cal.  229.  Parol  waiver  of  a  con- 
dition has  been  .sustained.  May, 
§  346. 

6.  Pitt  v.  Berkshire  Life  Ins.  Co., 

100  Maas.  500;  Bliss,  261-269;  Mc- 
Allister v.  N.   E.   Mut.  Life  Ins.  Co., 

101  Mass.  558;  N.  E.  Mut.  Life  Ins. 
Co.  v.- Hasbrook,  32  Ind.  447:  Bigelow 
v.  State  Assurance  Ass'n,  123  Mass. 
113.  Where  forfeiture  for  non-pay- 
ment of  a  note,  &c.,  is  doubtfully  ex- 
pressed or  not  expressed  at  all,  non- 
forfeiture is  the  fairer  con.struction. 
May,  §§  341-343;  McAllister  v.  New 
Eng.  Ins.  Co.,  101  Mass.  558;  New 
England  Ins.  Co.  v.  Hasbrook,  32 
Ind.  447.  Cf.  American  Ins.  Co.  v. 
Henley,  60  Ind.  515,  and  American 
Ins.  Co.  V.  Stoy,  41  Midi.  385.  And 
see  American  Ins.  Co.  v.  Klink,  6.'> 
Mo.  78.     If  the  contract  required  the 


839 


§  554: 


THE  LAW  OF  PERSONAL  PROPEETY. 


[part  III. 


But  non-forfeitable  policies  are  sometimes  issued;  and  even 
non-forfeiture  laws  are  enacted  in  some  States,  with  the  special 
object  of  protecting  the  insured  against  the  most  disastrous  con- 
sequences attending  a  delay  in  the  payment  of  his  regiilar  pre- 
miums/ And  any  agreement,  declaration,  or  course  of  action, 
on  the  company's*  part,  which  leads  the  party  insured  honestly  to 
believe  that  by  conforming  thereto  he  will  avoid  a  forfeiture,  may 
be  set  up  as  against  the  strict  letter  of  the  policy  itself.^ 

§  554.     Re-Insurance,  Double  Insurance,  etc. 

The  doctrine  of  re-insurance  applies  with  much  the  same  force 
to  life  as  to  fire  and  marine  risks ;  the  original  insurer  thus  pro- 


company  to  give  previous  notice  (as 
in  an  assessment)  such  notice  is  a 
prerequisite  to  forfeiture.  Mutual 
Ass'n  V.  Hamlin,  129  U.  S.  297. 

7.  Bliss,  293,  405;  Carter  v.  John 
Hancock  Life  Ins.  Co.,  127  Mass. 
153;  Chase  v.  Phcenix  Ins.  Co.,  67 
Me.  85;  May,  §  344;  Goodwin  v. 
Mass.  Ins.  Co.,  73  N.  Y.  480.  A  pre- 
mium payable  is  not  strictly  a  debt. 
Worthington  v.  Charter  Oak  Ins.  Co., 
41  Conn.  416.  A  non-forfeitable  stat- 
ute, if  mandatory,  controls  the  con* 
tract  of  insurance.     140  U.  S.  226. 

Whether  act  of  God  {e.  g.,  death) 
or  of  a  public  enemy  (e.  g.,  war)  or 
the  obligor's  own  acts,  can  be  set  up 
to  excuse  the  non-payment  of  pre- 
mium at  the  stipulated  date,  see 
May,  §§  350-355,  showing  that  the 
later  cases  are  somewhat  discordant. 
New  York  Life  Ins.  Co.  v.  Statham, 
93  U.  S.  24,  and  cases  cited;  Homer 
v.  Guardian  Ins.  Co.,  67  K  Y.  278; 
11  Am.  Law  Rev.  221;  Abell  v.  Penn 
Ins.  Co.,  18  W.  Va.  400.  See  as  to 
death,,  Palmer  v.  Phoenix  Life  Ins. 
Co.,  84  N.  Y.  63.  See,  as  to  acts  not 
amounting    to    waiver    of    forfeiture, 


Robertson  v.  jMetropolitan  Co.,  88 
N.  Y.  541 ;  Howe  v.  Union  Ins.  Co., 
80  N.  Y.  32.  Policies  are  not  always 
clear  in  their  expressions  as  to  the 
date  when  premiums  are  payable,  or 
the  certainty  of  a  forfeiture  for  non- 
payment. See  Phoenix  Life  Assur. 
Co.  v.  Sheridan,  8  H.  L.  Cas.  745; 
Bliss,  254;  Norton  v.  Phoenix  Life 
Ins.  Co.,  36  Conn.  503. 

8.  Hartford  Life  Ins.  Co.  v.  Unsell, 
144  LT.  S.  439.  Payment  to  the  com- 
pany's agent  is  good  though  he  con- 
vert the  premium  money  to  his  own 
use;  but  the  agent's  scope  of  author- 
ity follows  the  usual  rules.  See  May, 
§  345.  Part-payment  of  a  premium 
is  not  compliance  Avith  the  contract ; 
nor  does  it  give  a  right  pro  tanto  to 
the  fund.  Barnes  v.  Piedmont  Ins. 
Co.,  74  N.  C.  22;  81  Ind.  300;  May, 
ib. 

As  to  paying  premiums,  see  Rosen- 
feld  V.  Boston  Ins.  Co.,  222  Mass. 
284,  110  N.  E.  304  (excessive,  under 
protest)  ;  Clifton  v.  Mutual  Ins.  Co., 
168  N.  C.  499.  84  S.  E.  817;  Monast 
V.  Manhattan  Ins.  Co.,  32  R.  I.  557, 
79  Atl.  932. 


840 


CHAP, 'XI.]     ANNUITIES,    ETC.,  AND   INSUEANCE   POLICIES.  §    555 

tecting  himself  by  getting  some  other  insurer  to  cover  his  liability ; 
and  cases  have  arisen  in  England,  under  statutes  of  that  country 
permitting  the  amalgamation  of  insurance  companies,  where  the 
risks  of  the  old  company,  with  the  assent  of  policy-holders,  are 
transferred  to  the  new  one.^  Difficult  questions  often  arise  \vhere 
the  original  insurer  fails  and  then  the  reinsurer  is  commonly  held 
to  pay  the  actual  liability  of  the  original  insurer.^  And  "  double 
insurance,"  if  this  term  be  a  proper  one  in  the  present  connection, 
is  also  very  common ;  that  is  to  s'a.j,  on  one  life  or  risk  and  for  one 
and  the  same  insurable  interest,  insurance  may  be  effected  in 
various  companies.  Generally  speaking,  no  price  is  set  upon  a 
man's  life ;  and,  unless  prohibited  by  the  terms  of  his  policy,  the 
insured  may  go  and  insure  himself  again  elsewhere  without  regard 
to  amount.^  It  is  not  an  uncommon-  thing  at  this  day  for  married 
men  of  good  and  secure  incomes,  but  small  available  capital,  to 
insure  their  lives  heavily,  and  by  the  payment  of  annual  pre- 
miums provide  handsomely  for  their  families  in  the  event  of 
death,  while  living  freely  in  the  mean  time.  And  inquiries 
made  by  companies  as  to  whether  an  applicant  has  already  been 
insured  are  chiefly  for  ascertaining  what  other  insurers  thought 
of  the  same  risk,  and  thus  aiding  their  own  determination ;  though 
the  danger  of  having  a  risk  so  heavily  valued  as  to  tempt  death 
is  always  for  obvious  consideration. 

§  555.     Time  and  Mode  of  Obtaining  Payment. 

A  life  insurance  policy,  by  its  own  terms,  was  almost  invariably 
in  former  years  made  payable  on  the  death  of  the  insured  person 

9.  See   Bliss    Ins.,    250,    682;    Phil.  Firemen's    Ins.    Co..    209    U.    S     326. 

Life  Ins.   Co.   v.   Am.   Life   &   Health  See  MacArthur  Bros.  Co.  v.  Kerr,  213 

Ins.    Co.,    23    Penn.    St.    65 ;    Bimyon,  N.  Y.  360,  107  N.  E.  572 ;  MacDonald 

158;  Ernest  v.  Nicholls,  6  H.  L.  Cas.  v.  /Etna  Indemnity  Co.,  88  Conn.  571, 

401;  In  re  India  &  London  Life  Ass.  92  Atl.  154. 
Co.    L.  R.  7  Ch.  651.  2.  Mowry  v.   Home   Tn.<;nrance   Co.. 

1.  Law  Guarantee  Trust  and  Acci-  9  R.    I.    346;    May,   §§    364-376.   and 

dent    Society     (1914),    W.    N.    291;  cases    cited.     But    policies    are   often 

Blackstone  v.  Allemania  F.  Ins.  Co.,  guarded  on  such  a  point  and  the  con- 

66  N.  Y.  104;   Allemania  Ins.  Co.  v.  tract  governs. 

841 


§  555  THE  LAW  OF  PEKSONAT.  PROPEKTY.       [pART  III. 

before  the  risk  expired ;  though  risks  are  sometimes  taken  only 
for  a  specified  number  of  years,  and  endowment  policies,  to  be  paid 
absolutely  after  a  given  number  of  years,  are  becoming  quite 
conmion  of  late.  The  rule  as  to  death  is  that  it  must  actually 
occur  during  the  continuance  of  the  policy;  nor  can  it  avail  that 
the  cause  of  death  arose  during  the  existence  of  the  policy,  the 
life  having  ceased  after  the  policy  expired.  For  instance,  the 
fact  that  a  mortal  wound  was  received  while  the  policy  continued 
does  not,  unless  the  policy  is  worded  to  that  effect,  cast  any  new 
liability  upon  the  insurer,  the  extent  of  whose  risk  must  ordinarily 
be  referred  to  the  period  of  actual  death. ^*  Policies  are  so  care- 
fully worded,  even  to  the  precise  moment  of  the  day  when  the 
risk  expires,  or  the  precise  extent  of  the  risk,  that  in  the  great 
majority  of  cases  there  can  be  little  perplexity.  But  where  the 
insured  person  has  disappeared,  or  a  casualty  occurs  under  such 
circumstances  that  the  exact  time  of  death,  or  indeed  the  fact  of 
death,  cannot  be  ascertained,  the  insurer's  liability  is  to  be  deter- 
mined by  the  ordinary  rules  of  evidence  and  the  doctrine  of 
presumptions.^ 

The  executor  or  administrator  of  the  estate  of  the  insured,  or 
such  other  party  as  may  be  entitled  to  the  benefits  of  the  policy, 
must  scrutinize  its  terms  very  carefully  as  soon  as  pos'sible  after 
the  death  has  occurred ;  for  insurers  have  very  cunning  con- 
trivances ready  —  of  which,  to  their  credit,  it  should  be  said,  they 
do  not  avail  themselves  as  frequently  as  they  might  —  for  evad- 
ing payment  of  the  insurance  money  at  the  very  last  moment. 
Life  policies  usually  provide  that  the  insurance  money  shall  become 
due  and  payable  at  a  certain  time, —  say  sixty  days  after  formal 
notice  and  presentation  of  formal  proofs  of  death,  and  not  before. 
Proofs,  too,  must  frequently  be  prepared  in  a  specified  manner, 
and  be  presented  within  a  limited  time  after  the  death  of  the 

2a.  1  T.  R.  260;  Howell  v.  Knicker-  3.    See  Bliss   Life  Ins.,   28.9-299;    1 

booker  Life  Ins.  Co.,  44  N.  Y.  276;  Greenl.  Ev.,  §§  30,  278;  Moehring  v. 

Perry  v.  Prov.  Life  Ins.,  &c..  Co.,  99  Mitchell,  1  Barb.  Ch.  264 ;  Mem.  Dea, 

Mass.  162.  3  Den.  610. 

842 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    556 

party  insured,  pending  the  expiration  of  which  the  company 
cannot  be  sued.'*  Another  point  in  which  insurers  are  quite 
astute  is  in  providing  a  special  limitation  of  time  within  which 
suit  may  be  brought  upon  the  policy;  shortening  by  contract  the 
period  of  limitations  ordinarily  prescribed  by  law,  and  otherwise 
modifying  the  remedies  of  parties  entitled  to  the  insurance  money, 
to  meet  their  own  convenience.^ 

§  556.     Insurance  Against  Accidents, 

III.  Insurance  against  accidents  is  a  branch  of  business  not 
yet  greatly  developed,  though  pursued  to  some  extent  in  Great 
Britain  and  the  United  States.  The  want  of  proper  statistics  to 
serve  as  a  basis  for  risks  of  this  character  is  a  serious  obstacle  to 
taking  them;  for  the  more  shifting  the  rule  of  chances,  the  more 


4.  There  is,  certainly,  reason  in  such 
requirements,  inasmuch  as  the  com- 
pany should  have  proofs,  and  be  al- 
lowed time  to  investi<?ate  tho  facts  of 
death  and  questions  of  liability  in  its 
own  way,  but  there  is  hardship  be- 
sides in  conditioning  the  rights  of  a 
party  entitled  to  the  benefit  of  insur- 
ance upon  a  rigid  compliance  with 
mere  formalities  of  notice,  prelimi- 
nary proofs,  and  sworn  certificates; 
hence  the  courts  will  readily  presume 
that  the  company  has  waived  defects 
in  the  proofs  or  dispensed  with  them 
altogether.  And  such  a  requirement 
might  be  so  unreasonable  of  itself 
that  public  policy  would  reject  it. 
Loomis  V.  Eagle  Life  &  Health  Ins. 
Co.,  6  Gray,  39'6;  Provident  Life  Ins. 
Co.  V.  Baum,  29  Ind.  236;  Bliss  Life 
Ins.  407-418;  O'Reilly  v.  Guardian 
Ins.  Co.,  60  N.  Y.  169;  Taylor  v. 
.mna  Life  Ins.  Co.,  13  Gray,  434; 
Woodfin  v.  Asheville  Mut.  Ins.  Co., 
6  Jones,  ."SSS ;  1  Big.  Life  Ins.  Cases, 
375;    Miller   v.    Eagle   Life   &   Health 


Ins.    Co.,    2    E.    D.    Smith,    268;    May, 
cs.  19,  20. 

5.  Conditions  of  this  sort  contained 
in  a  policy  should,  like  those  which 
relate  to  notice  and  proof  of  death, 
be  carefully  examined  and  diligently 
complied  with;  for  insurers  have  tin; 
right  to  designate  the  terms  upon 
which  they  will  be  responsible  for 
losses,  and  the  contract  of  insurance 
is  a  voluntarj'  one.  Yet  conditions 
like  these  are  and  ought  to  be  con- 
strued liberally  for  the  insured,  even 
where  the  mouth  of  the  insurer  is 
not  stopped  by  his  own  acta  and  con- 
duct against  asserting  that  there  has* 
been  a  breach  and  forfeiture  of  the 
policy.  See  Bliss  Life  Ins..  5r>l-.'S70. 
and  cases  cited;  Riddlesbarger  v. 
Hartford  Ins.  Co.,  7  Wall.  386:  Amea 
v.  N.  Y.  Union  Ins.  Co.,  4  Kern. 
253;  May,  c.  21.  Most  cases  on  this 
point  relate  to  fire  insurance.  As 
to  agreement  not  to  sue  except  in 
States  where  the  insurance  company 
is  located,  stM?  Reichard  v  Manhattan 
Life  Ins.  Co.,  :n  Mo    ."is. 


84.' 


§  556  THE  LAW  OF  PEESOXAL  PROPERTY.       [PAET  UK 

surelj  does  an  insurance  transaction  sink  to  the  level  of  common 
gambling.  Bnt  experience  may  bring  a  more  correct  understand- 
ing of  the  business,  and  establish  hereafter  a  better  state  of  mutual 
confidence  between  insurer  and  the  insured.  The  avowed  object 
of  such  contracts  is  humane,  and  in  these  days  of  perilous  travel 
the  benefits  received  may  often  be  highly  valuable.  The  contract 
which  is  most  frequently  made  in  our  country  with  railroad  pas- 
sengers appears  in  form  as  one  by  which  the  insurer  agrees  to  pay 
a  given  sum  per  week  during  disability  caused  by  any  accident 
received  while  the  risk  continues,  and  a  gross  sum  in  case  of  death 
by  accident ;  this  contract  being,  however,  subject  to  various  modi- 
fications, according  to  circumstances.  In  this  country  the  busi- 
ness is  generally  conducted  in  a  brief  and  informal  manner;  the 
traveler  purchasing  an  accident  insurance  ticket  of  some  agent 
near  the  railroad  ticket  ofiice,  and  the  bargain  being  consummated 
in  a  hurried  manner  and  upon  a  verbal  application  with  neither 
warranty  nor  representation  on  the  part  of  the  insured.  But 
sometimes  the  business  is  conducted  with  those  formalities  which 
attend  the  transaction  of  life  insurance  business,  in  which  case 
the  usual  doctrines  of  life  insurance  would  apply ;  and  in  general 
the  law  of  'accident  insurance  differs  not  greatly  from-  that  of  life 
insurance,  except  in  its  greater  apparent  simplicity.^ 

An  accident  insurance  company  will  often  issue  tickets  at  the 
principal  office,  and  transmit  them  to  various  agents  to  sell  them 
indifferently,  in  which  case  even  an  agent's  clerk  may  sell  them. 
And  we  often  find  two  classes  of  tickets  sold :  one  known  as  the 
"traveler's  risk,"  and  the  other,  which  is  higher  priced,  known 
as  the  "  general  accident."  Tickets  of  the  latter  description  have 
been  held  binding,  even  when  purchased  by  railroad  employees.^ 

The  reported   decisions  concerning   accident  insurance   relate 

e.  See  Bliss  Life  Ins.,  683  et  seq.;  limits  as  may  prevent  it  from  being 

May  Ins.,  c.   23.     As  the  contract  is  a  wager  policy.     May  Ins.,   §   535. 
not    .strictly    one    of    indemnity,    the  7.  Brown     v.     Railway     Passenger 

parties  may  agree  upon  the  amount  Ass.  Co.,  45  Mo.  221. 
recoverable    within    such     reasonable 

844 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    556 

chiefly  to  the  construction'  of  phrases  used  in  the  insurance  policy 
or  ticket ;  and  these  phrases  suggest  as  the  leading  inquiry  whether 
the  insured  party  was  injured  "  by  accident  "  at  all.  As  to  this 
inquiry,  it  may  be  observed  that  the  term  "  accident  "  excludes 
the  idea  of  desig-n,  and  denotes  an  event  which  proceeds  from  some 
unknown  and  unforeseen  cause,  or  happens  without  one's  will  or 
intention.^  But  our  latest  decisions,  turning  upon  the  dubious 
reservations  of  such  contracts,  leave  it  exceedingly  doubtful 
whether  a  policy  of  this  sort  is  worth  taking  out  unless  expressed 
plainly  and  simply,  and  with  a  liberal  scope  of  expression  in  the 
contract.^     Where  the  conveyances  are  specially  designated  and 


8.  In  North  American  Ins.  Co.  v. 
Burroughs,  69  Penn.  St.  43,  death  by 
accident  was  defined  to  be  "  death 
from  any  unexpected  event  which 
happens  as  by  chance,  or  which  does 
not  take  place  according  to  tlie  usual 
course  of  things."  And  see  U.  S. 
Mut.  Ass'n  V.  Barry,  131  U.  S.  100. 

It  is  reasonable  to  construe  the 
word  "accident"  in  such  policies 
with  reference  to  the  will,  intention, 
or  design  of  the  party  insured,  and 
not  that  of  others  having  an  agency 
in  the  disaster.  Thus,  a  railway  ser- 
vant might  intend  to  throw  a  train 
off  the  track  and  cause  injuries,  in 
which  case,  as  to  himself,  there  would 
be  no  accident  resulting;  yet,  as  to 
a  passenger  not  expecting  or  having 
any  agency  in  producing  that  result, 
the  injuries  sustained  would  be  acci- 
dental injuries,  and  ought  to  entitle 
him  to  recover.  This  principle  has 
been  applied  in  a  case  where  the  in- 
sured was  attacked  by  highwaymen 
while  journeying.  See  Ripley  v.  Rail- 
way Pass.  Ass.  Co.,  1  Dillon,  403. 
And  see  Sinclair  v.  Maritime,  &c.,  Ins. 
Co.,  3  El.  &  El.  478;  Provdience  Life 
Ins.  &c.,  Co.  V.  Martin,  32  Md.  310; 


Southard  v.  Railway  Pass.  Ass.  Co., 
34  Conn.  574.  See  Prov.  Life,  &c.,  Co. 
V.  Baum,  29  Ind.  236,  as  to  proofs  of 
death.  "  Violent  means,"  as  well  as 
accidental,  are  sometimes  insured 
against. 

Where  the  insured  party  causes 
the  injury  plainly  by  his  own  volun- 
tary wilful  or  simply  careless  act, 
though  not  foreseeing  that  injury 
would  result  from  such  act,  the  in- 
clination is  to  hold  the  insurer  dis- 
charged from  liability ;  and  the  ticket 
often  expressly  disclaims  liability  on 
the  company's  part  for  injuries 
caused  by  the  insured  person's  wilful 
and  wanton  or  negligent  exposure. 
Morel  V.  Miss.  Life  Ins.  Co.,  4  Bush, 
535;  Bon  v.  Ry.  Ins.  Co.,  56  Iowa, 
664 ;  Southard  v.  Railway  Pass.  Ass. 
Co.,  34  Conn.  574.  But  see  Schneider 
V.  Prov.  Life  Ins.  Co.,  24  Wis.  28, 
which  treats  such  an  clement  for 
consideration  with  disfavor;  May, 
§§  530,  531,  and  latest  citations.  See, 
as  to  other  reservations  in  such  poli- 
cies, Shader  v.  Passengers^  Ins.  Co., 
66  N.  Y.  441:   37  L.  T.  N.  S.  356. 

9.  "  Intentional  injuries."  caused 
by    any    person,    are    sometimes    ex- 


845 


§  557 


THE    LAW    OF    PERSONAL    PROPEIJTY. 


[part  III. 


limited  in  the  policy,  the  risk  is  not  to  be  extended  to  accidents 
caused  in  other  conveyances  or  while  the  insured  is  traveling  on 
foot;  but  a  liberal  construction  applies  to  language  so  used,  and  in 
a  proper  case  changes  of  conveyance  incidental  to  the  general  jour- 
ney insured  against  will  be  deemed  embraced  within  the  scope  of 
the  insurance  contract.^ 

§  557.     Insurance  on  Property;  Fire  and  Marine  Insurance. 

IV.  Hitherto  we  have  considered  only  insurance  risks  assumed 
with  reference  to  a  person  and  which  contemplate  the  payment 
of  money  on  some  lapse  of  life  or  health  and  bodily  soundness. 
But  insurance  has  reference  often  to  risks  taken  upon  property; 
or  where  the  mutual  intent  is  to  replace  that  which  may  become 
destroyed  or  lost   through   some  peril  to  which  it  is   especially 


pressly  excepted  from  such  policies. 
Travelers'  Ins.  Co.  v.  McConkey,  127 
U.  S.  661.  This  confines  the  risk  very 
considerably.  But  jumping  on  or  off 
a  platform  might  be  sometimes  acci- 
dental in  the  popular  sense  of  the 
term  "  accident."  U.  S.  Mut.  Ass'n 
V.  Barry,  131  U.  S.  100.  Or  an  in- 
jury in  a  fray.  Supreme  Council  of 
Chosen  Friends  v.  Garrigus,  104  Ind. 
133. 

1.  Northup  V.  Eaihvay  Pass.  Ass. 
Co.,  2  Lans.  166 ;  s.  c.  reversed,  43 
N.  Y.  516.  Cf.  Theobald  v.  Railway 
Ass.  Co.,  10  Ex.  44.  On  this  subject, 
generally,  see  at  length  Bliss  Life 
Ins.,  683-721,  which  cites  several  Eng- 
lish and  unreported  American  cases. 
As  to  accidental  death  from  various 
causes,  see  May  Ins.,  §§  515,  516; 
Mallory  v.  Travellers'  Ins.  Co.,  47 
N.  Y.  52;  Reynolds  v.  Accidental 
Ins.  Co.,  22  L.  T.  N.  s.  820.  Loss 
cannot  be  recovered  for  partial  dis- 
ability when  the  express   stipulation 


of  the  contract  is  for  total  disabil- 
ity. Lyon  v.  Railway  Pass.  Ass.  Co., 
46  Iowa,  631.  As  to  whether  one  is 
a  traveler,  see  May  Ins.,  §  525.  Trav- 
eling on  foot  is  not  traveling  by  a 
'•  public  or  private  conveyance."  Rip- 
ley V.  Railway  Pass.  Ass.  Co.,  16 
Wall.  336.  But  see  May,  §  529,  criti- 
cising this  decision.  Reservations  as 
to  "  change  of  occupation  "  are  to  be 
liberally  construed.  Stone  v.  Casualty 
Co.,  5  Vroom,  371;  North  American 
Ins.  Co.  V.  Burroughs,  eff  Penn.  St. 
43;  May,  §  532.  Insurance  against 
injury  by  accident  includes  all  acci- 
dents not  excepted  by  the  express 
terms  of  the  policy.  Prov.  Life  Ins. 
Co.  v.  Fennell,  49  111.  180;  Prov. 
Life  Ins.  Co.  v.  Martin,  32  Md.  310. 
See  also  Perry  v.  Prov.  Life  Ins.  Co., 
103  Mass.  242. 

See,  further,  (1917)  National  Ins. 
Co.  V.  Fleming,  127  Md.  179,  96  Atl. 
281 ;  Mass.  Ins.  Co.  v.  Duncan,  166 
Ky.  515,  179f  S.  W.  472. 


846 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    558 

exposed.     Fire  and  Marine  insurance  are  the  most  familiar  kinds 
referable  to  this  latter  head. 

This  kind  of  contract,  by  which  one  party  undertakes  to  in- 
demnify another  against  the  loss  of  certain  property,  owes  its 
present  flexibility  to  the  energy  and  shrewdness  of  modern  capital- 
ists. The  bottomry  bond,  which  we  have  already  examined,  secures 
a  loan  upon  the  principle  of  insurance;  and  ships  have  been 
insured  ever  since  the  period  when  Rhodes  controlled  the  naviga- 
tion of  the  Mediterranean.  But  the  law  of  fire  insurance  dates 
back  in  the  courts  less  than  two  centuries ;  and  yet  this  branch  of 
business  at  present  engages,  the  attention  of  large  chartered  com- 
panies in  England  and  the  United  States,  which,  in  taking  their 
multitudinous  risks,  keep  an  immense  aggregate  capital  constantly 
employed.  Whatever  the  nature  of  the  property  on  which  such 
an  insurance  risk  is  taken,  whether  on  houses  or  furniture,  the 
risk  itself,  being  an  incorporeal  chattel,  represents  personal  and 
not  real  property,  so  far  as  the  rights  under  the  policy  have  any 
pecuniary  value. 

§  558.     The  Same  Subject. 

Insurance  on  fire,  as  the  name  imports,  applies  to  buildings  and 
all  species  of  property,  real  and  personal,  which  are  subject  to 
destruction  or  direct  damage  by  fire ;  :and  the  insurance  itself 
may  be  defined  as  a  contract  to  indemnify  for  loss  or  damage  to 
specified  property,  occasioned  by  that  element,  for  a  specified 
period.  The  contract  itself,  as  in  other  cases  of  insurance,  is 
called  a  policy,  and  the  consideration  of  the  contract  is  called  the 
premium?  Fire  insurance  appears  to  have  first  become  the  sub- 
ject of  judicial  cognizance  in  England  at  the  beginning  of  the 
eighteenth  century.^ 

Insurance  as  .applied  to  perils  by  sea,  or  marine  insurance,  is 

2.  Fland.     Fire     Ins.     (1871)      17;      mit  of   the  extended   examination   of 
Bouv.    Diet.    "Insurance;"    3    Kent      fire  insurance. 

Coin.  466.     See  also  May  InS.  passim.  3.  See   Lynch    v.   Dalzell,    4   Brown 

The  scope  of  this  work  does  not  per-      P.  C.  431 ;  decided  in  1729  on  appeal. 

847 


§  558  THE  LAW  OF  PERSONAL  PBOPERTY.      [PART  III. 

much  older,  though  to  Americans  of  the  present  day  perhaps  less 
famili"ar,  than  fire  insurance.  ISTot  to  speak  of  bottomry  and 
hypothecation,  contracts  were  made  for  the  express  purpose  of 
insuring  ships  and  merchandise  from  losses  at  sea  at  a  very  early 
period  of  modem  history;  and  in  a  collection  of  Venetian  state 
papers  published  in  England,  which  relate  to  the  trade  of  these 
countries,  is  found  the  statement  of  a  merchant  of  Venice,  made 
in  1512,  as  to  the  rate  of  m-arime  insurance  effected  in  England  on 
property  from  Candia."* 

Much  that  is  laid  down  by  the  courts  concerning  fire  insurance 
applies,  with  corresponding  changes,  to  marine  insurance.  Here 
we  have  a  contract  beUveen  the  insurer,  or  underwriter,  and  the 
insured,  which  generally  takes  its  expression  in  that  written 
instrument  known  as  a  policy,  though  such  contracts  might  on 
general  principle  be  oral  only ;  and  marine  insurance  policies,  too, 
are  signed  by  the  insurer  and  not  the  insured,  according  to  the 
uniform  practice ;  the  payment  of  a  premium  by  the  latter  making 
the  bargain  complete.^  In  this  and  in  most  respects,  the  doctrines 
of  fire  and  marine  insurance  will  be  found  quite  or  nearly  alike ; 

4.  See  Manly  Hopkins  on  Marine  a  policy  of  assurance,  by  means  of 
Ins.,  cited  in  1  Pars.  Marine  Ins.  10.  which  it  cometh  to  pass,  upon  the  loss 
The  statute  of  43  Eliz.,  c.  12  (1601),  or  perishing  of  any  ship,  there  follow- 
speaks  in  the  preamble  of  this  eth  not  the  undoing  of  any  man  but 
"■  usage  among  merchants,  both  of  this  the  los^  lighteth  rather  easily  upon 
realm  and  of  foreign  nations,"  as  many  than  heavily  upon  few,  and 
something  that  "  hath  been-  time  out  rather  upon*  those  that  adventure  not, 
of  mind;"  the  practice  of  these  than  upon  those  that  adventure."  43 
merchants  being,  "  when  they  make  Eliz.,  c.  12 ;  cited  in  1  Pars.  Marine 
any  great  adventure  (especially  into  Ins.  10.  See  N.  Y.  &  P.  R.  Co.  v. 
remote  parts) ,  to  give  some  considera-  .^tna  Ins.  Co.,  204  Fed.  255,  122 
tion  of  money  to  other  persons,  which  C.  C.  A.  523  (propeller  of  vessel); 
commonly  are  in  no  small  number,  Symmers  v.  Carroll,  207  N.  Y.  632, 
to  have  from  them  assurance  made  101  N.  Y.  698,  47  L.  R.  A.  N.  s  196, 
of  their  goods,  merchandise,  ships,  n>. ;  Plummer  v.  North  American  Ins. 
and  things  adventured,  or  some  part  Co.,  114  Me.  128,  95  Atl.  605. 
thereof,  at  such  rates  and  in  such  5.  1  Pars.  Mar.  Ins.,  34,  43 ;  Ham- 
sort  as  the  parties  assurers  and  the  ilton  v.  Lycoming  Mut.  Ins.  Co.,  5 
parties  assured  can  agree,  which  Penn.  St.  339. 
course  of  dealing  is  commonly  called 

848 


CHAP.  XI.]      ANNUITIES,    ETC.,    AND    INSURANCE    POLICIES.  §    559 

indeed,  fire  insurance,  being  the  more  recent  topic  of  law,  may  be 
said  to  have  sprung  from  marine  insurance,  as  from  a  parent  stock, 
notwithstanding  its  own  capability,  in  latter  days,  of  infusing 
some  new  elements  of  growth  into  that  which  first  gave  it  exist- 
ence. In  point  of  fact  the  law  of  insurance,  whether  as  to  persons 
or  property,  may  be  studied  as  a  whole  with  referen^^e  to  leading 
principles.^  The  contract  of  insurance  is  to  be  con-strued;  there 
are  doctrines  as  to  warranties  which  may  vitiate  the  policy  if  the 
insured  is  heedless  as  to  his  stipulations ;  doctrines  as  to  representa- 
tions which,  if  not  material,  will  be  lightly  regarded ;  doctrines 
concerning  the  payment  of  premiums  to  the  insurer;  doctrines, 
too,  as  to  the  enforcement  of  rights,  on  the  happening  of  the 
contingency  insured  against,  in  accordance  with  the  provisions  of 
the  policy. 

§  559.  Miscellaneous  Kinds  of  Insurance;  Guarzintee,  etc.;  Final 
Observations. 

V.  We  may  add,  in  passing,  that  there  is  still  another  kind  of 
insurance  business,  which,  though  taken  up  by  several  companies 
in  this  country,  and  established  already  on  a  very  fair  footing  in 
England,  is  but  little  understood  or  esteemed  here.  The  risk  thus 
assumed  is  that  of  lossess  which  employers  suffer  through  the 
misconduct  of  their  clerks ;  corporations,  by  the  unfaithfulness  of 
the  corporate  officers,  and  so  on;  in  other  words,  the  insurer 
guarantees  the  honesty  of  parties,  and  the  contract  is  one  of 
guarantee  insurance.^ 

There  seems,  in  fine,  no  reason  why  we  may  not  find  the  prin- 

6.  Mr.  May'a  treatise  is  prepared  guarantee  of  honesty  continually  re- 
on  such  a  principle.  solves    itself    into    the    more    difficult 

7.  See  Bliss,  722-733,  citing  En^-  question  of  .the  guarantee  of  commer- 
lish  cases;  Bunyon,  107  et  seq.  We  cial  credit  or  at  least  of  solvency, 
are  not  aware  of  any  decisions  under  See  also  May.  §§  540547.  The  aver- 
this  head  in  American  reports.  Mr.  age  honor  or  solvency  of  any  com- 
Bunyon  says  that  this  kind  of  insur-  munity  is  hardly  to  be  shown  by 
ance  is  beset  with  difficulty;  for  the  statistics. 

54  849 


§  559a  THE  LAW  OF  ^KI^so^■AL  piioperty.  [part  tti. 

ciple  of  insuring  against  hazards  successfully  applied  in  a  variety 
of  other  ways  not  yet  opened  to  enterprise  and  competition.'^ 

But,  on  the  whole,  it  should  be  said  that  the  right  to  receive 
money  under  a  contract  on  some  contingency  which  may  never 
happen  partakes  little  of  the  essential  and  legal  character  of  prop- 
erty, as  the  valuable  subject  of  ownership ;  though  it  is  otherwise, 
of  course,  when,  by  the  happening  of  such  contingency,  payment 
becomes  actually  due  from  the  insurer,  by  way  of  a  money  fund. 
There  is  but  one  kind  of  insurance  among  those  we  have  enumei'- 
ated  —  that  upon  a  life —  where  it  can  be  said  that  the  risk  in- 
volves absolute  payment  -at  a  more  or  less  remote  period ;  and 
even  here  the  risk  assumed  is  sometimes  limited  to  the  contingency 
of  death  within  a  specified  period,  or  so  that  death  under  pre- 
scribed conditions  shall  vitiate  the  policy ;  while,  furthermore,  the 
rights  of  particlar  beneficiaries  designated  by  such  a  contract  may 
depend  upon  the  contingency  of  surviving  the  life  insured.' 

§  559a.     Insurance   Regulation   Under   Local   Statutes. 

Of  late  years  insurance  business  has  been  considered  so  far 
affected  with  a  public  interest,  as  to  justify  fair  and  reasonable 
local  regulation  by  statute;  and  general  supervision  accordingly 
by  a  designated  public  official  is  held  constitutional.^ 

8.  Insurance  of  rents,  of  titles,  with  Life  Insurance.  For  American 
against  theft,  hailstones,  upon  the  readers  the  best  works  of  general  ref- 
lives  of  cattle  and  against  accidents  erence  are  those  of  Flanders  and 
to  carriages,  are  various  species  of  John  W.  May  on  Fire  Insurance  (the 
the  in>surance  contract  known  in  Eng-  latter  edited  in  an  ISW  edition  by 
land  and  Continental  Europe,  but  thus  Mr.  Frank  Parsons)  and  Parsons  on 
far  introduced  but  .slightly  (except  Marine  Insurance.  Mr.  May's  treatise 
for  title  insurance)  into  this  country.  has  the  advantage  of  comprehending 
See  May  Ins.,  §§  .544-547.  Even  in-  all  kinds  of  insurance  except  marine 
surance  against  the  birth  of  issue  has  risks.  Judge  Bennett's  Fire  Insur- 
been  practised  to  some  extent  in  ance  Cases,  and  Prof.  Bigelow's  Life, 
Great  Britain.  Tb.  So,  too,  a  land-  Accident.  &c..  Insurance  Cases,  sup- 
lord's  liability  is  insured  against.  ply   complete   series   of   the   decisions 

9.  The  topics  of  Fire  and  Marine  themselves  in  compact  volumes,  so 
Insurance   are   treated    at   length    in  far  as  they  continue. 

the     treatises     of     Phillips,     Angell,  1.  While  the  Legislature  may  regu- 

Amould,  and  others.     Mr.  Bliss  deals      late  as  against  abuses,  it  cannot  ere- 

850 


CHAP.  XI.]      ANNUITIES,    ETC.,    AN11    INSURANCE    TOLICIES.        §    r.59b 

To  prevent  fraud  and  deceit  by  irresponsible  insurance  com- 
panies and  agents  statutes  have  been  universally  enacted  requiring 
the  use  of  certain  forms  of  policies  as  provided  by  statute.- 

§  559b.     Liability  Insurance. 

Jn  the  last  few  years  the  insurance  business  has  broadened 
very  much  in  the  direction  of  extending  insurance  against  liability 
of  all  kinds.  Many  if  not  most  individuals  and  business  concerns 
using  motor  vehicles  are  now  insured  against  the  results  of  their 
o%vn  or  their  employees'  negligence  in  injuring  the  persons  or 
property  of  others ;  property  owners  now  quite  generally  insure 
against  liability  to  persons  injured  through  defects  in  the  prem- 
ises, and  the  largest  business  of  all  is  done  in  insuring  employers 
against  liability  for  injury  to  their  employees.  This  latter  kind 
of  insurance  has  become  of  great  importance  since  the  growth  of 
Workmen's  Compensation  Acts.^  These  statutes,  which  have  been 
generally  held  valid,  claim  and  attempt  to  offer  the  workman 
a  remedy  for  industrial  accident  which  shall  be  cheap  and  speedy 
and  not  subject  him  to  the  defences  of  contributory  negligence 
and  assumption  of  risk.  The  theory  of  such  legislation  is  that 
a  certain  amount  of  personal  injui*y  results  from  every  business 
undertaking  and  that  the  employer  should  undertake  this  as  one 

ate  a  monopoly  or  confer  upon  a  pub--Trinan  Alliance  Co.  v.  Barnes,  189  Fed. 

lie    oflicial     arbitrary    or    capricious  769    (Kan.    C.    C.    1911)  ;    Butler    v. 

powers   in   such  a  connection.     Stern  Roberson,    158    Ky.    102.    164    S.    W. 

V.    Metropolitan    Ins.    Co.,    169    App.  968. 

Div.  217,  154  N.  Y.  S.  472.  Foreifjn     insurance    companies    are 

See,  generally,  State  v.  McMaster,  thus  regulated.     Guardian  Tru?t  Co. 

237  U.  S.  63,  35  Sup.  Ct.  504,  59  L.  ed.  v.    Straus,   201    N.   Y.    546.   95   N.    E. 

839     (constitutional    power    upheld)  ;  1129. 

German  Ins.  Co.  v.  Kansas.  233  U.  S.  2.  The   States   may    under    the    po- 

389,  34  Sup.  Ct.  612.  58  L.  ed.  1011;  lice    power    regulate    insurance    rates. 

Claudy  v.  Royal  Leagiie.  259  Mo.  9^,  189  Fed.  760. 

168   S.   W.   593;   Nally   v.   Home  Ins.  3.  For  a  description   of  the   Work- 
Co.,    250    Mo.    452,    157    S.    W.    769  men's   Compen.sation   Acts,    their   his- 
(form  of  policy)  ;   Boston  Ice  Co.  v.  tory   and    validity,    see    27    Harvard 
Boston   &  M.   R.   R.,   77   N.   H.   6.  86  I>aw  Review,  235  ct  seq. 
Atl.  356,  45  L.  R.  A.  N.  S.  835;  Ger- 

851 


§  559b        THE  LAW  OF  PERSONAL,  PROPERTY.      [PART  III. 

of  the  usual  expenses  of  the  business  and  should  insure  himself 
against  it  to  protect  the  employee.  The  courts  have  been  liberal 
in  construing  such  legislation  for  the  benefit  of  the  workman,  and 
even  where  the  policy  is  for  reimbursement  of  the  employer  only 
for  losses  suffered,  the  workman  can  in  case  of  the  insolvency  of 
the  employer  recover  against  the  insurance  company  if  he  has 
an  assignment  of  the  policy."^  If  the  insured  is  only  partially 
insolvent  the  workman  may  in  some  jurisdictions  recover  from 
the  insurer  as  great  a  percentage  of  his  judgment  as  is  given  to 
other  creditors.^ 

4.  Davies  v.  Maryland  Casualty  Co.,  5.  Moses  v.  Travellers'  Ins.  Co.,  63 

89  Wash.  571,  154  Pac.  1116.  N.  J.  Eq.  260,  4?  Atl.  720. 


852 


CHAPTER  XII 

LEGACIES    AND    DISTRIBUTIVE    SHAKES  * 

§  560.     Legacies  and  Distributive  Shares  in  General. 

The  various  classes  of  personal  property  to  which  we  have 
hitherto  devoted  our  attention  are  such  that  ownership  in  the 
thing  may  be  acquired  in  a  variety  of  ways,  chiefly  by  means  of 
a  contract  between  living  parties.  But  legacies  and  distributive 
shares  pass  by  the  death  of  one  person  to  another,  death  indeed 
giving  them  full  creation;  and  in  such  property  original  title  is 
acquired  by  "  succession,"  to  use  the  broad  word  of  the  civilians ; 
in  other  words,  it  is  transmitted  by  one's  last  will  and  testament,  in 
which  case  there  is  a  legacy,  or  else  by  the  law,  when  we  find  a 
distributive  share  instead,  under  the  local  statute  of  distributions. 
Of  course  by  devise  under  a  will  or  by  descent,  and  as  a  ''  suc- 
cession "  title,  one  acquires  real  property  interests ;  but  their  treat- 
ment is  not  within  our  present  scope. 

From  the  main  aspect,  legacies  and  distributive  shares  seem 
to  fall  in  place  under  the  head  of  Title  to  Personal  Property ; 
since  money,  furniture,  stock,  bills  and  notes,  and  the  other  classes 
of  personal  property  which  we  have  considered,  retain  their  identi- 
cal character,  though  massed  together  or  passing  separately  by 
way  of  gift  upon  the  owner's  death,  and  so  finding  a  new  owner. 
And  yet  we  shall  not  do  violence  to  our  subject  by  devoting  a  chap- 
ter to  their  brief  consideration  as  a  species  of  personal  property. 
For  a  legacy  or  distributive  share,  expectant  or  vested,  is  ssign- 
able  under  suitable  circumstances  like  other  choses  in  action  or 
incorporeal  chattels,^  and  constitutes,  as  it  might  be  said,  a  sort  of 
debt  from  a  dead  man's  estate,  or  an  incorporeal  right  to  recover 
various  specific  goods  or  a  sum  of  money  therefrom.  They  can 
also  be  disclaimed  by  parol.^     Viewed  in  this  light,  legacies  and 

1.  See,  e.  g.,  Bryan  v.  Spruill,  4  404.  149  N".  Y.  Supp.  332;  Defreese 
Jones  Eq.  27;  Weems  v.  Weems,  19  v.  Lake,  109  Mich.  41'),  67  N.  W.  505. 
Md.  334.  

2.  Dueringer    v.    Klocke,    86    Misc.  *  See    Gleason   &    Otis   on    Inherit- 

ance Taxation. 

853 


§    ;")62  THE    LAW    OF    PERSON AI.    PROPERTY.  [pART  III. 

distributive  shares  appear  as  distinct  classes  of  incorporeal  per- 
sonal property  possessing  an  intrinsic  value  of  their  own  not 
lightly  esteemed  in  the  community.  Let  us,  then,  close  our  exami- 
nation of  the  leading  classes  of  personal  property,  by  sketching 
a  brief  outline  of  the  law  pertaining  to  these  last  of  incorporeal 
chattels. 

§  561.     Legacy  Defined. 

1.  A  legacy  is  a  gift  by  last  will;  and  this  word  appears  to  be 
generally  synonymous  with  "  bequest,"  though  more  familiarly 
spoken;  since  both  of  these  tenns  commonly  signify  that  the  gift 
made  is  one  of  personal  and  not  real  property ;  the  latter,  however, 
being  the  more  precise  in  such  a  sense.  Persons  often  use  words 
carelessly  in  their  testamentary  dispositions,  else  they  would  apply 
to  a  gift  of  real  estate  the  more  appropriate  word  "  devise."  ^ 
Our  present  concern  is  of  course  only  with  legacies  in  the  strict 
sense,  that  is,  to  testamentary  gifts  of  personal  property ;  although 
the  term  is  sometimes  used  with  reference  to  a  charge  upon  real 
estate.'* 

§  562.  General  and  Specific  Legacies;  Demonstrative  Legacies. 
Legacies  are  of  two  sorts,  general  or  specific.  A  legacy  is  said 
to  be  general  when  it  does  not  amount  to  a  bequest  of  any  par- 
ticular portion  of,  or  article  belonging  to,  the  estate,  as  distin- 
guished from  all  others  of  the  same  kind ;  but  when  it  does  amount 
to  such  a  bequest,  the  legacy  is  said  t^  be  specific.  The  same  dis- 
tinction is  made  at  the  civil  law,  which  furnishes  the  striking 
illustration  that,  if  one  bequeathes  "  my  watch  "  or  "  my  diamond 
ring,"  the  legacy  is  specific ;  while  if  he  bequeathes  "  a  watch  "  or 
a  "  diamond  ring,"  the  legacy  is  general.     In  the  one  instance 

3.  See  Bouv.  Diet.  "Legacy,"  "Be-  v.  Humphrey,  9  Pick.  350:  Cornell  v. 
quest,"  "  Devise."  Woolley,  40  N.  Y.  378.    As  to  legacies, 

4.  2  Wms.  Ex'rs,  6th  Eng.  ed.  981-  see  also   2   Sehoul.   Wills,   Ex'rs   and 
984;  2  Redf.  Wills,  2d  ed.  1-4;  2  Str.  Adm'rs,  §§  1458-1475. 

1253;  4  Kent  Com.  509,  510;  Hawes 

854 


CHAP.  Xir.  ]  I.EOACIKS    ANI»    DISTRIBI'TrVK    SHARES.  §    563 

that  particular  watch  or  rin<^'  must  ho  delievercd ;  iu  the  latter  any 
watch  or  ring  of  the  kind  will  answer.  The  consequences  of  the 
distinction  are  important:  for,  on  the  one  hand,  the  party  to  whom 
a  specific  legacy  is  given  can  have  no  claim  upon  the  estate  on  that 
account,  if  the  thing  given  cannot  be  found  and  identified  among 
the  testator's  assets;  while,  on  the  other  hand,  if  it  can  be  found 
and  identified,  he  is  entitled  to  it  without  being  recjuired  to  con- 
tribute towards  making  up  any  unexpected  deficiency  which  may 
arise  in  regard  to  the  other  portion  of  the  estate.  Thus,  the  be- 
quest of  "  my  diamond  ring  "  is  ineffectual,  unless  the  testator 
leaves  a  diamond  ring  of  .his  own  answering  to  the  description ; 
but  if  he  does,  the  legatee  should  have  it  in  its  present  condition, 
neither  better  nor  worse,  and  without  diminution  from  the  cir- 
cumstance that  the  estate  is  not  large  enough  to  pay  all  legacies  in 
full.  Hence  there  are  both  advantages  and  disadvantages  to  be 
found  in  a  specific  legacy  as  compared  with  a  general  one.^  Gen- 
eral legacies  are  usually  of  money. 

There  is  a  class  of  legacies  lying  between  the  general  and  spe- 
cific, to  which  the  civilians  applietl  the  term  demonstrative  lega- 
cies ;  and  in  this  class  we  include  bequests  of  a  certain  amount 
of  money  to  be  paid  out  of  a  particular  fund.^ 

§  563.     Residuary  Bequest  or  Legacy. 

That  which  remains  of  a  testator's  estate  after  paying  all  debts, 
expenses  and  statutory  allowances  and  satisfying  all  particular 
bequests  and  devises  is  the  residue,  and  the  person  to  whom  this 
residue  is  devised  or  bequeathed  is  knowm  as  the  residuary  legattH\ 
A   residurary  bequest  so  far  as   personal   property   is  concerned, 

5.  2  VVms.  Eux'rs,  1076  e*  seq-.;  Fon-  Pick.   299:    StfiiluMison    v.    Dowxon,    ?, 

taint-   V.    Tyler,    9    Price,   94,    104:    2  Beav.  342. 

Dom.  Civ.  Law,  §  3546;   1  Roper,  3d  6.  Creed    v.    Creed.    11    CI.    &    Kin. 

ed.   170:    2    Schoul.   Wills.   Ex'rs   and  508:    Toucli.    433:    Coleman    v.    Cole- 

Adm'rs,  §   1461:   Purse  v.  Snaplin,   1  man.   2   Ves.  Jr.   640;   2  Wni.s.   Ex'rs, 

Atk.  414;   Norris  v.  Thomson,  2   Mc  6tli  En<?.  ed.  1078;  1  Roper  Lefr.  215. 

Carter.    493;     Foote.     Appellant.     22  3d    ed ;    2    Schonl.    Wills,    Ex'rs    and 

Adm'rs,  §   1461a. 

855 


§  564  THE  LAW  OF  PERSONAL  PROPERTY.      [pART  III. 

carries  everything  not  otherwise  effectually  disposed  of,  whether 
such  other  disposition  was  at  all  attempted  by  the  testator  or 
not.  The  presumption  here  being  that  at  most  a  testator  intended 
to  take  from  the  residuary  legatee  only  for  the  sake  of  the  par- 
ticular legatee,  the  former  is  a  greatly  favored  party,  and  the 
courts  would  much  sooner  construe  a  will  so  as  to  carry  over  to 
him  the  residue  of  the  personal  property,  than  treat  the  case  as 
one  of  a  partial  intestacy.'^ 

§  564.     Distributive   Shares   Considered. 

II.  Lastly  as  to  distributive  shares.  When  a  person  dies 
intestate,  leaving  personal  property  more  than  sufficient  to  pay  all 
his  just  debts,  allowances,  and  the  expenses  involved  in  settling 
his  estate,  the  balance  goes  by  way  of  distribution'  to  such  persons 
and  in  such  shares  as  the  law  may  have  directed.  The  shares 
thus  left  over  are  known  as  distributive  shares-;  the  officer,  whose 
duties  correspond  to  thosfe  of  the  executor  under  a  will,  is  styled 
an  administrator ;  and  for  purposes  of  administration  the  personal 
assets  of  an  estate  are  considered  as  massed  together  at  their  total 
appraised  value,  and  so  appropriated  first  to  the  payment  of  legal 
debts  or  claims  against  the  estate  in  the  order  of  preference 
(inclusive  of  statute  allowances^),  and  finally,  to  distribution. 

The  surplus,  if  any,  which  remains  for  this  latter  purpose,  is 
computed  by  deducting  from  the  appraised  value  of  the  personal 
assets,  increased  by  such  sums  as  may  have  accrued  to  the  estate 
in  the  course  of  administration,  whatever  the  administrator  may 
have  lawfully  paid  out  in  a  just  course  of  administ^^^tioR  and 
what  should  be  allowed  him;  and  if  the  administrator's  accounts 
are  properly  filed  and  approved  in  court,  the  distributive  balance 
will  appear  on  his  final  account. 

7.  Attorney-Greneral    v.    Johnstone,  of  legacies,  and  the  proper  settlement 

Amb.   577;    1   Jarm.   Wills,   ed.   1861,  of   the   estate   of   a    deceased   person, 

724;    Cowling   v.    Cowling,    26    Beav.  see  2  Schoul.  Wills,  Ex'rs  and  Adm'rs, 

449';   King  v.   Strong,  9   Paige,   94.  §§   1476-1491. 

As  to  the  payment  and  satisfaction  8.  E.  g.,  the  "widow's  allowance." 

856 


CHAP.  XII.]  LEGACIES    AXD   DISTRIBUTIVE    SHAKES.  §    565 

§  565.     The  Same  Subject;  Method  of  Distribution. 

The  method  in  which  distribution  shall  be  made  is  set  forth 
by  statutes  knowTi  familiarly  as  statutes  of  distribution ;  the  most 
famous  of  these  being  the  English  statute  of  22  and  23  Charles  II. 
In  all  or  most  of  the  United  States  there  is  some  explicit  statute 
of  this  sort  in  force;  and  though  the  American  policy  of  descent 
and  distribution  may  be  said  to  differ  considerably  from  that  of 
England,  yet  with  regard  to  personal  property  the  English  statute, 
which  itself  is  largely  borrowed  from  the  civil  law,  serves  as  the 
basis  of  our  own  legislation.^ 

9.  See  2  Bl.  Com.  515;  2  Kent  Com.  The  following  table  shows  the  usual 

421,    422;    2    Wms.    Ex'rs,    6th    Eng.  method    of   distributing   intestate    es- 

ed.    1372    et    seq. ;    2    Schoul.    Wills,  tates  under  the  English  and  Amerioan 

Ex'rs  and  Adm'rs,  §§   1492-1508.  Statutes  of  Distributions:  — 

If  Intestate  Leaves 

Widow  and  children,  or  child Widow  takes  one-third  ;  the  rest  goes  to  the 

children  or  child  ;  if  dead,  to  their  repre- 
sentatives, or  lineal  descendants. 

Widow Half  to  widow,  the  rest  to  next  of  liin  of 

the  intestate,  in  equal  proportions,  or  to 
their  representatives ;  if  no  next  of  kin, 
to  the  State.  But  in  some  States,  the 
balance  of  personal  estate  being  small, 
widow  takes  the  whole,  in  default  of  issue 
surviving. 

Children   or   child Children    take    equally,    whether    male    or 

female  :  or  all  to  only  child. 

Children  by  more  than  one  wife Children  take  equally. 

Child  and  grandchild  by  deceased  child.  .Half  to  child,  half  to  grandchild. 

Grandchildren Per  capita. 

No  widow  or  descendant Father,  if  living,  takes  all. 

No  widow,  descendant,  or  father To    mother,   brothers,   and    sisters   In   equal 

shares,  and  to  any  children  of  deceased 
brother  or  sister  by  right  of  representa- 
tion. Representation  not  allowed  here  to 
the  extent  of  grandchildren  under  most 
statutes.  Mother  often  takes  by  local 
statute  in  preference  to  brother  or  sister. 

No   widow,    descendant,   father,   brother, 

or  sister,  &c Mother  takes  all. 

No    widow,    descendant,   father,    mother, 

brother,  or  sister Next  of  kin  In  equal  degree ;  preference  be- 
ing given  where  th.-re  are  two  or  more 
collateral  kindred  in  equal  degree,  but 
claiming  through  different  ancestors,  to 
those  who  claim  through  the  nearest 
ancestor. 

J857 


§  565 


THE    LAW    OF    PERSONAL    PROPERTY. 


[part  III. 


Intestate   being   a    married    woman,    and 

leaving  a  husband Husband    entitled    to    all    personal    estate ; 

but    statutes    in    some    States    give    half 
to   intestate's    child,    or   children,   if  any 
survive. 
In  case  of  no  known  widow,  husband,  or 

nest  of  kin Balance  goes  to  the  State. 


But  as  statute  provisions  vary  in 
different  States,  the  local  statute 
should  always  be  carefully  consulted 
by  an  administrator  in  settling  dis- 
tributive shares.  Legislation  in  this 
country  favors  placing  the  descent  of 
real  and  the  distribution  of  personal 
estate,  in  case  of  intestacy,  on  more 
nearly  the  same  footing  than  the 
English  law  allows.  This  subject  of 
distribution  is  more  fully  considered 
in  2  Schoul.  Wills,  Ex'rs  and  Adm'rs, 
§§  1492-1508. 


Upon  the  general  subject  of  Lega- 
cies, the  reader  is  referred  to  the  ex- 
tensive works  of  Jarman  and  Red- 
field  on  Wills.  Roper  on  Legacies 
discusses  many  of  the  technical  dis- 
tinctions which  have  arisen  under 
this  head.  As  to  distributive  shares, 
the  payment  of  legacies,  and  the  ad- 
ministration of  the  estates,  testate  or 
intestate,  of  deceased  persons  gener- 
ally, see  2  Schoul.  Wills,  Ex'rs  and 
Adm'rs.  In  Williams  Executors, 
latest  American  edition,  the  whole 
subject  may  likewise  be  studied. 


i358 


INDEX 


INDEX 


A. 

SECTION 

ACCEPTANCE.     See  Negotiable  Instruments. 

ACCIDENT  INSURANCE  55G 

See  Insuba  ;ce. 

ACCUMULATION.     See  Expectancy. 

ADVENTURES,  JOINT    167a 

AFTER-ACQUIRED  PROPERTY, 

covered  by  mortgage 421 

ALTERATION  OF  INSTRUMENTS, 

bills  and  notes 462 

payment  of  altered  check 470 

ANIMALS, 

personal  property  divisible  into  animate  and  inanimate 5,  57 

tame  and  wild 48-50 

offspring  of  domestic  aniamls,  how  owned 51 

wild  animals,  title  upon  owner's  death 97 

future  interests  in 142 

'See  Heirloom. 

ANNEXATION 4,  53 

See  Fixtures. 

ANNUITIES,  PERSONAL, 

definition,  nature,  and  incidents 66,  261,  542 

"  bank  annuities,"  and  annuities  by  will 543 

apportionment 145 

APARTMENTS, 

lease    of    42b 

APPORTIONMENT 145 

See  Expectancy. 

ASSIGNMENT, 

history ^^' 

civil  law  rule   86 

of  leases   34,  35 

of  chattels  personal,  difference  between  corporeal  and  incorporeal.  .72-86 

of  incorporeal,  forbidden  at  the  common  law 72,  73 

rule  in  equity "^ 

fusion  of  equity  and  common-law  doctrines  in  many  States ".=> 

all  incorporeal  property  with  few  exceptions  now  assignable 76 

no  writing  or  particular  form  of  words  necessary  to  constitute.  ...       77 

(8G1) 


862  INDEX. 

ASSIGNMENT— CoJiiwued.  kection 

what  notice  of,  is  necessary 78 

rights  conferred  under 79 

consideration,  question  of,  when  material 80 

assignee's  rights  and  remedies 81 

statutory  regulations  of 82 

negotiable  instruments  an  exception  to  common-law  rule 83 

indorsement,  how  distinguished  from 84 

classes  of  negotiable  instruments 85 

assignability  of  negotiable  instruments 456-461 

assignment  of  fixtures    129 

assignment  of  chattel  mortgage 433 

assignment  of  stock  495-508 

See  Stock. 

assignment  of  patents,  or  copyright 528,  539 

assignment  of  life  insurance  policies 547 

See  Insurance. 
And  See  Chattel  Mortgage. 

ATTACHMENT 89 

See  CnATTEi>. 
ATTORNEY.     See  Lien. 

ATTORNEY,  WARRANT  OF  357 

See  Debts. 

B. 

BANK  DEPOSITS 61 

BANK  NOTES   351 

BANKRUPTCY, 

of  partnership 193a 

See  Fixtures. 

BEQUESTS 63,   135,  234 

BILLS, 

of  credit 349 

of  lading 321,  471 

as  currency   54 

And  See  Negotiaele  Instruments. 

BILLS  AND  NOTES.     See  Negotiable  Instruments. 

BONDS, 

in  general    70,  3G0,  361 

bottomry  and  renpovdentia 442 

coupon 474-477 

debenture 47i> 

government 478 

negotiable • Ana 

registered  distinguished   from  coupon 479 

See  Mortgage;  Negotiable  Instruments. 


INDEX.  863 


SECTION 

BUILDINGS 131 

See  Fixtures. 
BULLION.     See  Money. 

C. 

CAPITAL  AND  INCOME, 

rights  to 144 

apportionment 14.-, 

Set'    liNCOME,    l.NTEREST,    AND   UsURY. 

CARRIERS 322 

See  LiEX. 

CERTIFICATES  OF  DEPOSIT 47:} 

See  Negotiable  Instruments. 

CHATTEL, 

distinguislied  from  freehold 6 

tlie  residuum  of  the  freehold 7 

derivation  of  the  term 8 

chattels  real  and  chattels  personal 9 

chattel  real  defined 20 

includes  "  term  of  years  "  as  applied  to  lease.s 21 

leading  characteristics  of  a  lease 22 

a  lease  may  be  executory 23 

"  term  "  of  lease  must  be  for  a  time  certain 24 

includes  estate  and  interest  aS  well  as  time 24 

leases  as  affected  by  the  Statute  of  Frauds 25 

whether  a  seal  essential  within 26 

effect  of  a  term  not  within 26 

form  of  lease 27 

lease  and  agreement  f()r  lease  distinguished 27o 

Tent  or  recompense  under  a  lease 28 

covenants  of  lease 29 

on  lessor's  pVirt 30 

on  lessee's  part 31-33 

how  a  lea.se  may  be  assigned 34,  35 

underletting  distingui^^hed  from  assignment 36 

modes  of  terminating  a  tenancy 37 

by     "lapse     of     time,"     "merger,"     "surrender,"     "forfeiture," 

"  notice  to  quit  " 38-40 

eontingcnt  modes  of  terminating 41 

mutual  rights  of  les,sor  and  lessee 42 

leases  follow  general  contract  rules .  42a 

leases  of  offices  or  aparaments 42b 

"  term  of  years  "  in  English  sense  of  trust  arrangement 43 

mortgages  of  such  terms 43 

miscellaneous  kinds  of  chattels  real  —  mortgages 44 

chattel  personal,  in  what  it  consists 45 


864  INDEX. 

CHATTEL— Continued.  section 

"  personal,"  significance  of  the  word 46 

corporeal  chattels  personal 47-57 

animals,  wild  and  tame 48-50 

offspring  of  domestic  animals,  how  owned 51 

person  or  corpse,  property  in 52 

vegetables  and  minerals 53 

soil  and  ice   53,  56 

severance  of  vegetables,  minerals,  soil,  and  ice 53 

money  as   54 

See  Money. 

ships  and  vessels 55 

See  Ships. 

miscellaneous  corporeal  chattels  personal 56 

movable  things,  civil-law  distinctions 57 

incorporeal  chattels  personal 58-70 

right  thereto  to  be  distinguished  from  the  mere  evidence  of  it.  .  .  .        67 

debts,  claims,  and  demands 59 

See  Debts. 

debts  upon  security 60 

See  Lien;  Mobtgage;  Pledge. 

bank  deposits,  general  or  special 61 

instances  of  incorporeal  chattels  personal 62 

"  goodwill  "  other  than  that  of  a  public  house 62 

legacies  and  distributive  shares 63 

See  DiSTBiBTJTiVE  Share  ;  Legacy. 

patent  rights  and  copyrights 64 

See  Copyrights;  Patents. 

insurance  policies 65 

See  Insurance. 

annuities,  pensions,  salaries 66 

See  Annuities. 

stocks  and  shares 68 

See  Stock. 

bills,  notes,  and  checks 69 

bonds  and  other  instruments  for  the  payment  of  money 70 

See  Negotiable  Instruments. 
leading   distinctions   between    corporeal    and    incorporeal    chattels 

personal 71-93 

as  to  assignment  of  chattels  personal 72-86 

See  Assignment. 

as  to  gift  or  sale  in  respect  to  delivery 87,  88 

as  to  seizure  and  attachment 89 

as  to  larceny 90 

as  to  husband's  marital   rights 91 

as  to  survival  of  remedies   92 

as  to  lapse  of  time  upon  title 93 


TJTDEX.  865 

CHATTF.L— Continued.  secttox 

perishable  chattels  140 

chattels  of  a  mixed  description 94-133 

See  Emblements;   Fixtures;   Heiblooms. 
CHATTEL  MORTGAGE.     See  ]\1ohtgage. 

CHECKS (JO.  403-470 

See  Negotiable  Instbcmexts. 
CaOSES, 

in  possession  and  in  action 1 1    53 

better  classified  as  corporeal  and  incori)oreal 12,  15 

how  affected  by  title 13 

how  things  incorporeal  may  become  corporeal 14 

distinctions  betw^H'n  tiie  two  kinds 71-93 

survival  of  interests  in 92 

CHURCH  FURNITURE    132 

See  Fixtures. 

CIRCULAR  NOTES    473 

See  Negotiable  Instruments. 

CLAIMS 59.  373 

See  Debts. 
COLLATERAL  SECURITY.     See  Pledge. 

COMMUNITY 172 

See  Ownership. 

COMPANIES,  JOINT  STOCK 201-204 

See  Stock. 

COMPOUND  INTEREST   263,  269 

See  Income,  Interest,  and  U.sury. 
CONFLICT  OF  LAWS, 

in  respect  to  interest  and  usury 288 

fundamental  principle  as  to  sovereignity;  early  view 291 

growth  of  international  jurisprudence;  various  writers  tliereon .  .      292 

American  publicists,  the  standard  authorities 293 

conflict   of   laws    regarding    property;    person   and    property    dis- 
tinguished        294 

international  distinctions  between  real  and  personal  property 295 

lex  domicilii,  as  controlling  personal  property,  a  fluctuating  rule.  .      296 
fundamental  distinction   between  real   and  personal  applicable   to 

property  in  its  legal  character  only 297 

the  owner's  domicile  as  a  test  becoming  relatively  less  important.  .      298 

as  to  the  tendency  of  the  lex  rei  sitcr  to  control 299 

contracts  concerning  personal  property 299o 

as  to  maritime  liens 391a 

CONSTITUTIONAL  LAW   2S9.  371a 

See  CoNFi.iCT  OF  Laws. 

CONTINGENT  REMATNT)ERS  149 

See  Expectancy. 
CONVERSION, 

real  into  personal,  etc 4,  133 


866  INDEX. 

COPYRIGHT,  «EcnoN 

iu  general    64,  518,  541 

nature  and  extent  of  copyright;  statutory  right  merely 535 

legal     principles    afl'ecting;     originality;     dedication     to    public; 

subject-matter  controlling 53G 

term  of  copyright 537 

obtaining  of  copyright,  requisites  attending 538 

assignment  of  copyright 535) 

infringement  of  copyright;  remedies,  etc 540 

English  and  other  foreign  patent  and  copyright  laws 541 

international  copyright   541,  note 

CORPORATIONS 215-246 

shares    in    480  et  seq. 

joint  Stock  companies 201,  204 

See  INSUBA^CE;  Owneeship;  Stock. 
CORPOREAL, 

distinguished  from  incorporeal  or  intangible 12,  15,  47,  5'< 

See  Choses. 

CORPSE 52 

See  Chattel. 

COUNTER-CLAni 374 

See  Debts. 

COUPON 474-477 

See  Negotiable  Instruments. 
COVENANTS, 

of  lease   29-33 

as  specialty  debts 360,  361 

See  Chattel. 
CROPS, 

when  personalty   53 

CURRENCY 347 

See  Money. 

D. 

DAMAGES 257 

See  Income,  Interest,  and  Usury. 

DEATH 194 

survivorship  of  rights  in  choses  in  action 92 

See  Ownership. 
DEBENTURES, 

considered 475 

DEBTS, 

definition  of  a  debt 59,  354 

"obligation,"  how  distinguished  from  debt;  technical  meaning  of. .  355 

priority,  classification  of  debts  as  respects 356 

upon  security    60 

debts  of  record 357-359 


indp:x.  8g7 

DEBTS — Continued.  section 

courts  of  record,  judgment;^  of;  warrant  of  attorney 357 

decrees  in  equity  ;  recogniziince 358 

priority  of  debts  of  record,  order  among 35!t 

specialty  debts  ;UJO,  oG  1 

instruments    under    seal;     deed-s ;    covenants;     bonds,    single    and 

conditional 360 

mere  recital  in^ullicient  to  constitute  voluntary  bonds 361 

simple-contract  debts 362 

priority  of  debts  as  dependent  on  the  parties 363,  364 

preferences  among  creditors,  rule  as  to 364 

how  a  debt  is  discharcjcd 3()5-372 

payment,  merger,  inkolvcncj-,  etc 365 

payment  of  smsiller  sum,  efTect  of 366 

debtor's  own  note  or  clieek,  effect  of  giving  by  Avaj'  of  discluirge.  .  .  .      367 

acceptance  of  a  higher  security  or  obligation,  elTect  of 368 

offer  and  acceptance  in  pajment  of  third  person's  note  or  obligation     309 

designation  of  a  place  of  payment,  efTect  of 370 

accord  and  satisfaction,  account  stated,  etc 370a 

application  or  appropriation  of  partial  payments;  election 371 

conditional  payment  in  a  diispute 371a 

agreements  of  composition  and  of  extension  of  tinu':  fraud 372 

demands  and  claims 59,  373 

set-olF;   recoupment :  counter-claim 374 

See  LiEN" :   Mortga(;k:   J'i.eix;k. 

DEEDS,  TITLE    OS 

DEFINITIONS, 

chattels • 16 

effects 16 

estate 10 

goods 16 

pergonal  property  at  coiiiaion  law 2 

things 16 

DELlVIuRY 87.  88,  304-3(Mt,  3'.19,  400.  425-429 

DEMANDS 59,  373 

Sen  Dkists. 

DEMURRAGE 325 

DEPOSITS,  BANK    61 

DISCOUNT 269,  272 

See  Ln'come,  Interest,  and  Usurv. 

DISTRESS 42 

See  Chattel. 

DISTRIBUTIVE  SHARE, 

in  general   500 

an  incorporeal  chattel  personal G3 

administration   of    564 

statutes  of  distribution 565 


868  ixDEx. 

DIVIDENDS,  SECTio.v 

in  stock   483 

rights  to 510 

DOGS 50 

See  Animai,s. 

E. 

EFFECTS, 

meaning  of  term 16 

EJECTMENT 42 

See  Chattel. 

EMBLEMENTS, 

their  nature  and  incidents 100 

chattels  vegetable  in  general 100 

diverse  ownership  of  soil  and  products 101 

Statute  of  Frauds  as  applied  to 101 

title  in  chattels  vegetable  transmissible  by  death 102 

annual  crops  fit  for  harvest  as  chattels 103 

doctrine  of  emblements  strictly  so  called 104-107 

labor  upon  crop,  what  essential 105 

unexpected  termination  of  tenancy  without  fault  does  not  deprive.  106 

right  of  taking  emblements,  how  to  be  exercised 107 

"  away-going  crops  "  of  tenants,  effect  of  custom  on 108 

as  to  the  effect  of  a  mortgage  or  judgment  lien  on  emblements.  .  .  .  109 

civil  law  a&  to  emblements 110 

EMINENT  DOMAIN   240 

EQUITABLE  CONVERSION, 

doctrine  of 133 

EQUITY  OF  REDEMPTION 439 

See  Mortgage. 

ESTATE, 

applied  to  realty 17 

tail 148 

in  possession  or  expectancy 135 

See  Expectancy. 

EXPECTANCY, 

doctrine  of  interest,  immediate  and  in  expectancy 135 

application  to  personal  property 136,  137 

expectant  interests  in  personalty  under  a  will 138 

expectant  interests  created  by  deed  of  trust,  etc 139 

rule  as  to  perishable  chattels 140 

articles   limited  over  in  specie  must  not  be  wasted  by  party   in 

immediate  interest 141 

rule  as  to  animals 142 

as  to  stock  and  stock-di^^dends 143 

income  and  capital,  as  between  life-tenant  and  remainder-man.  . .  .  144 

apportionment,  rule  as  to,  how  applied 145 


INDEX.  86  9 

EXPECTANCY— Co««mMed.  section 

rule  against  perpetuities 146 

limits  to  accumulation  of  income 147 

estates  tail,  distinction  between  real  and  personal  interests  a-s  to.  .  148 

contingent  remainders   149 

reversionary  interests  in  personal  property 150 

conditional  devises  or  bequests 151 

equitable    assistance    to    remainder-men    in    the    requirement    of 

security 152 

presumption  of  death  of  life  beneficiary 153 

F. 

FACTORS.     See  Lien. 

FARRIERS.     See  Lien. 

FEUDAL  SYSTEM, 

effect  traced 17 

FIRE  INSURANCE  557,  558 

See  Insurance. 

FIXTURES, 

their  nature,  origin,  and  definition 10.  Ill,   112 

distinction  between,  and  heirlooms 09 

annexation  to  land,  character  of 113 

modern  tests  as  to  what  constitutes  a  fixture 114 

constructive  annexation   115 

purposes  of  improvement;   pecuniary  consideration,  etc 115a 

assent  essential  to  either  annexation  or  severance 116 

considerations  determining  the  right  to  take  away 117 

situation  of  contending  parties 118 

right  to  remove  fixtures  as  between  heir  and  executor 1 19 

right   to    remove   as   between    life-tenant   and    remainder-man    or 

reversioner 120 

right  as  between  landlord  and  tenant 121 

distinction  between  trade  and  agricultural  fixtures 121 

articles  for  ornament  or  convenience,  removable 122 

effect  of  custom  or  agreement 122 

right  as  between  vendor  and  vendee 123 

as  between  mortgagor  and  mortgagee 124 

Secret  arrangements;  subsequent  parties  without  notice 124a 

right  as  between  personal  representative  and  devisee 125 

as  between  various  other  parties 120 

latest  test  of  fixtures  ;  general  conclusion l'2Ga 

time  within  which  fixtures  should  be  removed 127 

liability  to  repair  damages  caused  in  removing  fixtures 12S 

rights  of  action,  etc.,  in  general 128rt 

transfer  of  fixtures   129 

turpentine,  sap,  peat,  etc 130 

buildings  placed  on  another's  laud 131 


870  IXDEX. 

FIXTURES— Continued.  section 

pews,  organs,  church  furniture,  etc 132 

doctrine  of  equitable  conversion 133 

FORFEITURE 39 

See  CiiATTEU 

FORGERY, 

of  negotiable  instruments 462 

payment  of   forged  check 470 

FRAUDS,  STATUTE  OF 25,  34,  38.  53,  101 

FREEHOLD 6,  7 

See    CHATTEa.;    PROrEKTY. 

FREIGHT 319 

See  Ships. 

G. 

GIFT 87 

See  Chattel. 
GOODS, 

meaning  of  term 16 

GOODWILL 62,  185 

See  Chattel;  Ownership. 

GOVERNMENT  LOANS   70,  478,  479 

See  Money. 

GUARANTEE  INSURANCE   559 

See  Insurance. 


H. 

HEIRLOOMS, 

their  nature  and  incidents 10,  95 

in  general  passing  to  the  heir 95,  96 

wild  animals   97 

title  deeds  and  keys 98 

distinction  between,  and  fixtures 99 

heirlooms,  in  the  popular  sense 99 

HEREDITAMENT 11 

See  Choses. 

HUSBAND 91,  214 

See  Chattex. 

HYPOTHECATION.     See  Mortgage. 

I. 

XCE 53,  56 

See  Chattel. 
INCOME,  INTEREST,  AND  USURY, 

usufruct  or  income  of  personal  property,  general  remarks  upon .  .  .     248 


ixi)i:x.  671 

INCOME.  INTEREST,  AXD  USUr.Y— Continued.  -kctios 

origin   rf   the   practice   of   taking   econipensc   on    loans,    primitive 

ideas  upon    240,  250 

modern  legislation  respecting  interest  and  u^iiry,  lendencii-s  of.  .  .  251 

doctrines  concerning  interest  252-264 

when  interest  is  payable  on  contracts;  mercantile  usage,  etc.  .  .  .253,  254 
whether  statute  fixing  higher  or  lower  rate  than  agreed  prevails 

after  default  of  payment 255 

interest  allowed  on  bills  and  notes  and  other  negotiable  obligations  256 

interest  imposed  in  the  nature  of  punitive  damages 257 

interest  allowable  after  an  action  is  begun 258 

interest   chargeable    in    real-estate   transactions,    ront~,    niortgagi- 

debts,  etc 259 

holders  of  trust  funds,  interest  when  chargeable  and  allowable.  .  .  .  260 

interest  on  legacies  or  annuities,  when  allowable 261 

exemption  of  government  from  liability  for  interest 262 

compound  interest,  when  it  may  be  demanded 263 

partial  payments,  rule  of  interest  applicable 264 

doctrines  concerning  usury   265-289 

characteristics  of  usury  laws,  contrivances  to  evade 265 

what  contracts  are  usurious,  intention  determines 266 

change  or  renewal  of  usurious  contracts,  effwt  of 267 

usury    upon    a   contract    not   usurious   in    its    inception   does    not 

vitiate 268 

compounding  interest,  discounting,  sale  of  notes,  not  usuriou'^.  .  .  .  269 

charging  usual  rate  of  exchange  not  usurious,  unless  a  device.  .  .  .  270 

receipt  of  gift,  bonus,  fee,  gi'atuity,  etc.,  whether  usurious 271 

ibanks,  usury  rules  applicable  to 272 

loan  of  productive  chattels  with  reservation  of  increase,  rule  as  to.  273 

various  other  devices  to  cover  usury 274 

purchase  and  sale  of  commodities,  distinctions  as  respects  usur}-.  .  275 
exacting  security  for  an  old  loan  as  condition  to  a  new  loan  not 

neces.sarily  usurious   276 

usury  consists  in  the  actual  taking,  not  in  the  attempt  to  take.  .  .  .  277 

what  parties  only  can  set  up  the  defence  of  u.sury 278-280 

usury,  in  general,  to  be  specially  pleaded  and  strictly  proved 281 

usury,  as  a  defence  in  chancery 282 

legal  consequences  of  usury,  modern  tendencies 283 

usurious  payments,  voluntarily  made,  not  recoverable 284 

consequences  of  usury,  rule  in  equity  regarding 285 

collateral  security,  effect  of  usury  as  between,  and  principal  debt.  .  286 

usury  in  some  States  punishable  as  a  criminal  or  penal  offence.  .  .  287 

conflict  of  laws  regarding  interest  and  usury 288 

law  in  force  at  the  making  of  usurious  contract  usually  governs: 

constitutional  questions 280 

summary  of  doctrines  relating  to  usufruct  of  personal  property 290 


872  INDEX. 

INHERITANCE,  section 

an  incorporeal  chattel 63 

INNKEEPERS.     See  LiE.x. 
INSURANCE, 

in  general   65 

life  insurance   544-555 

origin,  modern  rise  and  growth 544 

the  parties;  various  forms  of  contract;  event  certain 545 

insurable  interest  in  a  life,  what  is  necessary 546 

assignment  of  life  insurance  policies 547 

preliminaries  to  the  contract;   the  application;   medical  examina- 
tion ;  warranty  and  representation 548 

questions  as  to  health,  age,  habits,  hereditary  causes,  etc 549 

conditions  subsequent,  violation  of  which  forfeits  the  policy 550 

death  in  "  violation  of  law,"  suicide;   insanity 551 

commencement  of  risk    55ib 

forfeiture   through   failure   to    pay    premiums;    •■  non-forfeitable " 

policies 553 

re-insurance  and  double  insurance 554 

proceedings  at  insured's  death  to  obtain*  payment 555 

accident  irisurance  556 

fire  and  marine  insurance 557,  558 

guarantee  insurance,  etc 559 

final  observations  on  insurance 559 

regulations  under  local  statutes 559a 

liahility  insurance  559b 

INTANGIBLES 12 

See    C'OEPOREAL. 

INTEREST, 

on  pledges   ^^^ 

See  IxcoiiE. 
INTRODUCTORY, 

division   of   subject 1 


JOINT  AND  COMMON  OWNERS, 

See  Ownership. 

JOINT  STOCK  COMPANIES   201-204 

shares  in    -°^ 

See  Ownership. 


K. 
KEYS ^8 


IJJfDEX. 


L. 


LANDLORD  AND  TENANT,  section 

interest  on  rent   250 

right  to  away-going  crops 108 

right  to  fixtures 121 

leases  and  terms  for  years 21-43 

See  Chattels  ;  Emblements  ;  Flxtukes  ;  Lease. 

LARCENY 50,  90 

See  Chattel. 

LEASE 21-42 

See  Chattel. 

LEGACY, 

in  general  560 

an  incorporeal  chattel  personal 63 

definition  of  a  legacy  ;  "  bequest,"  "  devise  " 561 

general  and  specific  legacies;  demonstrative  legacies 562 

residuary  bequest  or  legacy 563 

distributive  sliares,  administration  of 564 

statutes  of  distribution   565 

doctrine  of  conversion  applied 133 

power  of  corporation  to  take  legacy 234 

interest  transactions  261 

LEGAL  TENDER.     See  Money. 

LETTERS  OF  CREDIT 473 

See  Negotiable  Iinstbuments. 

LIABILITY  INSURANCE    5596 

LIEN, 

enumeration  of  the  various  securities  for  debt 375 

definition  and  characteristics  of  a  lien 50,  60,  370 

different  kinds  of  lien 377 

common-law  liens  378-388 

particular  and  general  liens 378 

innkeepers,  farriers,  carriers,  lien&  of  paticular 379 

bailees  for  hire,  livery-stable  keepers,  agistors,  etc 380 

particular  lien  may  be  implied  as  well  as  result  from  express  con- 
tract    381 

general  lien,  who  may  have;  effect  of  custom;  bankers;  insurance 

brokers 382 

attorneys  and  factors,  general  lien  of 383 

general  lien  by  express  agreement ;  efTect  of  notice  and  custom  ....  384 
possession,  actual  or  constructive,  necessary  to  creation  and  con- 
tinuance of  lien   385 

waiver,  extinguishment,  exclusion  and  revival  of  lien 386 

enforcement  of  Hen.  remedies  enlarged  by  statute  and  usage 387 

owner  of  goods,  right  of,  to  discharge  lien 388 

equitable  liens 389 

vendor's  lien;  deposit  of  title  deeds,  etc.;  possession  unnecessary.  .  389 


874  ixi)i;x. 

LIEN — Continued.  section 

statutory  liens;  mechanic's  lien,  etc 390 

maritime  liens    20!J,  317,  391,  392 

definition  of  maritime  "lien,"  significance  of  term  and  kinds  of.  .  391 

material-men,  as  affected  by  ship's  domestic  or  foreign  port;   sea-  • 

men's  wages ;  master's  lien 391a 

waiver  and  loss  of  maritime  lien 392 

**  lien,"  broad  significance  of  tlie  term  in  the  courts 393 

lien  statutes  constitutional 393o 

lien  distinguishtHi  from  pledge  or  mortgage 416 

lien  of  corporation  on  stock .  501 

LIFE  INSURANCE.     See  Insurance. 

LIMITATIONS,  STATUTE  OF 93 

LIMITED  PARTNERSHIPS.      See  Ownership. 

LOTTERY  TICKET 62 

See  CuATTHU,. 

M. 

MANURE 121 

See  FiXTUiiES. 

:\L\RGIN, 

trading  in  stocks  on 398o 

MASTER 311-314 

See  SiiiP.s. 

MERGER 38 

See  Chattei-. 

MINERALS 53 

See  Chattel. 

MONEY, 

definition,  nature,  and  uses ~A,  335 

coinage  of  money,  rise  and  spread 336 

copper  and  other  base  metals,  useful  for  token  coinage  only 337 

gold  and  silver,  many  advantages  of,  for  money  purposes 338 

money  as  a  standard  of  value;   amount  necessary  for  circulation 

limited 339 

money  only  effectuates  a  "  .sale :  "  price ;  barter 340 

"  lawful  money"  applicable  to  coin  as  distinguished  from  bullion.  .  341 

"  legal  tender  "  as  distinguishing  money  from  what  passes  as  such .  342 

government  coinage;  history  of  English  money;  pounds  "  sterling"  343 

United  States  money;  dollar  as  a  unit;  statutory  changes 344 

history  of  American  "  legal  tender  "  notes 345 

"Confederate"  currency:  effect  of,  on  ordinary  business  contracts.  346 

specie  and  currency,  defined  and  distinguished 347 

counterfeiting  and  forgery :  scope  of  legislation 348 

bills  of  credit,  their  issue  by  States  prohibited ^. 349 

national  banks  and  their  currency,  history  of 350 

bank  notes:  popular  use  of.  as  money:  how  far  a  legal  tender 351 


INDEX.  875 

MONEY — Continued.  section' 

'•  money,"  "  cash,"  "  ready  money,"  construction  of  these  terms  in 

testamentary  trusts  and  colloquial  use 352 

MORTGAGE, 

of  terms  of  years 43 

whether  a  mortgage  is  a  chattel  real  or  a  chattel  pur-onal,  etc.  .44,  60 

chattel  mortgage,  distinction  between,  and  real-e.~tate  mortgages..  414 

interest  payments 259 

tchat  constitutes  a  chattel  mortgage 415-419 

possession  necessary,  and  form  of  instruments  of  transfer 415 

distinction  between,  and  lion  or  pledge;  equity  of  redemption 416 

sale,  how  distinguished  ;  essential  test 417 

legal  reqiii.sites,  as  respects  form  or  seal;  parol  or  oral  mortgage.  .  418 

description  of  debt,  recital  of  property  mortgaged,  identification.  .  41!» 

■what  a  chattel  mortgage  gives  in  security 420-424 

what  chattels  may  be  mortgaged 420 

after-acquired  property,  whether  covered;  equitable  rule 421 

contingent  debts  and  future  advances,  how  secured 422 

qualified  property  in  a  chattel  subject  of  mortgage 423 

chattel   mortgages   must   conform   both    to   public  and    legislative 

policy 424 

delivery,  registry,  and  priority  of  title 425-42!) 

registry  a  prerequisite  to  validity  .by  modern  legislation 425 

unrecorded  mortgage,  effect  of,  between  the  parties  and   against 

third  persons  with  or  witliout  notice 426 

change  of  possession,  wliat  necessary  to  make  valid  in  absence  of 

registry 427 

mortgagee's  riglit  of  posse.s.sion 427 

delivery  and  possession  raise  presumption  of  fraud:  -liow  nMuitted.  428 
unregistered  mortgages,  priority  among  fixed  by  order  of  exeeutioit 

or  filing  for  record 429 

rights  and  liabilities  of  parties  to  chattel  mortgages 430-433 

mortgagee's  title  and  right  of  possession,  remedies  for  injuries  to.  .  430 

right  of  mortgagor  to  sell,  transfer,  pledge,  or  redeem 431 

liability  of  mortgagee  exceeding  his  rights 432 

assignmcTit  of  mortgage  by  the  mortgagee;  rights  of  as.^ignee 433 

rights  to  crops 109 

rights  to  fixtures   .  .  124 

foreclosure  and  redemption  of  chattel  mortgages 4:;4-439 

mortgagee's  rights  at  law  after  default 434 

mortgagor's  right  to  redeem  :  when  and  how  exercised 435 

remedy  of  mortgagee  by  foreclosure  in  equity 436 

statutory  regulations  and  agreement  of  parties  as   to   foreelo.>ure 

and  redemption   437 

mortgagee   may   resort   to   mortgage   or    per.soiial    reiiudy   against 

mortgagee 438 

equity  of  redem[)tion  of  mortgagor,  how  avaib-d  of  and  |no(eeted.  .  439 


«7'6  INDEX. 

MORTGAGE— Continued.  section' 

extvngudshment  of  mortgage  debt,  modes  of 440 

mortgage  and  hypothecation  of  cessels 305,  441,     442 

registration,  etc 44I 

bottomry  and  respondentia  bonds 442 

See  FiXTUBES. 

MORTMAIN,  STATUTES  OF 233 

MOVABLES.      See  PRorEKTV. 

N. 

NATIONAL  BANKS  .350 

See  MoxEY. 
NEGOTIABLE  INSTRUMENTS, 

classes  of   85 

issue  by  corporation 238 

bills  and  notes  as  incorporeal  chattels  personal 69 

so  checks,  bonds,  and  other  negotiable  or  ^Mos^i-negotiable  instru- 
ments    70 

assignment  and  pledge  of  negotiable  and  (j'Ma^-negotiable  instru- 
ments   83-85 

rights  of  partners  in  such  property 188 

interest  upon,  when  allowable 256 

history  of  hills  and  notes 443 

the  negotiable  instruments  law 443a 

distinction  between  bills  of  exchange  and  promissory  notes 443 

definition  of  each 444 

essential  characteristics   of  such  instruments;    as  to   parties  and 

amount 445 

as  to  time  and  fact  of  payment 446 

leading  parties;   maker  and  acceptor,  drawer  and  indorser,  com- 
pared    447 

acceptance  of  a  bill  and  legal  consequences 448 

acceptance  supra  p^-otest ;  genuineness  of  signature;  notice 449 

holder  at  maturity,  right  to  demand  payment,  duty  as  to  present- 
ment    450 

presentment  and  demand  of  bill  or  note  at  maturity 451-455 

how,  where,  and  on  whom  presentment  and  demand  should  be  made  451 

on  what  day  and  hour  each  should  be  made ;  days  of  grace 452 

dishonor  of  bill  or  note;   notice  given  to  secondary  parties,  form 

and  character  of 453 

only  holder  or  his  agent  to  give  notice  of  dishonor;  time  of  sending.  454 

strict  presentment  and  notice,  when  excused ;  waiver 455 

trwn^fer  of  bills  and  notes 456-461 

indorsement,  character  and  legal  effect  of 456 

rights  and  liabilities  of  an  indorser 457 

transfer  by  mere  delivery;  title  of  bona  fide  holder  for  value 458 

accommodation  paper,  rules  concerning 459 


INDEX.  877 

NSGOTIABLE   INSTRUMENTS  —   Continued.  ssctiot? 

drawer  or  indorser,  how  discliarged  from  liability 46:) 

failure  of  consideration,  a  defence  between  original  parties 4G1 

as  to  forgery  or  alteration  of  bills  or  notes 4G2 

checks  or  cheques Of),  463-470 

definition  and  characteristics  of  a  check 4G4 

distinctions  between  checks  and  bills  of  exchange;  drafts 405 

drawing  of  check,  legal  effect  of;  days  of  grace  and  presentment.  .  .  46'3 

certification  of  checks,  effect  of 467 

payment  of  check,  rights  and  duties  of  banker 4G8 

points  of  reseimblance  between  cliecks  and  bills  and  notes 469 

indorsement  of  a  check,  effect  of 46!) 

payment  of  a  forged  or  altered  check,  loss  borne  by  whom 470 

memorandum  checks   470a 

bills  of  lading 471 

giw^i-negotiable ;  rights  and  duties  conferred  by  their  transfer.  ...  471 

warehouse  receipts,  ichether  negotiable 472 

letters  of  credit,  circular  notes,  certificates  of  deposit 473 

coupon  bonds 474-477 

rule  of  expectancj'  applied 143,  143(» 

convenience  and  negotiable  qualities;  English  rule 474 

origin  of  interest  coupons 47-") 

varieties  of  coupon  bonds ;  American  rule  as  to 476 

how  far  negotiable  ;  tendency  of  decisions 477 

negotiable  bonds  in  general 477i 

stock,  whether  negotiable 499 

government  securities,  treasury  notes,  bonds 478 

registered  bonds  as  distinguished  from  coupon  bonds 479 

NOTES.     See  Negotiable  Instruments. 

NOTICE 193 

See  OwNEBSHiP. 

NOTICE  TO  QUIT 40 

See  Chattel. 

NOVATION 193 

See  Ownership. 

0. 

OBLIGATION.     See  Debts. 
OCCUPANCY, 

title  by 49 

OFFICES, 

leases  of 42& 

OWNERSHIP, 

possession  as  evidence ;  personalty 2 

oicners  of  chattels  in  severalty 155 

joint  owners  of  chattels 156-164 

origin,  nature,  and  incidents  of  joint  ownership 156 


878  INDEX. 

OWNERSHIP— ContinHcJ.  section- 

doctrine  of  survivorship  under  a  will 157 

executors,  trustees,  where  two  or  more,  survivorship  applies  to.  .  .  .  158 

construction  of  joint  ownership  should  be  beneficial 159 

severance  of  joint  ownership 160 

disposition  of  chattels;  rights  and  remedies 163,  164 

owncrf!  in  common  of  chattels lGl-167 

origin,  nature,  and  incidents  of  common  ownership 161 

special  exceptions  in  the  case  of  a  patent,  etc 162 

disposition  of  chattels,  as  to  third  persons 163 

rights  and  remedies  against  third  persons 164 

rights  and  remedies  among  themselves 166 

contribution,  partition,  etc IGti,  166a 

joint  adventures  and  adventurers 167a 

disadvantages  attending  joint  or  common  ownership 167 

oiimers  hij  ivay  of  partnership  comhination 16S-195 

convenience  of  such  partnerships 168 

nature,  creation,  and  general  purposes  of  a  partnership 170-174 

competency  of  parties  to  become  partners 171 

purposes  and  scope  of  a  partnership 172 

community  of  profits,  losses,  etc 173,  174 

community  in  protits  and  losses;  latest  cases 173a 

partnership  liabilit}',  how  incurred  as  to  third  persons 175 

ostensible  or  public,  nominal,  silent,  secret,  and  dormant  partners.  176 

liability  of  secret  and  dormant  partners,  when  discovered 177 

criterion  of  partnership  as  to  third  persons 178 

person  held  out  to  the  world  as  a  partner,  liable  as  sucli 179 

his  liability  tlie  effect  of  his  acts  and  conduct 180 

English  explanatory   act 181 

stipulations  qualifying  partnership  liability  binding  on  third  per- 
sons with  notice 182" 

articles  of  copartnership,  embracing  what 183 

time  when  a  partnership  begins 184 

rights  and  duties  of  partners  to  each  other  and  to  the  public.  .  .  185-18ft 

rights  in  partnership  personal  propei'ty  including  "good-will"...  185 

effect   of   a   partner's   death 185 

rights  in  partnership  real  estate 180 

right  of  partner  to  bind  the  firm  within  the  scope  of  partnership 

business 187 

different   ways    in    which    a   partner   may   or   may   not   bind    tlie 

firm.  .  .   /. 188,  189 

as  to  contracts  involving  fraud  and  deceit,  how  firm  may  be  liable.  190 

rights  and  duties  of  partners  as  between  themselves 191 

perfect  good  faith  requisite 191 

dissolution  and  change  of  partnership,  how  brought  about 192 

consequences  of  dissolution  as  to  late  copartners  and  as  to  third 

persons 193 


INDEX.  8T'.t 

OWNERSHIP— Cow/mwcd.  section 

what  notice  is  requisite 193 

novation,  how  it  may  take  place 193 

dissolution  in  bankruptcy 193a 

dissolution  by  death;  rights  and  liabilities  of  surviving  partners.  .  194 

rights  and  liabilities  of  deceased  partner's  personal  representatives  194 

advantages  and  disadvantages  of  the  partnership  relation 195 

otoners  hy  nay  of  limited  partnership .  .  .  196-200 

origin,  nature,  and  purposes  of  limited  partnerships 19G 

statutory  enactments  on  the  subject 197 

statute  preliminaries,  requisite  to  form 198 

rights  and  liabilities  of  general  and  special  partners 199 

dissolution  and  its  consequences 200 

oumers  combining  in  joint-stock  companies 201-204 

origin,  nature,  and  purposes  of  joint-stock  companies 201 

managing  ofTicers  appointed  by  a  majority  of  shareliolders 202 

advantages  over  partnership  in  respect  to  dissolution 203 

how  regardixi  and  treated  by  courts  of  this  country 204 

part-oicncrship  in  sJiipff 205-214 

peculiar  nature  of  owner^^hip  in  vessels 205 

ship-owners  with  relation  to  one  another 206 

part-owner's  right  to  dispose  of  vessel 207 

employment  of  the  ship  ;  right  of  majority 208 

adjustment  of  mutual  claims  of  ship-owners 209 

as  to  lien  on  each  other's  sliares 209 

as  to  part-owner's  right  to  pledge,  mortgage,  or  insure 210 

part-owner's  liabilities  towards  third  persons,  remedies  against.  .  .  211 

liability  for  necessary  repairs  or  supplies 212 

liability  for  each  others'  or  servants'  torts 213 

the  ship's  husband  or  managing  owner,  powers  and  duties  of 214 

memhersliip  in  corporations 215-246 

advantages  and  disadvantages  of  corporate  organization 215 

public  and  private  corporations,  distinctions  between 216 

corporations,  historj'  and  modern  growth  of 217 

increase    of    corporations    in    this   country,    tendencies    and    char- 
acteristics    218 

how  private  corporations  are  created,  by  charter  and  legislation.  .  .  219 

acceptance  of  a  charter  a  condition  precedent  to  its  taking  elTect .  .  220 

corporations  de  facto 220a 

terms  of  acts  of  incorporation  construed  in  light  of  intention 221 

constituent  powers  and  capacities  of  a  private  corporation 222 

internal   management  of  a  private   corporation,   its  directors   and 

membership 223 

powers  of  the  directors  and  corporate  officers 224-226 

liabilities  of  such  officers  to  the  corporation 227 

by-laws  of  a  private  corporation,  how  restricted 228 

corporate  seal,  use  and  effect  of 229 


880  IXDEX. 

OWNEB.'SB.IP— Continued.  secttox 

power    of   private   corporations    to   hold    and   dispose   of    personal 

property 230-232 

power  to  hold  real  estate ;  statutes  of  mortmain 233 

power  to  take  personal  property  by  bequest 234 

power  to  hold  property  upon  trusts  germane  to  its  character 235 

corporate   property,   in  what  manner   to   be  transferred  and  dis- 
posed of   236 

corporate  franchise,  limitations  as  to  its  disposal 237 

negotiable  obligations,  right  to  issue,  how  restricted 238 

riglit  to  borrow  or  raise  money 239 

eminent  domain,  rule  of,  how  applied 240 

visitation  of  corporations;  mandamus  and  quo  loarranto 241 

foreign  corporations   241a 

legislative  regulation   241a 

holding  companies   245a 

dissolution  of  private  corporations,  by  what  modes  efTected.  .  .  .242,  243 

effect  of  such  dissolution  on  the  corporate  property 244 

consolidation  or*amalgamation  and  seccession  of  corporations 245 

revival  of  private  corporations 246 

summaryas  to  the  kinds  of  otcnership  in  personal  properti/ 247 

P. 

PARTITION 166,  166ff 

PARTNERS 168-195 

See  Ownership. 

PASSENGERS 322 

PATENTS, 

in  general 64,  518,  541 

what    is    patentable;    "art,"    "machine,"    "manufacture,"    "com- 
position of  matter  " 519 

novelty  and  utility  essential  requirements 520 

no   public   use    for    two   years   prior   to    application,    a    condition 

precedent 521 

foreign  invention,  when  patentable 522,  541 

abandonment  or  dedication  of  an  invention  to  the  public 523 

priority  among  conflicting  claimants  for  a  patent 524 

proceedings  requisite  in  taking  out  a  patent 525 

specifications,  how  to  be  drawn,  and  leading  objects 526 

letters- patent,  issue  and  terms  of 527 

rights  of  heirs,  assignees,  and  licensees 528 

caveat,  surrender,  reissue,  disclaimer 529 

extension  of  patents,  law  concerning 530 

appellate  proceedings  in  procuring  a  patent 531 

infringement  of  a  patent,  what  constitutes 532 

legal  and  equitable  remedies  for  infringement 533 

patent  suits,  rules  of  construction,  damages,  evidence,  etc 534 


INDEX.  881 

PATENTS  —Continued.  secxioit 

efl'ect  of  the  anti-trust  laws 534a 

controlling  price  of  patented  articles 5346 

joint  patentees  not  partners 162,  172 

PAWN.     See  Pledge. 

PAWNBROKERS, 

business  of 413 

PAYMENT, 

of  checks 468 

of  forged  or  altered  check 470 

of  mortgages 440 

of  pledges 412 

See  DiaJTS. 

PENSION 66,  543tt 

PERISHABLE   CHATTELS, 

remainders  in  140 

PERPETUITY 146 

limits  to  accumulation  ;  the  Thelusson  Act 147 

PERSON 52 

PERSONAL  PROPERTY, 

defined  .  . 2 

mobility  of 3 

division  of  4 

changes  from  realty  to  personalty,  etc 4 

movables  divided  5,  57 

estates  in,  duration  of  enjoyment 6 

classification  affected  by  legislation 18 

PEWS, 

as  fixtures  132 

PLEDGE, 

uhat  is  a   "pledge'*   or  "paicn;"   distinction   hcticecn;   coUaleral 

security 60,  394,  416 

what  may  be  subject  of  a  pledge,  increase  thereof  included 395 

things  forbidden  to  be  pledged ;  public  policy 396 

debt  or  engagement  to  be  secured,  kind  and  character  of 397 

parties  to  a  contract  to  pledge,  capacity,  conduct,  and  title  of .  .  .  .  398 

trading  in  stocks  on  margin 398a 

delivery  and  possession  of  property  in  pledge 399 

re-delivery  or  re-possession  by  the  pledgor,  effect  of 400 

situation  of  parties  pending  maturity  of  secured  debt 401—406 

pledgee's  duty  in  taking  care  of  pledge,  loss  by  theft,  accident,  etc.  401 

use  of  pledge,  right  of  pledgee  as  respects :  matter  of  intention ....  402 
pledgee's    right   to   sue   the    owner   or    third    persons;    to   assign, 

transfer,  etc 403 

pledgee'.?  transfer  in  breach  of  trust,  efToet  of 404 

right  of  pledgor  to  dispose  of  his  own  interest 405 

owner's  rights,  whose  property  has  been  wrongfully  pledged 406 


SS'2  i.\i)Kx. 

IM.EDG  E — ConI  inu-ed.  skctioiv 

situation  of  parties  after  maturity  of  debt .407-412 

pledgee's  threefold  remedy,  suit  against  pk-dgoi,  judicial  r>ali'.  nun- 
judicial  sale  after  notice  to  redeem 407 

statutory  methods  of  sale  and  parties'  express  agrei'meut.  ellVct  of.  408 

collection  and  sale  of  commercial  paper  and  otlier  securities 409 

interest,  expenses,  subsequent  advances,  appropriation  of  payments, 

and  disposal  of  surplus,  etc 410 

pledgee  has  the  option  to  enforce  the  pledge  or  sue  the  pledgor.  ...  411 

pledgor's  general  right  to  redeem 411a 

methods  of  extinguishing  contract  of  pledge,  payment,  satisfaction, 

waiver,  extension,  etc 412 

pawnbrokers  and  their  business,  regulation  of 413 

PROMOTER 492 

See  Stock. 
PROPERTY, 

personal  property  defined 2 

mobility   its  leading  essential  quality 2 

division  of  things  into  movables  and  immovables 4 

interchangeable  by  severance  or  incorporation  with  soil 4 

thing's  movable  are  animate  or  inanimate r>,  57 

origin  and  definition  of  chattel 6 

distinction  between  chattel  and  freehold 0 

personal  property  or  "  chattels,"  the  residuum  of  the  freehold 7 

derivation  of  the  term  "  chattel '' 8 

chattels  real  and  chattels  personal 9 

See  Chattel. 

fixtures,  heirlooms,  and  emblements 10 

See  Emblements;  Fixxur.E.^  ;  nFJRLooM.s. 

choses  in  possessio-n  and  in  action 11 

•better  classification  into  corporeal  and  incorporeal  chattels 12 

See  CiioSES. 

meaning  of  the  terms  ''  goods,"  ''  efl'ects,"  "  things,"  etc 16 

"  estate,"  why  applied  to  things  real,  and  "  property  "  to  personal.  17 

property  classification  affected  by  legislation 2,  18 

conflict  of  laws  concerning 291-299 

R. 

RAILWAY  SHARES 62 

See  Chattel. 

rtECOGNIZANCE 358 

See  Debts. 
IIIXOUPMENT.      See  Debts. 

REGISTERED  BONDS    479 

See  Negotiabij:  Instruments. 

REGISTRY'.     See  Mortgage. 


ixDKx.  883 

REMAINDERS.  sectiox 

contingenl 149 

reversionary  interests  150 

rights  to  capital  and  income 144 

fSeo    KXI'ECTANCY. 

RENT 28 

See  CiiATTtx. 
RESPONDENTIA.     Kee  Moktgage. 

REVERSIONARY  INTERESTS    15U 

Sei'  Expectancy. 

ROLLING-STOCK 56 

Sec  Chattel;   Fixtures. 

S. 

SALARY 66,  543rt 

SALE 86 

distinguished  from   mortgage 417 

of  ships  8S,  ;J0.-j-309 

See  Chattel;  Ships. 

SALVAGE :!2;) 

See  Ships. 

SECURITY  DEBTS  60 

SET-OFF.     See  Debts. 
SEVERANCE, 

applied  to  vegetables  and  minerals -,  5:{ 

among  joint   owners 160 

See    FlXTUEES. 

SHARES »'^.  ;■'«* 

Sec  Stock. 

SHIPS, 

as  corporeal  chattels  personal •>•'>,  ^(M) 

peculiar  rule  a.s  to  the  transfer  of  a  ship 88 

part-owners  of,  their  rights,  duties,  and  liabilities -iO.V-iH 

See  Ownership. 

history  of  the  law  of  shipping -"{Ol 

"  ship,"  a  fx'culiar  kind  of  property  ;  st-n-e  of  term .302 

title  to  a  ship  and  modes  of  transfer :>0'>  'M'.i 

origin  of  title '-^^^^ 

statutes  of  registration  in  general;  bill  of  sale,  mortgage,  etc 305 

registry,  liceni-e,  enrolment,  policy  of  the  Unite<l  States  respecting.  306 

sale  and  transfer  of  title  to  a  ship;  "  grand  bill  of  sale  " 88.  307 

"appurtenances,"  "apparel."  "furniture,"  include  what  under  con- 
veyance ;   usage    '^0° 

possession  under  a  transfer,  when  to  be  taken;  rarcnt  rmptnr  309 

persons  employed  in  and  about  a  ship 310  317 

the  master,  rights,  duties,  powers,  and  res|>onsibilities 311 

master's  authority  in  case  of  an  emergency 312 


884  ixDEX. 

SHIPS — Continued.  SECTIOX 

the  "  cargo,"  master's  power  over,  under  various  circumstances.  .  .  .  313 

master's  authority,  when  specially  employed 314 

seamen,  rights,  duties,  and  peculiar  protection  accorded  to 315 

pilots,  rights  and  duties  of 316 

"  material-men,"  employment,  rights,  and  lien  of 317 

manner  of  the  ship's  employment 318-326 

"  general  "  ship  and  "  charter-party  " 318 

contract  of  "freight"  by  general  ship,  different  meaning  of  term 

"  freight  "  31D 

illegal  contracts;  freight  pro  rata;  transshipment;  delivery 320 

'bills  of  lading,  terms,  character,  exceptions  under,  parties  to 321 

transportation  of  passengers,  statutory  protection  of 322 

charter-party,  letting  under,  modes  of  effecting 323 

various  usual  provisions  of  a  charter-party 324 

time,  how  essential ;  demurrage 325 

modifications  and  construction  of  charter-parties 326 

marine  torts  and  perils 327-333 

collision ;  rules  of  navigation 328 

limitation  of  liability ;  statutes 328a 

salvage,  twofold  meaning  of  term  ;  who  may  claim 329 

salvage  service;  what  constitutes;  compensation 330 

general  average,  definition  and  application  of 331 

sacrifice,  must  be  necessary,  voluntary,  and  successful;  contribution  332 

prize,  piracy,  and  privateering 333 

jurisdiction  of  courts  of  admiralty 334 

maritime  liens    209,  317,  391,  392 

mortgage  and  hypothecation  of  ships 441,  442 

marine  insurance    557,  558 

SOIL 53 

See  Chattel. 

SPECIE 347 

See  Money. 

STATUTES  AFFECTING  PROPERTY 2,  233,  289,  328a,  393a, 

408,  437,  477a,  534a,  559o 

See  CopYBiGHT;  Fraud;  Limitations;   Expectancy;   Ixteeest; 
Stock;  Patents;  Usury. 
STOCK, 

nature  and  incidents 68,  481-487 

capital  stock,  division  into  shares;  limitation  of  amount 481 

shares  of  stock  regarded  as  incorporeal  personal  property 482 

dividends  on  shares  of  stock,  shareholders'  right  to,  when  declared.  483 

corporate  property  held  in  trust  for  the  stockholders 484 

limitation  in  the  issue  of  shares  of  stock 485 

corporation's  right  to  deal  in  its  own'  stock 486 

investments  in  stock,  risks  attending 487 

trustees'  right  to  invest  trust  funds  in  stock 487 


iXDEX.  885 

STOCK — Continued.  SECTION 

how  one  becomes  a  stockholder 488-508 

subscription  for  or  transfer  of  shares,  general  method 488,     48^ 

rights  and  liabilities  of  a  subscriber 490 

contract  of  subscription,  liow  construed  and  atlected  by  failure  of 

conditions,  etc 4!)0 

right  oi  subscriber  to  witlidraw  annulled  by  his  fraud  or  waiver.  . .  44)1 

preliminaries  to  organizing  corporation;  promoters 4i)2 

subserlfjtious  to  new  shares  of  stock;  new  slnixeholdera 49o 

contract  of  memibership  and  subscription,  a  statutory  contract.  .  .  .  494 

transfer  of  stock,  formalities  attending 4DG 

certificates  of  stock  indorsed  in  blank,  whether  valid 49G 

informal  transfers  of  shares,  protection  of,  in  equity 497 

transferee's  rights  as  against  transferor's  creditors;    transfer  on 

the  books ;  .pledge  of  stock 498 

eetificate  of  stock,  whether  negotiable 499 

transfers  in  case  of  trusts,  bankruptcy,  marriage,  etc 500 

lien  of  corporation  for  unp:iid  dues  upon  stock 501 

innocent   stockholders'    rights   in   case   of   fraudulent   or   careless 

transfer 502 

stock  dealings  and  speculations,  contracts  for,  how  construed 503 

"•corners,"  "  margins,"  manager's  frauds,  etc 504 

stock-brokers  and  stock-jobbers  ;  usages  and  rules 505 

directors'  fraudulent-  rejiresentations,  equitable  relief  for 506 

attacliment  and  sale  of  stock  on  execution 507 

preferred  stock,  rights  conferred  by;  "'scrip;  "  "  rights,"  etc 508 

rights  of  a  stockholder 509,  510 

membership,  right  to  vote,  "  proxy,"  etc 509 

voting  trusts 509a 

future  interests  in 143 

dividends,  character  of  and  rights  in 510 

liahilitws  of  a  stockholder 511—517 

responsibility  for  debts  of  tlie  corporation,  oomnion-Iaw  rule 511 

rule  in  equity  as  to  personal  liability 512 

statutory   restrictions   upon  officers  and   sliareholders;    "special" 

and  "  general "  stock 5 1 ."{ 

legislative  enactments  to  be  strictly  construed 514 

stockholders'  liability  for  corporation's  torts 515 

"  assessments,"  '"'  calls,"  provisions  concerning  levy  of 51<> 

enforcement  of  an  assessment ;  relief  in  equity 517 

rights  of  stockliolders  on  dissolution 517ff 

SURRENDER 3S 

See  Chattel. 

SURVIVAL  OF  REMEDIES 02 

SURVIVORSHIP 157,  194 

See  Owne:r.siiip. 


S86  INDEX. 

T. 

TANGIBLES.      See  CoRPOBE.^x.  section 

TENANT.      See  Landlord  and  Tenant. 

TENANT  IN  COMMON.      See  Ownebship. 

THINGS, 

meaning  of  term 16 

TITLE 2 

See  Chattel;  Choses;  Property. 

TREASURY  NOTES 478 

See  Negotiable  I.\struments. 

TREES, 

when  chattels 53 

TRUSTS, 

trustee 235,  260.     487 

voting  trusts    509a 

anti-trust  law.s  as  applied  to  patents 534a 

U. 

UNDERLETTING 36 

See  Chattei-. 
USURY.     See  Income,  Interest,  and  Usury. 

V. 

VEGETABLES :  .53,  100-102 

See  Chattels;   Emblements. 
VENDOR  AND  VENDEE.      See  Fixtures. 
VESSELS.     See  Ship.s. 

WiAGES 543a 

WAREHOUSE  RECEIPTS  472 

See  Negotiable  Instruments. 

WARRANT  OF  ATTORNEY 357 

See  Debts. 

WIFE 91 

See  Chattel. 


[Total  Number  of  Pages,  977.] 


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